It's Time For Dollar Coins

The United States government has floated the idea of making the dollar a coin instead of a bill a couple of times now, and it has been a dismal failure. People got a few of the dollar coins (as a collectible item) and then went back to using the old familiar dollar bills. What that proved more than anything is that most people are creatures of habit -- and they are unlikely to change those habits until they are forced to do so.

The fact is that a dollar is not really worth enough to be a bill anymore. When I was a child (and I'll admit that was a long time ago) you could buy more with a quarter than you can today with a dollar. Americans may not want to admit it but a dollar is just pocket change these days.

And they don't want to admit it. A Gallup Poll in 2006 showed that 79% of the American population did not want to go to a dollar coin. Although that dropped to 64% when it was explained how much money the government could save by going to dollar coins and discontinuing dollar bills. I'm not aware of a more recent poll, but a dollar is worth even less now than it was in 2006 (so hopefully attitudes have softened a bit toward the idea of a dollar coin).

How much could the government save? Consider this -- a dollar bill have a life expectancy of about 40 months (slightly over 3 years), but a coin will last for many decades. The Government Accountability Office says the government could save about $5.5 billion over a period of 30 years. Now that's not going to balance the budget by itself -- far from it. It's just a little over $183 million each year. But why should we spend $183 million each year when we don't have to (and when it really doesn't accomplish anything). After all, a few million here and a few million there adds up to real money before long.

I think it's definitely time to go to a dollar coin, but the government needs to do it right this time. When they introduce the coin they need to stop making the dollar bills. Don't give people the choice. In a few years people will accept it -- and most will wonder why they ever thought the dollar should be made out of paper in the first place.

Today's dollar is just pocket change (and it's value won't rise in the future). We need to admit this and make it the coin that it should be. And the nice part is the government will be saving money -- millions of those dollar coins each year (and that makes a lot of sense in this recession).