Following up on my Penny Lobby post from earlier this week, I thought I’d tackle another coin-based issue: dollar coins.
For the past decade or so, the government has been trying to produce and popularize dollar coins. Efforts to introduce the currency, though, have been met with failure (much like the Susan B Anthony coin fiasco of the 70s):
The Obama administration has suspended production of the coins for mass circulation after the government racked up a $1.4 billion surplus of dollar coins. […]
•Over-ordering: During special “introductory periods” of new presidential coins, the Mint swallowed the shipping and handling costs for coins sent to banks, making it cheaper for banks to order them. A memo by U.S. Treasurer Rosie Rios last year estimated that 75% of all orders for coins came during those introductory periods, artificially inflating orders for new coins, even as banks were sending unwanted old coins back to the Federal Reserve…. Reports from the Federal Reserve to Congress show the central bank knew of the impending backlog as early as 2010. They estimated that 40% of dollar coins were returned by banks, prompting the Fed to propose building a $650,000 storage vault in Dallas and spend $3 million on armored cars to take the coins there.
Of course, politicians with little respect for history will not be deterred from introducing dollar coins. S. 2029, proposed in late January 2012, is trying to take another swing at the dollar coin:
Currency Optimization, Innovation, and National Savings Act – Requires the Board of Governors of the Federal Reserve System (Federal Reserve Board) to sequester all $1 coins bearing the design common to those $1 coins minted and issued from 1979-1981 and again in 1999. Allows the release of such sequestered coins to collectible coin dealers and countries that have adopted the U.S. dollar as their base unit of exchange. Directs the Federal Reserve Board to: (1) undertake efforts to improve, and remove barriers to, the circulation of all other $1 coins; and (2) work with the U.S. Mint, consumer groups, media outlets, and schools to publicize the Presidential $1 Coin Program. Declares it is U.S. policy that after consumers and retailers are comfortable using and able to obtain adequate supplies of $1 coins, such $1 coins should replace $1 Federal Reserve notes as the only $1 monetary unit issued and circulated by the Federal Reserve System.
I doubt it will pass, but it’s a good example of government doing the same thing over and over again and expecting different results.