Wall Street Journal (Sparshott, J (November 27,

¶ … 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.

The National Debt

Nations with large debts and deficits are not attractive for foreign investors. This is because a large debt stimulates inflation, and if inflation is high, it will be paid off with cheaper real dollars in the future. The country with a debt will also be worrying to foreigners who may believe that the country is defaulting on its obligations and may default in other ways too. They will, therefore, be less willing to own securities denominated in that currency (e.g. dollars). So the country's debt influences its exchange rate. America is trying to both raise value of its currency and reduce its National Debt by increasing its savings (even at a minute rate) and decreasing its spending (which would be absorbed into creating more of the bills than the coins; the coins last longer than the bills.