What The Coin Shortage Means For Americans
Back in March, some envisioned a world in which we resorted to toilet paper as the base of our bartering. Now, however, NPR reports that a new fashionable shortage has arrived, meaning we will monetize... Well, money. Specifically coins.
As the economy closed in the face of the lockdown, banks around the country discovered that the Federal Reserve, which supplies banks with nickels, dimes, and all the rest, had started to ration the amount of coins it distributed. Instead of 400 to 500 penny rolls a week, Gay Dempsey, manager of Lincoln Country, Tennessee's Bank, only received 100 with similar cuts in the other coin denominations.
So the dreaded coronavirus has struck again! For, as CNN quoted the Federal Reserve chairman Jerome Powell, "What's happened is that, with the partial closure of the economy, the flow of coins through the economy has gotten all — it's kind of stopped."
Yes — yes — yes — we know at a glance this story seems like it should only concern numismatic fanatics. After all, many of us simply waggle our card about as payment. But the cause of the coin shortage and its implications speak to the coronavirus's impact upon the economy.
COVID-19 gives us no quarters
In order to keep their employees safe from the pandemic, the U.S. Mint produced fewer coins than usual. This reduced number directly translated to the amount of coins sent to individual banks. At the other end, i.e. our end, we've shopped and handled cash less over the last few months than we ever typically do, meaning another source of the flow of coinage has been blocked.
The real impact of this will be felt in transactions that require coins, such as laundromats or stores that require cash payments. If a store does not have the appropriate pennies or dimes to return the change of a transaction, they will have to either round up or round down, take money from the buyer or lose money themselves. Now, while we may ignore Lincoln and disregard the penny, multiple transactions of those pennies can add up. At a time when the economy seems as up in the air as it does, that should give pause for thought... could this be the death knell of small change?
For now, it seems unlikely. The Federal Reserve has stated they're working with the Mint to produce more coins, so this shortage may go the way of toilet paper as well.