Fed Coin Shortage
Sign at local gas station:
“WE APOLOGIZE FOR THE INCONVENIENCE. DUE TO SHORTAGE OF COINS FROM THE FEDERAL RESERVE:
IF POSSIBLE, PLEASE PAY WITH EXACT CHANGE OR USE DEBIT, CREDIT, OR CONTACTLESS PAYMENT.”
What caught my eye was mention of the Federal Reserve on a sign at a gas station.
I asked the clerk about it, and he said there’s a notification that went out nationwide earlier today. The gas station currently has coins but is concerned about running out. They also will buy coins.
I don’t recall seeing notes like this before. I’ve seen stores run out of change, but on a national scale? What’s going on?
From the Fed:
“The COVID‐19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin. ”
So this may be just a temporary blip. Or, not.
I saw this story back on June 18 in our daily digest (thanks to ‘Daily Digest’ and Sparky1):
I’d rather be a hammer than a nail
IMO, this is an excellent illustration of the notion of the ‘velocity of money.’ Velocity isn’t really about quantity; if money’s not moving through the economy the economy slows down proportionately.
One reason the Fed has been printing so many trillions of dollars and we have not seen the inflation many of us hard-money advocates would expect is because as the world’s currencies are collapsing dollars are being taken out of circulation in those countries (which, these days, is all of them). US currency is being hoarded all over the world because 80-odd percent of debts on the globe are denominated in dollars – the most stable currency, and the universally accepted currency – so dollars are needed by billions of people to make interest and principal payments on loans and pay for business transactions.
But as a local currency weakens, more of them are needed to buy those necessary dollars. As a result, people are holding onto any dollars they get or can buy, storing them up for the next installment, getting as many today as possible to hedge against further local currency debasement tomorrow. This is true at the individual, business, and national levels. So velocity collapses; and not enough dollars remain in play to make all of the payments, so the Treasury prints more to fill in the velocity gap just trying to keep things flowing. To the tune of trillions of dollars!
Regarding coins: Apparently, in the US enough people have become afraid of spreading the Honey Badger through hard money that they’re parking it. With so much coinage parked in people’s homes, cars, handbags, and pockets, a shortage has manifested. Velocity is trending toward zero. Powell says he’s ‘monitoring’ the situation but doesn’t think increased hard money creation is called for; at least, not yet. (Keep in mind, it’s expensive to make coins, sometimes it costs more to make a coin than the coin can purchase.)
Just a guess, but I wouldn’t be surprised to learn that $10 trillion in quarters would make a stack more than 10 million miles high. Maybe that’s where all the coins are.
It would be 44 million miles high
I have several rolls of quarters in my desk drawer. I’ll be glad to sell them back for at least 20 bucks a roll (to adjust very modestly for lost purchasing power) if the Goobermint gets desperate for spare change. Otherwise, the washers and dryers at the local laundromat don’t seem to care one way or the other (and I smell better too).
Interesting how this little item keeps developing. Many stores now no longer accepting cash.
This could be nothing, but I’m watching for this to wind down. If it doesn’t, wouldn’t it be a convenient excuse to push society to go cashless?
The US government mints the coins, not the FED. It looks like the war on cash has begun since there is also a bill to ban encryption without a back door. It’s supposedly hidden deep in some CV-19 bill. This will probably lead to a ban on bitcoin. Is physical (in your hand) gold next?