Coins and Cash: Shortages, Hoardings, and Threats
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 5 August 2020
⏱️ 25 minutes
🧾️ Download transcript
Summary
What is the cause of the current U.S. coin shortage and when have there been other shortages. Why is there a push to get rid of both the penny and the hundred dollar bill.
Topics covered include:
- How many coins does the U.S. Mint produce each year and why hasn't it been enough to avert a coin shortage in 2020.
- How the U.S. coin shortage in the early 1960s differs from today.
- How much profit does the U.S. Mint make producing coins even though it loses money minting both pennies and nickels.
- How often and under what circumstances do U.S. consumers pay with cash.
- Why the U.S. penny should be discontinued.
- Why companies and individuals are hoarding cash, mostly in one hundred dollar bills.
- Why the existence of one hundred dollar bills would impede the effectiveness of negative interest rates in the U.S.
- Why has the U.S. mint sold 300% more ounces of gold coins in 2020 compared to last year.
Thanks to Chili and Policygenius for sponsoring the episode.
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Transcript
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| 0:00.0 | Welcome to money for the rest of us. This is a personal finance show on money. How it works, how to invest it and how to live without worrying about it. |
| 0:10.0 | I'm your host David Stein today's episode 308. It's titled Cash and Coins, Shortages, Hortings and Threats. |
| 0:20.0 | A few weeks ago my daughter and I were at a bakery buying a couple loaves of bread. |
| 0:27.6 | We didn't have the exact change and they didn't have the coins to make change, so they rounded down. |
| 0:33.3 | We got a small discount. |
| 0:35.3 | This week I was going through the McDonald's drive-thru and there was a sign that said |
| 0:40.1 | due to Treasury shortage of coins, use credit or debit cards, |
| 0:44.4 | round up to the nearest dollar, donate the difference to Ronald |
| 0:47.9 | McDonald House Charities, or use exact change on cash transactions. There is a coin shortage in the US right now. |
| 0:57.0 | Federal Reserve Chair Jerome Powell told Congress last month, what happened is that with the partial closure of the economy, |
| 1:07.8 | the flow of coins through the economy, it has gotten all, it's kind of stopped. We've been aware of it. We're working with the |
| 1:14.3 | meant to increase the supply while working with the reserve banks to get the supply |
| 1:18.6 | to where it needs to be. The agency of the U.S. Treasury responsible for minting coins is the U.S. Mint. |
| 1:28.3 | It was established in 1792 by Congress when it passed the coinage Act and it chose Philadelphia as the site of the first |
| 1:36.8 | mint. Now the U.S. mint operates production facilities in Philadelphia, San Francisco, Denver, and West Point. |
| 1:45.0 | Every two years Congress requires U.S. Treasury to give a report on the U.S. Mint, its budget, and its cost to produce its coins. |
| 1:57.0 | In 2020, the U.S. Mint projected that it would produce 14 billion circulating coins, |
| 2:05.9 | including 8.5 billion pennies, |
| 2:08.6 | 1.3 billion nickels, 2.4 billion dimes, 1.8 billion quarters. |
| 2:15.0 | Now due to the coronavirus pandemic, the U.S. Mint cut back production of circulating coins in March and April. |
| 2:24.0 | Year to date through July, they had produced 8.2 billion coins. |
| 2:28.0 | They said they were back up to full capacity by mid-June and anticipate producing 1.65 billion coins per month. That would equate to |
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