I never think about money. Don’t get the idea I am rich – I am not! I just never think about money, and, I bet you don’t either. We all think about bills, savings, investments, and where / when the money comes but we never really think about the money itself.
What started all this was an article by Ajay Banga, President and Chief Executive Officer at MasterCard. In the article, Financial Inclusion By 2020: Our Generation’s Equivalent of Putting a Man on the Moon (Nov 12, 2013), Banga focused on creating a global financial system and everyone having access to money.
Banga said “Cash is expensive in ways beyond just the cost of printing, distributing and delivering it, which can be anywhere between 0.5 to 1.5% of GDP. It’s also expensive in terms of tax avoidance, corruption, and illegal activity.”
I started wondering what cash cost the Federal Reserve – see the chart for Cost of Printing. At the Federal Reserve, one department - Division of Reserve Bank Operations and Payment Systems (RBOPS) - sends the order to the Print Shop - Bureau of Engraving and Printing (BEP) – then the Print Shop tells them what it will cost to print. That amount is what the Federal Reserve requests for its budget. About 92% of the budget goes to printing the money. The rest is taken up with transportation, quality assurance, education and security with transportation the biggest amount (about 79%). For 2013 the Federal Reserve requested a budget of $779 million.
The same week I read Banga’s article, I saw an article by Mike M Ahlers, CNN - $1 coins: Unwanted, unloved and out of currency. I remembered I had an Eisenhower silver dollar in my piggy bank. Did you know that the mint stopped making one dollar coins in 2011 because no one wanted them? According to the Ahlers article, more $1 coins are returned to the Fed than paid out – they have enough coins for 40 years.
It is a shame. I kind of like the $1 coins – the big ones like the Eisenhower, not the little Susan B Anthony dollars that were too easy to confuse with quarters. The Ahlers article says that it is cheaper to produce $1 coins that $1 bills. And it costs more to produce pennies and nickels than the pennies and nickels are worth.
Would you give up pennies and nickels and take up one dollar coins? I never have cash of any kind but I still like paper money – when I can get it. Ahlers article says we can save about $150 million a year by using the coins but the chances are less than 1% a bill in the Senate will even make it to the floor.
In today’s economy, it seems we should be doing things that cost less rather than things that cost more. Who knew money cost so much money?
Well, it is all about learning!
Center for Lifelong Learning - 121 South Marion Street, Athens, AL 35611
By: Wanda Campbell