Last week was full of stories on the impending default of the United States Postal Services and the billions taxpayers must put in — even though many of us pay taxes and bills online, send email and text, and use services like skype and facetime. (I’d rather put my money into FedEx or UPS, but the federal government doesn’t give me any choice on where my $$ goes)
Today I saw that the US Congress is trying the same strategy — fighting technological progress — on another front (h/t kids prefer cheese). There are billions worth of $1 coins piling up in fed warehouses because congress mandates the Federal Reserve buy $1 coins from the Treasury each time new coins are issued. From John Fritze from the Baltimore Sun:
Congress created a program in 2005 to mint four new dollar coins a year, each featuring a different U.S. president, in an effort to encourage consumers to make the switch from dollar bills to coins.
But the new line, which began rolling out in 2007, failed to spark a significant increase in demand, Fed officials said, and some commercial banks are threatening to stop ordering the coins altogether.
Nonetheless, the law compels the Federal Reserve to keep buying the coins. Each time the Mint issues a new presidential coin — the latest, featuring Rutherford B. Hayes, came out earlier this month — the Fed must be able to supply commercial banks with that new $1 coin, and only that coin, for several weeks. That requirement limits the Fed’s ability to draw down its burgeoning supply of idle coins.
So bankers and consumers don’t want it, but the Treasury keeps producing them and the federal must buy them and store them (there are warehouses full of coins!).
It really shocking that US consumers are not interested in carrying around $1 coins in an age of purchases (including paying parking meters) made with debit cards, credit cards, and smart phones. Alternatively its not shocking that the Treasury, the Fed, and Congress are spitting in the wind of societal change with tax payer dollars.