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 Replies: 57 / Views: 5,651 |
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Pillar of the Community
United States
2295 Posts |
Quote:
the federal government would incur a net loss during the first 4 years. Yearly net benefits begin to accrue in the fifth year of our analysis, and in the tenth year (2020), the initial start-up costs are paid back and overall net benefits begin to accrue. The early net loss represents the up-front cost of producing a large number of coins during the transition from notes to coins, together with the limited interest expense the government would avoid in the first few years after replacement began. Thanks for the quote, so now I see what you mean, but that doesn't make sense it would take that long to make a profit and when does the government ever know what they are doing? There is no way it would take 10 years to make a profit. This is probably an argument written by the politicians/lawyers/whomever that support Crane to not switch over the to coin. I wouldn't be surprised if the lawyers for Crane Currency wrote that up for them. And people buy this hook, line, and sinker. Plus when has ever US money (except for gold coins and a few notes here and there) ever been considered illegal to spend? We are on the FRN and we still spend BN, SC, etc. There is no reason to make the $1 not illegal to spend, but just stop printing them. They will be removed eventually over time and the cost to remove them will be more than offset by the profits of the dollar coin. Within 2-3 years most $1 notes won't be circulating anymore, since a $1 note only lasts about 18-22 months. That is no where near the 10 year time frame they mention. One dollar notes will long be forgotten from the public by then. Look at my numbers. See how many $1 notes they print each year just to replace worn ones? And how many they need just to print for growth? Those are the key factors. The BEP states those facts on their web site. So if they have to print about 900 million notes per year to replace existing ones at 6 cents each, that costs $54 million, at an annual loss. Make sense? Edited by wquinn
03/02/2012 10:33 am
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New Member
United States
37 Posts |
No one is proposing banning the dollar bill in a transition. The GAO assumes a gradual transition replacing worn out bills with coins. However current estimates of the dollar bill is significantly longer than 18-22 months. To illustrate my point I checked the bills in my wallet. 3 from 2009, 2 from 2006, and 2 from 2003. All are older than 2 years old. This is admittedly anecdotal but consistent with the report's observation. The federal reserve has changed their processing methods and bills are living longer, current estimate is a Median of 32-40 months with 20% needed to be replaced anually. The estimate is that there are 9.5 billion dollar bills that need to be replaced, there are only about 4 billion coins currently which means the mint would need to produce 10 billion coins (remember 1.5-1 ratio). This is a massive upfront investment.
There is nothing at all wrong with taking a short run loss. Noting at all. The only issue is that future projections are inherently uncertain, could cost more could be less. The case for a longterm benefit is strong in my opinion. But government benefits should also be considered with the cost and benefits of the private sector. I think there could be a case that those net benefits are positive but I am not at all sure.
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Moderator
 United States
188443 Posts |
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To illustrate my point I checked the bills in my wallet. 3 from 2009, 2 from 2006, and 2 from 2003. All are older than 2 years old. Dates on notes are not like the dates on coins. That is, they do not indicate the year the were printed. |
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New Member
United States
37 Posts |
Point taken.
But my original point stands. Bills are living longer.
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Moderator
United States
188443 Posts |
The higher denomination notes do last longer, but we are talking about the one dollar note here. The one dollar note only lasts about 18 months on average. Even if they did last four years (48 months), they are still short of the 50+ years a coin would survive.
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Pillar of the Community
United States
2295 Posts |
Quote:
No one is proposing banning the dollar bill in a transition Yes, trdhrdr007, said the following: Quote:
Stop printing & set the date at which they are no longer legal tender at the end of the life cycle for the last run printed. Now if you mean, no one in the government is to ban the dollar bill, then yes, I agree with you. |
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Pillar of the Community
United States
2295 Posts |
Quote:
Bills are living longer. Does anyone not ready my posts? Look at it. I quote that the BEP replaces 95% of notes each year. It is the 14th post on the 1st page. If you are going to debate, you have to back it up better than that. Just what you have in your wallet as compared to 312 million people, doesn't hold water.  Edited by wquinn
03/02/2012 12:01 pm
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New Member
United States
37 Posts |
You win on the wallet thing. That was admittedly lame. Probably should jut have put this up instead. Quote:
Ten years ago, a $1 note lasted about 1.5 years on average. Because of improvements in the processing of paper notes, the life of the $1 note has grown considerably-to as high as 40 months on average, according to a BEP analysis. This longer note life reduces the differential between the lives of the note and the coin, which is expected to have an average life of at least 30 years, according to senior Federal Reserve officials. http://www.gao.gov/assets/320/316331.pdf |
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Pillar of the Community
United States
2295 Posts |
Cool. It does make sense, since more people are using plastic than cash these days.
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Pillar of the Community
United States
1903 Posts |
Plain and simple......you tell the people the paper note is going away.....they will be hoarded off the market in less than a year....everyone will think they will become "collectors items".
Edited by unholyroller
03/02/2012 1:18 pm
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Pillar of the Community
United States
2295 Posts |
And once people realize they aren't worth anything over face value in such worn condition, there will be a surge of them for a short period of time.
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Moderator
United States
188443 Posts |
Quote:
This longer note life reduces the differential between the lives of the note and the coin, which is expected to have an average life of at least 30 years, according to senior Federal Reserve officials. But not by much. 18 months of 30 years is 5%, 40 months is 11%. I feel that 30 years is a serious low-ball estimate as well. |
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Pillar of the Community
United States
2295 Posts |
The NN issue of 3-13-12 has an article by David L. Ganz, on page 1, stating it is the fifth time in 22 years the GAO has made the suggestion of replacing the dollar bill.
And they state it be in their seventh year, when they would make a profit.
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Pillar of the Community
 United States
1796 Posts |
Quote:
I feel that 30 years is a serious low-ball estimate as well. 30+ years *is* a really low-ball estimate. How many 1964 nickels does one find in their change on a daily basis? Or "worse": When roll hunting?Answer: TOO MANY! Those blasted ~50 year old coins are ubiquitous! :-) The point is, over a more reasonable estimate of lifespan it's going to save not just a lot of money, but an awful lot of money. |
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Pillar of the Community
United States
1796 Posts |
Quote:
The NN issue of 3-13-12 has an article by David L. Ganz, on page 1, stating it is the fifth time in 22 years the GAO has made the suggestion of replacing the dollar bill. It's the 7th time the recommendation has been made, but there have been 5 investigative reports to specifically analyze the cost savings. The latest suggestion I mentioned in the OP wasn't an analysis, it was a recommendation in a larger report about the consolidation of duplicate programs that cited earlier analysis. |
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Posted 03/02/2012 11:28 am
