Wednesday - June 29, 2011

Recursive Stupidity

In the basement of a Baltimore vault the size of a soccer field, 1 billion dollar coins are just sitting there. Thanks, Congress.
...
Each coin costs the government 30 cents to make, so the piles in those vaults have cost the government $300 million so far, according to NPR.

The whole thing started in 2005, when the Presidential $1 Coin Act was written into law. While the legislation seemed to have good intentions, when the U.S. Mint started producing the coins a couple years later, the demand just wasn’t there. I mean, have you even heard of the presidential $1 coins, let alone seen one?

Unused dollar coins have been quietly piling up in Federal Reserve vaults in breathtaking numbers, thanks to a government program that has required their production since 2007.

And even though the neglected mountain of money recently grew past the $1 billion mark, the U.S. Mint will keep making more and more of the coins under a congressional mandate.

The pile of idle coins, which so far cost $300 million to manufacture, could double by the time the program ends in 2016, the Federal Reserve told Congress last year.

A joint inquiry by NPR’s Planet Money and Investigations teams found that the coins are the wasteful byproducts of a third, failed congressional effort to get Americans to use one-dollar coins in everyday commerce.

In 2005, Congress decided that a new series of dollar coins should be minted to engage the public. These coins would bear the likeness of every former president, starting with George Washington. There would be a new one every quarter. So, far, the Mint has produced coins through the 18th president, Ulysses S. Grant.

Members of Congress reasoned that a coin series that changed frequently and had educational appeal would make dollar coins more popular. The idea came from the successful program that put each of the 50 states on the backs of quarters. But as the new presidential dollar coins rolled out, the greenback lost none of its dominance in Americans’ hearts and wallets.

It was easier for the bill’s sponsor, then-Rep. Mike Castle (R-DE), to move the presidential coin bill forward if it didn’t displace other dollar coins honoring Sacagawea, the teenage Native American guide to Lewis and Clark.

The deal: The mint would be required to make a quota of Sacagawea coins. Currently, the law says 20 percent of dollar coins made must have Sacagawea on them.

Inside one basementlike Federal Reserve vault in Baltimore, NPR was able to see 45 million $1 coins of various types. The coins were overflow from vaults elsewhere.
...
Inside the vault, dollar coins languished in clear plastic bags piled high on sturdy metal pallets that looked like baby cribs. Through the bags, one could see Sacagawea mingling with Suffragette Susan B. Anthony and rubbing edges with some of America’s early chief executives. Glaring fluorescent lights coaxed an occasional shimmer from the dollars, which are made mostly of manganese brass and have a gold color. One row of pallets bore a handwritten note that said, “Dollars ... 48 skids ... 6,720,000.”

After the Susan B. Anthony and Sacagawea series lost their bids to become America’s pocket change sweethearts, the presidential series was the next big [stupid] idea.

But in a report to Congress last year, the Federal Reserve said the coins are now being held “with no perceivable benefit to the taxpayer,” and that banks are sending them back to the Fed in increasing numbers.

They just don’t get it, do they? Once upon a time we had actual Silver Dollars. They were a large ponderous coin, but at least they were “real” money, a great chunk of silver that filled your hand. Those coins - the Peace Dollars - were minted up to 1935, and remained in circulation for almost 30 years.

In the early 60s the silver went away, but the huge coins stayed. For the longest time we had Eisenhower Dollars (and Kennedy Half-Dollars) in circulation, but they quickly became rare. These were well made coins, and accepted as the real currency that they were, but both were heavy and inconvenient.  I think we still have the Kennedy Half, although I haven’t seen one in ages. At more than twice the weight of a quarter, why bother? The lesson should have been clear. But no.

The “Susie B” was a total flop. It’s another well made coin, but it’s the same color as a quarter but just a smidgen larger. If you aren’t looking super closely, you’re going to use it as a quarter, and shortchange yourself 75¢ on every purchase. At first the idea was to make the coin different by giving it a unique 11 sided edge, which turned out to be nearly impossible (ie $$$) to make, so the hendecagonal edge was moved to the inside, as part of the stamping. But at least the “Eagle on the Moon” obverse was carried over from the standard Ike dollar (not the bicentennial) so you could tell it was real money. But in use, the coin sucked. Thanks a lot Carter. Another loser idea.

Next up was the Sacagawea “golden” dollar. It’s a bit bigger than the Susie B., and it’s struck from manganese bronze. It tarnishes very quickly and seems cheaply made.

The “50 state” quarters were a neat idea for the first 2 years of their issue. The whole country was checking their pocket change all the time, and setting aside a few of each mintage. After that it became dull. I might be one of the few who stuck it out to the bitter end and filled my “official” collector board, but highly uneven distribution of the coins made that “hobby” a real pain in the tail. By 5 or 6 years into the program the only thing it had taught Americans was that any shiny disc could pass for money. Gee, what a great lesson that was.

Not to be outdone, the mint then took the quarters thing even further and issued another series featuring Puerto Rico, the US Virgin Islands, and all the other territorial areas we have. That must be where Obama got his 57 states concept from. All this late effort did was to PISS OFF the folks like me who had filled up our collector boards and now had no place to put the coins that were obviously part of the same series. Thanks Mint. You suck.

So after watching the Sacagawea Dollars rot for a decade, and seeing the boredom generated by an ever changing quarter, politicians and the folks at the mint put both crap ideas together and came up with the Presidential Golden Dollars. And gee, who would have guessed? They utterly suck. They suck so bad that banks send them back. Few people even know the things exist. The coins are such crap that stores refuse to accept them. They aren’t money, they’re video game tokens. On the first coin, George Washington looks like a constipated corpse wearing a weave. Seriously:

I looked stuff up in Wiki. Turns out there is a whole other series of Sacagawea coins with different backsides “honoring” Native Americans, showing various indian activities such as planting corn, living in peaceful harmony with nature, and killing white people and burning their villages. Oh, I jest with that last one. But the real take away from the Wiki entry is that, once the silver and gold went away, and once the economy grew past the point where a dollar was a whole day’s pay, these coins fell into disuse. So for more than 70 years now dollar coins have been on the outs. They are the coin that nobody wants. Oh sure, coin collectors. Big deal. Nobody wants dollar coins as spending money, m’kay? They suck.

Which is why the mint continues to waste hundreds of millions of dollars stamping them out, then bagging them up in vaults where they lie in the dark. Money wasted making waste money that nobody wants. Current currency that is so unknown and low caste that stores won’t even accept it as real. US Dollars as video tokens. Recursive stupidity.

Posted by Drew458     on 06/29/2011 at 01:33 PM   
Filed Under: • Miscellaneous •  
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