Tweet
...The real reason has to do with what’s known as “seigniorage.” It costs less than $1 for the government to produce both dollar bills and dollar coins. And the government gets to pocket the difference between the cost of making money and the face value of that money. So every time the government circulates a new dollar bill or coin into the economy, it nets a small profit.
Now here’s where the magic happens: If we got rid of the dollar bill entirely, the GAO assumes that the U.S. government would have to produce about 1.6 dollar coins to replace every current bill. (That’s because dollar coins are more likely to get stashed in drawers and shelves and less likely to recirculate.) The government’s $4.4 billion profit comes entirely from this boost in seigniorage...
Would killing the dollar bill save money? Don’t bet on it.
Now here’s where the magic happens: If we got rid of the dollar bill entirely, the GAO assumes that the U.S. government would have to produce about 1.6 dollar coins to replace every current bill. (That’s because dollar coins are more likely to get stashed in drawers and shelves and less likely to recirculate.) The government’s $4.4 billion profit comes entirely from this boost in seigniorage...
Would killing the dollar bill save money? Don’t bet on it.
Comment