Here’s a copy of my former blog: Grandparents of America Awaken
Tuesday
Feb12,2008
A Penny For Your Thoughts
Tuesday, February 12, 2008 at 09:55PM
If the USA were USA Inc. with real executives and shareholders, would if be run differently? Let’s look at a really simple issue, the penny. With copper costs soaring, it costs more to make a penny than the penny is worth. Many other less progressive countries have discontinued their penny equivalent. Citizens, retailers, and banks all hate the penny. Why do we still keep the penny? Is it too much to ask for Washington to step up and make it go away?
Here’s my two cents worth. If we can’t deal with an issue as simple as a penny, how will we deal with those big issues we are facing? In a corporation of even medium size, the penny would have gone away long ago. Until Washington can do more than hold hearings and add pork projects on pork project , debate endlessly, investigate everything and everybody, and pontificate, we have little chance for real progress.
Someone once said “lawyers are like beavers damming up the streams of progress”. Since the majority of elected officials today are lawyers, maybe this explains the paralysis.
Or, some government workers who mint pennies might be laid off and have to find a job in the private sector, so our government keeps minting pennies at a loss.
Now we move on to today.
Now, here’s another mint opportunity. The Chicago Tribune ran an article on September 20, 2011, regarding the Fed’s vaults filling up with dollar coins. A picture showed the shelves of the Federal Reserve Bank of Richmond, Virginia, running out of storage space for bags of dollar coins. Overflowing shelves.
Why do they keep minting these coins with no demand for the coins? A 2005 law requires the reserve bank to keep ordering coins regardless of demand. When all the vaults fill up the Fed will have to begin renting storage space. The law requires the Fed to mint 4 new versions of these coins every year featuring a new president. The newest series is Rutherford B. Hayes. The Fed must be able to supply commercial banks with that coin and only that coin for several weeks. The total is $1.2 billion in idle coins now stored in the vaults at 28 cash office across the country. A Harris poll showed 76% of Americans prefer paper money.
Since coins last longer than paper money, the government says that switching from paper to metal would save taxpayers $5.5 billion over 30 years. But, the dogs won’t eat the dog food and the Fed and the 2005 law just roll along and the coins go into ever increasing storage at ever increasing cost.
There are two humorous aspects to this mess. First, the U.S. Treasury pockets the difference between the face value of the coin and the 30 cent cost to mint the coin. So, the government made $280 million, on paper, in 2010 by facilitating this farce. Here’s the second piece of humor. The Mint tried selling these coins on the Internet. The public, the private sector, always smarter than the government, bought them in bulk using credit cards to get the free air miles, then took them immediately to the local bank and cashed them in.
When Obama asks anyone, you, me, Warren Buffet’s secretary, or a billionaire to donate more tax dollars to his government, remember this. This is how he’s spending those tax dollars.
