Coin Numbers Still Don't Look Good
December 15, 2009
Numismatic interest aside, there certainly was little in the U.S. coin mintage numbers that I wrote about yesterday to indicate that the economy is turning up again as financial pundits have been saying.
Coin demand should rise as the wheels of commerce begin to turn faster. That increased demand eventually has to turn into higher coin production.
So what does it mean? Are we bumping along the bottom? The production pattern has been pretty well established since last spring.
We could be recycling better. Coinstar counting machines are often pointed to as a reason coin production has dropped and stayed down since 2000. This phenomenon could have been magnified this past year as financially desparate Americans break open their piggy banks just to eat.
In the past month I have encountered more and more quarters from the 1980s that look like refugees from quarter slot machines. The reeding on the edges is worn smooth from repeated use in the slot machine mechanism.
Are Americans abandoning the use of coins in favor of other means of payment? I have not seen any evidence of this first hand, but it is fair to say that more coin use means banks need to keep higher inventories and incur higher costs to do so. Conversely, less coin use leads to lower costs.
The idea of Americans giving up on coins at first glance seems silly, especially during hard times, but there are examples in other countries where inflation has made the value of coins drop so much that there is a spontaneous reaction among the people who stop using the low denominations.
Has the American cent and even the nickel reached that point?
It is certainly worth pondering.
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