The Future of US Paper and Coins

[Copper Catcher]

I predict that on or about December 13th a report will be issued showing that it the US could save money if we convert our current coinage to using bi-metallic coins.

The problem will be that this process is patented by the RCM and while licensing is available there other issue far more pressing that would need to be worked out. First with the vending industry and secondly finding a supplier for the blanks etc. We are talking about change that would take years i.e. three or more before anything goes into effect! Eventually the metals used will be some combination of Aluminum, Zinc and Steel.

The penny will not be touched….no one wants to admit that the value has been inflated away so it is virtually worthless and that the melt value is worth more than the coin itself. There isn’t any metal to replace it with that is worth less than the face value. NONE!

There is no real political interest in getting rid of the coin either. If you try the suppliers of the blank will paint the congressman or woman as someone who wants to hurt the poor or charities because rounding up to the nearest nickel will be inflationary. It is a no win situation.

We will never convert into using a dollar coin and or a two dollar coin and replace paper currencies!

Why you might ask? Is it because the public doesn’t like carrying around those heavy coins? Nope that is just a smoke screen. It is all about who makes the profit! Seigniorage i.e.is the difference between the value of money and the cost to produce it.

The Federal Reserve Bankers make money on the creation of paper money. The US Mint makes money on the creation of coins. So who do you think is going to win that fight? Do you really think the Fed is going to want to give up the profit on making dollar bills?

You would think it would be a fairly simple equation to figure out the long term cost of making money. The question should be is it cheaper to make a dollar coin or dollar bill i.e. What last longer? You don’t give people a choice. Anyone with any sense alreay knows that a metal object last longer than paper.

In fact the last twenty or more years it was generally accepted stat was that paper money last about 18 to 24 months in circulation before having to be replaced. Now the Federal Reserve has increased that number to say paper money last 52 months in circulation. Regardless coins can last thirty years or more!

Unfortunately in Washington is it not about what makes sense it is about who is making money. You might think I'm cynical but I just call them, like I see them!

[scyther]

The penny will not be touched….no one wants to admit that the value has been inflated away so it is virtually worthless and that the melt value is worth more than the coin itself. There isn’t any metal to replace it with that is worth less than the face value. NONE!

Actually, there are several. The zinc it's already made of is only worth about half of face value. And if that gets too expensive, they can use aluminum or steel. These would still cost more than face value to make, but not be worth more than face value. It may sound like I'm just nitpicking, but it's a meaningful difference. If the government believes coins are important enough to make at a loss, it can continue to do so indefinitely, just as it spends money on other things. But if the value is actually higher than face, people will just melt or hoard them as soon as they get them. So continuing to produce them that way would be suicidal and pointless. Personally, I can't imagine steel coins will be worth more than face value any time soon.

[68Camaro]

I think what CC means is that there isn't any metal you can make pennies out of such that the total manufactured cost is less than a cent. The unit price manufacturing cost of the cent is > 1 cent, even if the material was free.

[Copper Catcher]

I think what CC means is that there isn't any metal you can make pennies out of such that the total manufactured cost is less than a cent. The unit price manufacturing cost of the cent is > 1 cent, even if the material was free.

Exactly!

[moneydog]

nice

[hobo finds]

The cent will be recycled plastic over a recycled cardboard disk!

[henrysmedford]

I would put money that the new nickel will be made by Jarden http://jardenzinc.com/Coins-EMSecure.aspx as it will match what we have now also they make the penny now so if you dump the penny they still have a job. They also make the blanks for the RCM. Also if you watch the YouTube I have posted here all they players have links back to Jarden
from http://jardenzinc.com/Coins-Nickel-Plated.aspx

The typical substrate is steel. We can plate in single or multiple layers with various combinations of plated surfaces such as nickel on copper. We are licensed to produce the Royal Canadian Mint’s Multi-ply, nickel-copper-nickel technology.

[scyther]

I think what CC means is that there isn't any metal you can make pennies out of such that the total manufactured cost is less than a cent. The unit price manufacturing cost of the cent is > 1 cent, even if the material was free.

Exactly!

Hm that may be the case, but I find it surprising. If they used aluminum and stopped copper-plating them, it seems like that must probably be under 1 cent... or not.

[uthminsta]

If they used aluminum and stopped copper-plating them, it seems like that must probably be under 1 cent... or not.

This is exactly what I think! It doesn't take as much force to stamp an aluminum planchet, so the dies should all last much longer. Right?

[NHsorter]

I don't think it is the metal or the dies as much as the overhead (labor, equipment, maintenance, etc.) Just the act of producing a hundred million pennies is gonna cost more then 1 million dollars, regardless of what you make them out of. Don't forget!! Most critically, Government is doing this.

[uthminsta]

I am trying to think of the bigger picture, with all the overhead costs. If it's that much of a closed book, then they should have stopped making them 6 years ago. Meh, I know, they can't do that, it would admit to inflation. But man, some truths just need to be admitted.

[johnbrickner]

I predict that . . .

The penny will not be touched….no one wants to admit that the value has been inflated away so it is virtually worthless and that the melt value is worth more than the coin itself.

It appears you are right on, with the above. The claim is there is nothing less expensive than what we are currently using with the Zinc Lincoln costing us 2 cents each to produce. Interesting is Canada reported in March 2012 Budget the copper plated stainless cost 1.6 cents each to produce.

We will never convert into using a dollar coin and or a two dollar coin and replace paper currencies!

Why you might ask? . . .
The Federal Reserve Bankers make money on the creation of paper money. The US Mint makes money on the creation of coins. So who do you think is going to win that fight?

This is the real answer I've been looiing for, for some sime now. The missing puzzle piece in my mind.

You might think I'm cynical but I just call them, like I see them!

Cynical? Not even close. I'd call it prescient. CC, I like the way you "see" the world thru your eyes.