On the face of it, substituting dollar bills for dollar coins make a lot of sense. Coins are much more durable than bills, so over the long haul (but only over the long haul), they offer more seigniorage. Bills get reserved for larger transactions. And it helps us move closer to getting rid of those damned pennies.
But the currency market doesn’t like dollar coins. According to Stan Collender, who spearheaded the campaign to encourage people to start using dollar coins in the 1990’s (formally called the “Golden Dollar” but more colloquially known as the “Sacagawea Dollar”), individual consumers are indifferent to bills versus coins, and vendors and banks found the transaction cost of the switchover too burdensome. Also according to Collender, Tea Party activists are starting to agitate for a new dollar coin, and Democrats are opposing the idea based on prior market experience.
Well, no. I think consumers were mildly displeased with the Sacagawea Dollar. Certainly this bit of trenchant commentary graphically demonstrates the reaction I recall getting from merchants when I got some of these very-nearly-quarter-sized coins. And it’s not an insurgent Tea Party Republican versus old-line Democrat thing — the guy in Congress pushing for dollar coins represents the area where the metal used to make the coins would be mined, and the guy in Congress pushing back to keep paper dollars represents the area where the largest currency printer is located. This is good old fashioned political football.
What we need is a cashless economy, with everything done on debit or credit cards. Crime becomes more difficult to make profitable. Taxes become easier to collect. Disputes about who paid what and when become easier to resolve. And we can get out of the business of printing currency altogether, making control of the money supply a more efficient and effective exercise. I don’t see anyone asking for this, though. Maybe I’m just thinking too far in the future.
As it stands, the capital/transaction costs seem too high to go to paperless. Assuming that the government (or whomever) acts as a bank, it would be a real drag for every single transaction anywhere – no matter how small – to have to be done electronically.
I know all of the arguments for doing away with the dollar bill, but the difficulty I have sitting down would just be made all the more difficult. You’d almost certainly want a $2 coin as well, to cut down on that. Or alternately, you do away with the penny and quarter and round to the nearest 10c (you may need a 50c piece, too). It would be a pretty giant upheaval. Or a lot of uncomfortable sitting.
This all reminds me of the Simpsons episode where Marge shows a gaggle of schoolchildren a dollar coin and tells them, “you can take this to a bank and exchange it for a real dollar.”
I don’t remember that one — but it’s a good joke!
I don’t think I would want to go cashless. I prefer to make all my petty purchases by cash. Doing so puts a check on my spending habits. Also, I don’t like the idea that someone might, with the proper subpoenas, find out I waste my money on junk food. It all seems a little big-brotherish to me.
Also, an effective cashless system would have to solve the problem of the non-banked and non-bankable. Not that steps in that direction haven’t been taken–some store, maybe it was Walmart, started experimenting with paying employees with cash cards.
Also, I wouldn’t be surprised if a black market “cash” economy would emerge, with its own logic and inflationary or deflationary spirals.
If I were participating in National Novel Writing Month like some of my colleagues here, this would be a good premise. Mind if I keep that one in (non-exclusive) reserve for when I do have time for it?
Count me in the “prefers dollar bills”. If they made a 25 cent banknote, I’d probably carry that. Carrying and sorting coins is a pain. Although cashless does win over both, yes, at least as far as convenience goes.