Government plans to replace dollar bills with dollar coins

¶ … Wall Street Journal (Sparshott, J (November 27, 2012) talks about Government inclination to convert the dollar bill into dollar coins. Whilst the public seems to mostly prefer the dollar bill according to the way it is and whilst Crane & Co., the company that prints these bills, is reluctant to eliminate paper money, The Government (as too the Federal Reserve System) views coins as being more of a rational choice. It lasts longer, and can save the government more money enabling it to invest in other more important public programs.

"We continue to believe that the government would receive a financial benefit from making the replacement," Lorelei St. James, a director at the nonpartisan Government Accountability Office, said in remarks prepared for a Congressional hearing scheduled for Thursday.

Predictably, companies that would profit by mining he coins (such as Mining and metals companies, mass transit agencies, vending machine manufacturers and other groups) are in agreement too.

The GAO calculates that ultimately replacing bills with coins could provide $4.4 billion in "net benefits" to the federal government over 30 years. That averages out to less than $147 million a year. The benefits would only be seen incrementally after many years.

The U.S. Treasury had tried introduction of dollar coins last year but had curtailed production after discovering that more than 40% had been returned to the government unwanted. Government vaults then stored 1.4 billion such coins -- enough to meet demand for a decade.

If the government does go ahead with its inclination towards replacing bills with coins, it will be interfering with public desire. Not the first time it does so.

I see a few connections here:

The idea of saving

The Government has a certain budget which it allocates amongst its various needs. It tries to save as much money as possible and places only a certain amount of money too in the Central Bank for public consumption. The Central Bank determines how much of this will be given to the various banks, and how much the banks should loan out. By printing less paper, the government will be saving more money in the more endurable coin and this will contribute incremental drops to its net savings account.

Government Intervention

The government sometimes intervenes in the free market in order to improve (as they see it) the economy and social welfare and to direct resources in a certain direction.

One of the reasons for government intervention is to improve performance of the economy as for instance during a recession. By saving in certain directions, Government will have more money to invest in programs that can help the economy.

Two of the ways that governments intervene are through Legislation and Regulation and through policies that direct business and economics

By replacing paper money with coins, despite public disinclination, and by insisting that all revert to using this medium would be manifestation of government intervention.