Coins of Steel: Should U.S. Mint Phase Out Copper and Nickel?

The discussion about what we should be doing with our U.S. coins has been going on for years now. Our currency has a lost it's value and with Representative Steve Stivers' steel-coin bill, we might be sending our loose change elsewhere.

Stivers says the U.S. will save a large chunk of change if it makes pennies and nickels with steel instead of cooper, zinc and nickel. He introduced a bill last year that would ensure that pennies and nickels are made of steel (although pennies would be dipped in copper.)

Last year the bill got a hearing in a House subcommittee.

So how could we save so much money by reestablishing our coins? Easy, just look at the figures...

According to the U.S. Mint, the cost to create a penny is 2.41 cents, a 170% inflated price, and the cost to create a nickel is 11.18 cents, a 223% inflated price. Stivers says that by changing the composition of nickels, dimes and quarters, the U.S. would save as much as $207 million a year.

But like any good idea, there comes reasonable action. John Blake of the Cummins Allison Corp. which develops solutions to sort and authenticate currency, checks and coins, says that the U.S. Mint needs to be very careful. If the bill passes through Congress, consideration needs to be made whether the change would increase the risk of counterfeiting.

Although the low value of the pennies and nickels makes the possibility of people making counterfeit coins from steel seem very unlikely, there is still reason for concern. Blake cautioned the subcommittee before jumping to any conclusions with the bill to change the coins.

From the Columbus Dispatch,

Reducing the costs of producing nickels and pennies “will mean nothing if there are societal costs incurred due to the inability to properly process and circulate American currency throughout the world,” Blake said.

Other ways of tightening the financial belt with the bruised U.S. economy have fallen short in the past, but analyzing and assessing the potential for change within our coins is important. Rodney Bosco, of Navigant Consulting, which provides analysis on accounting, financial and economic issues, believes that adopting the steel coin could reduce the per-unit material costs of those coins by between 84% and 89%. That equates to about $200 million a year.

The U.S. Mint is continuing to study other alternatives of its coins, while Stivers feels his bill should be pushed forward without hesitation. Not just because it's a smart financial move, but because it's Congress's duty.

“Congress has the constitutional mandate to regulate currency,” he proclaimed. “I don’t think Congress should cede this authority … while I consider the folks at the U.S. Mint to be experts, it’s Congress’ responsibility to do this.”

So if the Congress is to do its civic duty of maintaining a regulated, sound currency, than shouldn't the Federal Reserve do the same thing? With this bill being passed, the constitutional duty of balancing a budget while protecting the social currency is an obligation, but sadly we continue to devalue our currency. The U.S. dollar has fallen out of priority with many currencies around the world and with the threat of losing its position as the world's reserve currency.

SurvivalBlog.com points out that with Bernanke's artificial lowering of interest rates, massive injections of liquidity, and monetization of Federal debt, the U.S. currency will continue down it's path to demise. 

Voltaire said it best, over 400 years before Bernanke's wrecking ball hit the U.S. fiat currency: “Paper money eventually returns to its intrinsic value--- zero.”

It may soon be the case with metal money as well...

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