Will Our Crumbling Coin Economy Ever Be Restored?

coins by hamad M is licensed under CC BY-NC 2.0

“coins” by hamad M is licensed under CC BY-NC 2.0

Annabelle Alton

Who knew that such a small, flat piece of metal would so largely influence the United States? The U.S. Mint manufactures coins that are carefully punched from large chunks of metal, each molded into perfectly rounded discs. Every time you decide to buy something, you may expect to receive the exact change for your purchased item, but what if I told you that soon that may not be possible? The United States has been suffering from a national coin shortage as a result of the Covid-19 pandemic and as businesses continue to close, the circulation of coins is decreasing significantly. The U.S. Mint has also had a major drop in staffing as a result of the Coronavirus, therefore the production of coins has also lessened. As businesses begin to open again, the demand for coins is more than the accessible supply. 

There was also a coin shortage after WWII, where the Federal mint did not produce enough coins for banks around America. Coins were rationed and as a result, and the flow of change in Federal Reserve banks was sparse. Similar to what is happening now, consumers struggled to obtain coins, interrupting sales as well as business activity in the mid-1900s. This shortage lasted from about 1958 to 1966, until the US currency began to change, and the government stopped distributing silver coins.  

It may be exciting to find loose change on the couch or in random kitchen drawers, but large amounts of the coins that would typically be circulating the economy are locked up in homes along with many U.S. citizens. On average, the people of the United States lose about 62 million dollars in coins each year, but with the coronavirus, this number has increased exponentially. Many do not feel safe traveling to the bank to convert their change into dollar bills and do not want to go into stores, waiting to exchange their coins for bills in coin kiosks. The limited circulation in coins has to lead to a depletion in the number of coins sent to the federal reserve, which distributes coins all around the country. 

Founder of the WESS financial club, Josh Unger, stated that “Due to the coin shortage, most times when I have gone to pick up food or purchase something from a store, I have not received exact change due to the lack of coin flow… Although it is not good to do this with cash, in order to solve the coin circulation issue, the U.S needs to increase the production of coins. I believe the U.S has recently started to do this…” As a result of the shortage, it is predicted that there was a monthly gap of about 2.3 billion to 3.5 billion coins by the end of 2020. As the days in quarantine drag on, this gap continues to widen, and the longer it will take to restore adequate change circulation. The government is discussing the production of more coins, where more would be created by the end of this year than have been over the past ten years. 

As many continue to purchase goods off of online sites, big online business owners continue to prosper, while small local businesses crumble. Another founder of the WESS financial club, Junior Xavier Czarnecki, believes that “To preserve the local business’ some of the burdens falls onto the local community. This means buying from your local business whenever you can… The burden also falls onto the feds if the economy is so bad that local businesses can’t be started, or reach profitability relief strategies need to be considered.” 

He also stated that, “the sad reality is some small/local business will just have to go because of our ‘free market’ economy. Since it is harder times the reality is that only the best/smartest local business owners will succeed.” 

As a result of closing businesses, the unemployment rate continues as a steady incline, currently standing at about 6.9%. The unemployment rate has almost doubled since February 2020, where it stood at 3.5%.  As a result, many American citizens will not be able to afford credit cards and will struggle in the new financial world emerging. Currently, only ⅓ of all transactions are made through cash purchases, and that number continues to decrease. 

On the other hand, Czarnecki stated that, “Many economists see this as another step towards a cashless society. This is why people might not see this as a big of a problem as others, since the benefits of a cashless society could mean job growth and economic growth, lower crime rates, and simplified banking on a global level.” The coins that we now recognize as a prominent part of our currency, could one day be extinct.