Making Money
We all knew that the U.S. Mint made money, but did you know they could turn a profit? I didn’t either. Apparently, they have a term for this process and it is called seignorage.I’m reading an article about the next attempt at a dollar coin and I come across a word I’ve never seen before. It was a key point in the article because it turns out to be the reason that the U.S. Mint may be producing $1 coins again after monumental failures on their last two attempts. I’ll use the example of the 50 states quarters to illustrate the meaning of this word. You see, it costs the U.S. Mint less than 5 cents each to produce one of those state series quarters. When someone “buys” or receives a coin in change, and then removes it from circulation for collecting or any other reason, the government literally turns a profit from this phenomenon. The process is known as seignorage. The U.S. Treasury estimates that they have ‘earned’ about $5 billion in seignorage profits from the 50 states quarters minted thus far.
Those ever creative lawmakers on Capital Hill have decided to capitalize on the profitable success that the government has enjoyed with the state quarter series. Their next big idea comes in the form of H.R. 902, Presidential $1 Coin Act of 2005 where there will be a series of coins minted with the likeness of each of the former U.S. Presidents appearing on the front of the coin and an image of the Statue of Liberty on the back of the coin. There would also be a redesign of the penny to commemorate the bicentennial anniversary of the birth of Abraham Lincoln. The estimated seignorage profits of the $1 coin are estimated by the Congressional Budget Office to be approximately $280 Million over the 2006-2015 period.
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How very interesting. I wonder what the limit of interest for would be coin collectors is? Will the Treasury continue on with the collectible currency trend? I guess we will find out in time.
posted by Bonzai @ 2:02 PM
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