With all the fuss about the Fed raising interest rates- which is going to go straight to the banks’ bottom line, it’s time to take a look at a commonsense approach to handing some money back to the people at the bottom of the economic ladder- and save the government money at the same time:
A new report shows the cost to produce a penny was 1.7 cents in the 2014 fiscal year. That’s down from 2.4 cents in 2011 but still more than face value.
And that won’t change.
“There are no alternative metal compositions that reduce the manufacturing unit cost of the penny below its face value,” the biennial report to Congress said.
The nickel, too, is dead weight for taxpayers. Production costs stood at 8 cents last year, down from 11 cents. The lower cost per coin is largely a result of rising production and reduced metal costs.
Other coins turn a profit. A dime costs 3.9 cents to make, and a quarter 9 cents. All together, the Mint made $289.1 million on seigniorage–the difference between the value of the coin and the cost to make it–despite a $90.5 million drag from the penny and nickel.
Congress in 2010 told the Mint to examine ways to save money on coin production, a mandate that so far has led to detailed testing of alternative metals and production methods, including the use of a laser to produce coin blanks.
The Mint estimates that switching up the metallic content of coins could save taxpayers $5 million to $57 million a year, though vending, amusement, laundry and other groups with coin-operated machines warn that it could cost them billions to reconfigure machinery and make other adjustments needed to accept altered specie, the Mint said.
So, how do we do this? You know that pile of pennies you have, sitting around the house? In kids piggy banks, and on top of the washing machine? Buy them back at more than a penny.
Have a day set where you can bring in 100 pennies and get a dollar bill and a dime back. Making the effective cost of putting a penny back into the Fed’s coffers .0011 cent. You could even spiff people who brought in 1,000 pennies and give them back $11.25 etc.
If the cost to make the nickel is that high and the Mint needs more- simple, buy them back too.
Since the super rich probably won’t waste the time running their spare change to the banks for the buyback- this will put a bunch of extra dollars into the hands of those who’ve been penny pinchers for a good reason. Pay the banks a small premium for handling the cash, but stop the stupidity of minting new coins that cost so much. Economic stimulus made easy.
Dr. Yellen are you listening?