Why the US is Having a Shortage of Coins

This video was made possible by CuriosityStream. When you sign up for their bundle deal at
curiositystream.com/hai, you’ll also get access to Nebula—the only place in the entire
world where you can listen to the relaunch of my podcast, Showmakers. Hey, so, you know what’s fun? When somebody in the comments says something
like “you sound just like the guy from Wendover” and then someone else replies “he is the
guy from Wendover, you idiot” and then the first person is like “I knew that; I was
making a joke, you doofus” and then the second person is like “I actually think
you didn’t know that, and now you’re just trying to backtrack, you nitwit” and then
the first person is like “that’s not true and by the way I think the world is run by
lizards” and then the second person is like “well clearly you’re an insane conspiracy
theorist, and by the way the world is obviously run by animatronic raccoons.” Oh wait, my mistake, that’s not fun at all.

I wonder why it happens in the comments section
of every single video, then. Let’s try again. Hey, so, you know what’s fun? Coins! They’re like little tiny dollars, if dollars
were round and made of metal, which by the way they definitely should be because that
would save the US literal billions of dollars. Coins are used for all kinds of things—collecting,
opulent floor tiling, throwing them at strangers on the street, and sometimes even buying stuff.

But right now, these metal-heads—get it,
they’re metal and they have heads on them; I am a genius—are undergoing the same problem
as the jokes in this video: there’s a severe shortage of them. Well, technically it’s not a shortage—even
though that’s what the news is calling it. But then again, the news once called this
channel “Fascinating and Educational.” The problem isn’t that we don’t have enough
coins—actually, we have more than ever: according to the US treasury, there’s $47.8
billion worth of coins in circulation, up from $47.4 billion last year—which, if my
math is correct is a difference of eight dollars… or 400 million dollars.

I’ll have my math department look into it. So if we have more coins, what’s the problem? Well, Jerome Powell, Chairman of the Fed,
recently appeared in front of the House Financial Services Committee and explained exactly what’s
going on. He said, “My name is Jerome Powell and I
am the lost fourth Rice Krispies elf. My brothers Snap, Crackle, and Pop hid me
away for decades because I refused to shill for their corporate cereal overlords.” Wait sorry I totally misread that. What he actually said was that the flow of
coins throughout the economy has basically stopped. You see, in order for businesses
to keep adequate coinage on hand, money has to keep moving from people to businesses to
people to businesses, like a game of hot potato where the potato is hard and small and circular
and has pictures of old dudes on them who loved to rap. Because of the Coronavirus, though, coins
haven’t been moving the way they normally would, for two reasons.

First of all, people aren’t going out to
buy things as often, which reduces the cashflow—and thus coin-flow—of businesses. Second of all, even when people do go to stores
to buy things, they aren’t using cash as often. Money, including coins, can carry germs, and
germs make you sick, and being sick is—let me check my notes—bad. Basically, there’s plenty of coins—they’re
just sitting in people’s houses, in a jar or in a couch cushion or in the stomach of
a child who thought it was one of the ones made of chocolate. This shortage has created
a dilemma for businesses and banks, who are hesitant to offer incentives for people to
turn in coins for fear of creating an arbitrage situation. Arbitrage, if you don’t know because you’re
not a big-brain business boy like me, is a system whereby someone can buy something for
one price and sell that same thing immediately for a higher price—it’s essentially a
way to make instant, unlimited, risk-free profit, and offering an opportunity for it
is generally very bad.

If you start offering, for example, more than
one cent for a one-cent coin, that’s a problem—something that apparently nobody has told the US Mint,
which wastes about 90 million dollars a year spending 7 cents to make a nickel and 2 cents
to make a penny, because they gotta make sure the money machines keep going brrr. The Community State Bank in Wisconsin, however,
did offer something like arbitrage in response to the shortage, giving people an extra $5
in exchange for every $100 in coins they brought into the bank, a program so many people took
advantage of that the bank shut it down after just a week.

To try to help with the situation,
the Federal Reserve—which is like the big daddy bank all the US’ little baby banks
rely on—instituted a cap on how many coins banks and other depository institutions can
request from them, to make sure that the coins stay evenly distributed throughout the country. After all, it would be bad if all the coins
ended up in Nebraska or something, especially given that Nebraska doesn’t exist. And further, although the Mint did have to
temporarily reduce coin production because of COVID, since June they’ve been back on
schedule, producing 1.6 billion coins a month—half of which, by the way, will be pennies, a currency
so useless Americans throw away $62 million of them a year, not that I’m annoyed about
pennies or anything. If you’re curious about how those new coins
will be placed into circulation without creating inflation, the answer is that the Fed will
give them to banks while simultaneously deducting the same amount of money from the bank’s
electronic account with the Fed.

If you’re weren’t curious about that,
oh well, deal with it. Either way, maybe you will be curious about
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