Doing away with the dollar bill?
Democratic Senator Tom Harkin of Iowa and Republican Senator John McCain of Arizona are co-sponsors of a bill to take all dollar bills out of circulation and replace them with dollar coins. They claim that it will save the government over 200 million dollars a year as they won’t have to keep replacing worn out bills.. and the both happen to be from states that mint coins for the government.
But, upon a closer look, there appears to be more going on here than just replacing worn out paper.
It appears that a LOT of this profit the government will be making is coming from something called seigniorage
If you are like me, you hate coins, as they jingle around in your pocket and they are heavier than bills… basically annoying, so you do what a lot of people do, put their coins in a jar at home, effectively removing the coins from circulation. When you take money out of circulation, the government needs to print more to make up the loss. And this difference is a big part of the profit the government will be making by moving to dollar coins. By making things inconvenient for us, they are able to make a profit.
What do you guys think, shall we kill the dollar bill and replace it with a dollar coin, or just stick with the bill. Let me know in the comments below.