Posted 4/28/2005 05:41:00 PM by Douglas

Now that the Mint knows that stupid people hoard coins, they're set to make another stab at the dollar coin.

On Wednesday, the House of Representatives passed a bill to create a new $1 coin, which would accompany the current Sacagawea piece. The measure enjoyed enormous bipartisan support, passing by a vote of 422 to 6.

Assuming a companion bill makes it through the Senate, the nation would be on its way to taking another stab at a dollar coin.

Supporters realize that the dollar coin is the Rodney Dangerfield of American money. So they make clear that any new coin would augment -- not replace -- paper currency.

In fact, although the coins would enter into general circulation, their biggest selling point is that people might hoard them.

Honestly, I don't know why the dollar coin isn't more successful. It can't all be the obscure, PC figures they chose to grace their obverse, but yet both of the last attempts have been miserable failures. But now, the Mint has tipped their hand to show why there's a much bigger incentive to produce money that people are going to willingly take out of circulation.

After the 50 State series launched in the late 1990s, the government discovered that an astonishing number of people were collecting each new quarter as it rolled out of the U.S. Mint, taking the pieces out of circulation.

It costs the Mint less than five cents for each 25-cent piece it produces. So in a process called seigniorage, the government makes money whenever someone "buys" a coin then chooses not to spend it.

The Treasury estimates that it has earned about $5 billion in seigniorage profits from the quarters so far.

$5 billion, for convincing people to take absolutely worthless metal and put it in a shoebox. That's pure genius!

Labels: seigniorage