U.S. Mint Loses 6 Cents On Every Nickel It Produces
Ezra Klein notes that one of the items in the President’s new budget includes giving the U.S. Mint the authority to explore the use of cheaper metals in U.S. coinage. That’s a good thing, because we’re apparently losing money on at least two of them:
The Mint’s primary cost driver is the price of metal, a factor over which it has no control. Daily spot prices of copper and zinc, the Mint’s two main metallic materials, have fluctuated in excess of 400 percent, and the price of nickel by 500 percent over the past 10 years. This contributes to volatile and negative margins on both the penny and nickel: recently, the penny has cost approximately 2.4 cents, and the nickel approximately 11.2 cents to produce.
There are other options, of course, including eliminating coins like the penny entirely, but this seems like a good, albeit ultimately temporary, idea.
I have a simple solution: http://bit.ly/zL9BOd
I’ll tell you, though… I really, really hate those thin, little aluminum coins some countries use. They seem as though they’d blow away if you sneezed in their general direction.
Yeah, dump the penny and the nickel. If something costs ≤ $0.12, round it down;
≥ $0.13, round it up.
I think equating the value of a coin to it’s instantaneous value might be wrong. I shuffled the coins on my dresser and found a 1975 nickle no worse for wear. I think the penny and dollar have the problem that they cost too much and wear fast.
So how do we amortize the next 30 years use of a 2012 nickle? Assuming that they don’t degrade it from wear-resistant steel? Would that be “Pound foolish?”
We could start using Canadian pennies and nickels, so we stick the costs onto the Canadians.
Just send civil servants over the border, have them walk into banks, and ask for 500M rolls of nickels.
Looking it up …
Cents last about 15-20 years
Nickels, dimes, and quarters last about 30-50 years. These coins are made of cupronickel which is very hard; noticeable wear only sets in after 30+ years in circulation.
Paper bills last about 18 months
So your 12 cent nickle is really costing you about 0.3 cents per year of use.
Good idea! Of course, the Greeks tried that with the Euro and …
(If the government put 100% return versions of “Coinstar” at post offices they’d probably get back more coins than they knew what to do with. Return 101% and the’d be inundated. Of course, this is America and Coinstar could probably block with a patent or something.)
Hey! I didn’t know about the partnered eCertificates and zero fees!
Everybody take your coins in, for efficiency and lowering of government spending.
I’m reminded of an study I saw a few years back the was discussing how different methods of rounding prices for gasoline effect oil company profts. That is, since gas is sold in hundreths or thousandths of a gallon, the prices of purchases routinely come to fractions of a cent which have to be rounded up or down. Gas stations generally use the ’round nearest, ties round up’ rule (which is what most of us leaned in school): if you get .000-.004 of an fractional cent round down, .005-.009 of a fractional cent, round up. The problem is if you figure out the expected bias, you end up with 0.0005 cents per transcation in the gas station’s favor. Which seems like a small amount, but if you calculate over the number of times people buy gas in the US every year, this adds up to millions of dollars of extra revenue vs. a unbiased rounding rule (such as ’round nearest, ties round even’).
What, is a mint supposed to make money for the government?
@Stormy Dragon: I understand that. But the ‘millions’ earned on the margin are then divided by the 128K gas stations in the US. That comes to about $50/station/year. It doesn’t all go to some unitary Gas Station Magnate. I can bear to have my local station make an extra $50, which is close the the price of a single tank of gas these days.
Looking at it another way, it comes to $0.015 per American.
I’m assuming a $5 million surplus and a total US population of 316 million. Yes, not all drive. So assuming only 1/3 do, then it’s $0.045 per driver.
Let’s just switch to lead coins. What could possibly be the harm?
Aw, don’t hate on the nickel. I love all those different faces of George, even when they piss my off because I’ve once again mistaken them for quarters.