Friday, February 16, 2007

More Bang for the Buck

Just a few miles up the road is Denver, Colorado, home of one of the two United States Mints that are producing the new dollar coins, which were introduced yesterday (the other is in Philadelphia). As you probably know by now, this is a new series of coins featuring the visages of the Presidents of the United States, produced in the order they held office, starting of course with George Washington.

The mint is hoping these new coins will be better received by the public, both as collectible and circulatory currency. The variety of the series raises hopes that they will replicate the popularity of the state quarter program. For collectors, I believe they may be correct. For wider use, I doubt it.

When I was a child, one could occasionally find a Silver Dollar in circulation, along with Mercury dimes, buffalo nickels, and of course, the ubiquitous wheat penny. Then along came the Eisenhower dollar which stuck with the large format of previous dollar coins. But the big change came with the introduction of the much maligned, smaller dollar featuring suffragette Susan B. Anthony.

This coin never caught on outside of a few vending machines and slot machines, because it was similar in size and appearance to the quarter. How many of us accidentally overpaid by using these coins thinking they were quarter dollars?

So, a few years back, the mint came up with the “golden” Sacagawea dollar coin. While easier to distinguish from a quarter due to its hue, it retained the size of the Susie B. coins, making it a direct replacement for vending machines. Yet despite a huge push to garner public acceptance, the Sacagawea dollar never caught on either.

Now we get the golden president dollar coins. I have no doubt collectors will pick them up, but they still have the issues of previous coins when it comes to circulation. Despite being smaller than the old Ike dollars, they are bulkier and heavier in the pocket than paper dollars.

Still, with inflation, I think the dollar coin could be viable. I think the solution is as follows:

  • Stop issuance of the $1 bill and remove them from circulation
  • Flood the market with the $2 bill, as this doesn’t even have the purchasing power the paper buck once had
  • Reformat the $1 coin to be somewhere between the dime and the quarter in size, making it acceptable for pocket change

The third item is unlikely now that the mint has committed to, and started production of, the new presidential dollars. Still, if the first two ideas were implemented, both the $1 coin and the $2 bill would be widely used.

Yes, I have the answer, but alas, the people at the mint never asked my opinion.

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