Doth quoth the DaveM

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Yet another new dollar coin

Friday Feb 16, 2007

So, we're getting yet another new dollar coin here in the United States. The articles I've read say the Sacagawea dollar coin was a flop. Really, I think it flopped because they didn't try hard enough. They were hard to find after the initial period where they were pushed.

This new series of dollar coins has the collector thing going for it, at least, in that it will honor the U.S. presidents, with 4 being honored each year, starting with George Washington. But will this make for a successful dollar coin, or will people just pocket them and save them for their kids?

If we really wanted a successful dollar coin, I think we'll need to get rid of the dollar bill, first off. The article I referenced makes the point that there's no space in many existing cash registers for a dollar coin, so we'd have to get rid of the penny too. Apparently people like the dollar bill pretty well, but I suspect if Congress pushed with an explanation about efficiency and saving money, it would work. Hey, they messed with Daylight Savings Time (that's for another post, don't get me started), and people are just dealing with it.

As for getting rid of pennies, I suspect people would be more responsive to that, but I wonder how we'd transition to a system with multiples of 5 as the smallest unit. Right now an item might sell for $0.99 (hey, less than a dollar) and with my Texas state and local sales taxes adding to 8.25%, the bill comes to $1.07. So will the price drop to $0.97 to have a nice even $1.05, or rise to $1.02 to give us a nice $1.10 price? I'm sure the retailers would prefer the extra nickel, but suddenly the psychological element (under a dollar!) is gone.

Anyway, I'm skeptical that these new dollar coins will be any more successful than the Sacagawea or the $2 bill. They'll have their collector element, but doesn't that just take them out of circulation?

[4] Comments

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Posted at 11:27AM Feb 16, 2007 by DaveM in Life
Tags: coins dollar rant

Comments:

You hit the nail on the head. To make the dollar coin successful, they need to get rid of the dollar bill. To make room for the dollar coin, they need to get rid of another coin, and the penny makes the most sense. Many countries have eliminated their 0.01 coin. Prices don't need to be changed. Actual sales totals can be used for checks, charge, and debit transactions. Cash purchases can simply be rounded to the nearest nickel. A lot of places already do this. The U.S. military exchanges and commissaries did this in Japan back in the early 1990s because shipping pennies to Japan was cost prohibitive. As proof this will work, look at the price of a gallon of gasoline in the U.S. It is priced in tenths of a penny. Tenths! And there is no $0.001 coin. They just round it. Once you get rid of the penny and the dollar bill, a two dollar bill could be introduced so we would not have to carry three or four dollar coins in our pocket as change for a five dollar bill. I am convinced a two dollar bill would be more accepted once the dollar bill is replaced with a dollar coin.

Posted by Mark on February 16, 2007 at 01:09 PM CST #

But what will all the "penny pinchers" do? Become "nickel niggards?" (Thanks to thesaurus.com for finding me a synonym that begins with "n" for "pincher").

Posted by Dave on February 16, 2007 at 01:57 PM CST #

eliminating the penny is not enough. We need to eliminate the nickel and quarter too. That way we can keep with Thomas Jefferson's(or was it Franklin's?) objective of having a decimal currency system. Just imagine; dime, half-dollar, dollar... replacing penny, nickel, dime. That means the next coin should be $2.50, not $2.00. This would eliminate the $1 and $2 paper currency. Then just a matter of time before $5 goes from paper to coin. No point in arguing the merits here. The benefits are obviously, but the obstacles to make it happen have prevented it so far.

Posted by 208.1.67.34 on February 16, 2007 at 03:03 PM CST #

I'm not sure how half dollars fit into a decimal currency system like you're describing (everything a multiple of 10?). Seems like more of a metric currency system. A $2.5 coin seems like a good way to teach kids math :).