According to an article in NPR.org, the program to make the $1.00 Presidential coins has been a failure and they are accumulating in Federal Reserve and vaults because they have not become as popular as anticipated.
According to an article I read in NPR.org, the program to make the $1.00 Presidential coins has been a failure and they are accumulating in Federal Reserve and vaults because they have not become as popular as anticipated. According to the article, government reached the $1.4 BILLION worth in stored coins in August 2012. Since it takes about 30 cents to make a coin, government is now at least 2.38 Billion dollars in the red with this program not taking into account the cost of storing the coins. Now VP Biden wants to can the program.
After reading this article, it occurred to me a way to reverse this program's current situation and to make a $1-$2 Billion loss, into a $2-$3 Billion in profit.
As I understand from the article, the main problem is that, although it is a good and practical idea to substitute the $1.00 bill for the $1.00 coin, people are not likely to use the coins because it is a lot easier to carry, say, 10 dollars in your wallet than 10 coins in your pocket. I calculated that at 0.28 ounce each, 10 coins will weigh almost 3 ounces and will occupy more than 2.5 cubic inches in volume. That is the equivalent of 1 match box with 15 US quarters inside, in your pocket. Furthermore, cash registers don't have a slot for these $1 coins.
The Solution I Propose:
The vending machine industry and many other groups already support the idea of switching to $1.00 coins. Others that will get involved are Laundromats, tollbooths, trains and public transportation systems. So how do we motivate people in the first place to start using the coins? The government would implement a program to do the following:
1.- Sell the coins at 90 cents to banks and have banks sell them at 95 cents to people in multiples of $100: 100 coins for $95.00. Banks make a 5% profit, people make a 5% profit, and government makes a 60% profit (90 cents profit - 30 cents cost of making them).
2.- Include in next year's income tax refund the option to buy -up to a certain amount- the coins at 6% discount. Mail a Boucher to be redeemed at banks.
3.- To face out the one dollar bill, have banks give one hundred $1.00 coins (four rolls) for 95 $1.00 bills. Collect the bills and destroy them.
4.- Promote cash register manufactures (and others) to make cash register drawers to include space for the $1.00 coins, it should not difficult since they'll have available the space used for the $1.00 bills.
5.- Give incentive to clothing designers to include a "$1.00 coins pocket" in pants (like the one some jeans have), purses, wallets, etc. to make it easy to carry the coins around. Other people will come up with pouches, holders, wallets, etc. in which to carry the coins. People in other countries have gotten used to carrying coins, Americans will too; just have a campaign promoting the use of the coins; say something like "The 'Presidents' will thank you", or "It's a 'Golden' opportunity."
6.- And last, but not least, do this for only 1 or 2 years, after which the coins will again be worth $1.00.
IT'S A WIN - WIN FOR EVERYONE!
The government will get rid of the coins and even turn the program into a huge profit.
Let's take a look at some numbers:
Now:
-- Coins made since 2007:................................... -- $3.50 Billion
-- Cost of making these coins:........................... -- $1.05 Billion = -- $4.55 Billion
-- Coins sold at $1.00:......................................... + $2.10 Billion
-- Profit:................................................................ + $1.47 Billion = + $3.57 Billion
-- Net Profit (Loss):............................................. -- $0.98 Billion
-- Plus coins in storage:...................................... -- $1.40 Billion = -- $2.38 Billion
With my suggested plan:
-- Remaining coins:................................................ + $1.40 Billion
-- Cost of making these coins:.............................. -- $0.42 Billion
-- Profits from selling these coins:........................ + $0.84 Billion
-- Net Profit:.............................................................. + $1.82 Billion
Instead of losing $2.38 Billion, the government will make a profit of $1.82 Billion. After the 2 years period, it'll make the regular 70 cents per coin profit or, $0.7 Billion per billion coins made.
Other Benefits:
-- Banks, retailers, people and the economy will benefit.
-- People will benefit and see a relief from the present economy situation: 5% is a much better yield --and faster-- than what CDs, Savings Accounts, even the market, are offering. For obvious reasons, there would have to be a regulation in which no one or no business can deposit the coins in a bank account during the duration of the program, this will keep the coins in circulation for those 2 years.
With this initiative, the government will have no problem in dispersing the coins. It will also create a huge and historical movement (economic, social, cultural, fashion, industrial) gyrating around the use of the coins. I'm sure it will be a great paradigm shift, a national phenomenon, and a true WIN-WIN for everyone.
I believe this could be a major socio-economical event. At the very least, Congress will be able to get back on track in the $1 coin program, and people will realize an instant 5% gain. Help me promote this idea: Tell your familiy and friends, ask your governor and representatives to endorse and promote it. Forward and re-tweet this blog to motivate people to start using the $1 coins.