Recently, the federal government announced yet another revision of the dollar coin. This time, in order to entice collectors (and thus inflate circulation numbers), the coins will be issued depicting all of the presidents, starting with George Washington and followed every three months by another president. This would mean that my most desired coin, that of James K. Polk (obviously), will appear in the fall of 2009.
Gloria Eskridge, the associate director of sales and marketing for the United States Mint, says:
“This is about giving Americans a choice. There are times when a dollar coin is easier to use. Instead of carrying around a pocketful of quarters for public transportation, for instance, it’s more convenient to use the dollar coin.”
It makes a lot of financial sense for the United States Mint to switch to a dollar coin. While each coin would be more expensive to produce than a paper dollar, they would last a much longer time, meaning that the overall cost of having a dollar in circulation over a long period of time would be much lower.
The consumer, I fear, would face a pretty raw deal if a dollar coin went into mainstream acceptance. Vending machines would be much easier to access for people (for example, I often have pocket change; it’s much rarer for me to have a dollar bill) and thus frivolous small expenditures could become more prevalent. Vending machines wouldn’t require a dollar reader (one of the larger expenses on a machine) and thus would multiply, finding its way into niches not currently occupied. I noticed this in Great Britain recently, where there are far more vending machines (compared to the United States) due to the prevalence of the one pound coin. Remember, increased vending machine usage could increase taxable income for the United States government, which may be one reason why they’re trying to increase the popularity of the coin.
However, the only way to switch away from the dollar bill is to wholly replace it in transactions. This would require equipment upgrades in a lot of places: cash registers, vending machines, and so forth. Thus, the government is trying to push the transition gradually by trying different avenues of building general acceptance without simply locking out the printed dollar bill.
The paper dollar bill in the United States will go away soon enough and it won’t necessarily be a good thing for the average citizen’s finances. That’s part of the reason why I’m planning on using the dollar coin in educating my son on personal finance issues.