Federal officials say some may be hoarding coins because of Y2K concernsgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Pennies being pinched out of circulation
Ohio faces noticeable shortage of the coins as mint can't meet demand
BY ROBERT HOILES
Beacon Journal staff writer
Blame it on the hoarders, the penny pinchers, a burgeoning economy, or maybe even on Y2K. But whatever the reason, there is a shortage of pennies in Ohio.
The shortage isn't bad yet, but it is enough to be noticed.
``There is a sort of penny shortage,'' said Kelly Banks, a spokeswoman for the Federal Reserve Bank in Cleveland, which distributes money to banks throughout Ohio, western Pennsylvania and parts of Kentucky and West Virginia.
``For reasons nobody knows, there was an unusual demand for pennies in the first half of the year.''
Some businesses are starting to feel the pinch.
``There's been a few times when the banks weren't able to give us all of the coins we wanted,'' said John Ballard, vice president for retail marketing for the Holland Oil Co., which operates 51 convenience stores in Summit, Stark and Cuyahoga counties. However, Ballard said the inability of banks to fulfill coin orders has been reported in the Cleveland area. He hasn't heard of it yet in the Akron area.
The eastern seaboard region also has been affected by the shortage of 1-cent coins -- even though the U.S. Mint, which stamps out pennies in Denver and Philadelphia, produced 3.6 billion pennies in the first four months of this year.
Still, demand can't be met.
``The mint has minted as many pennies as they can,'' said Rose Pinalto, a policy analyst with the Federal Reserve Board in Washington, D.C.
The 3.6 billion pennies produced from January through April is up from the 2.7 billion pennies minted in the same period last year and the 2.1 billion pennies produced in the first four months of 1997.
According to a June 30 internal memo to employees of FirstMerit Bank, ``The U.S. Mint is limiting the amount of pennies the Federal Reserve Bank of Cleveland can order . . . during the weeks of June 28 and July 5.''
Reducing shipments to some banks gives the federal reserve an adequate supply in each region, Pinalto said.
She suggested that the booming U.S. economy may have caused the shortage.
``The more retail transactions there are, the more demand for coins -- you spend dollars and you get back coins,'' Pinalto said.
The Cleveland Federal Reserve Bank has requested more pennies, but ``the mint is not able to supply it at this time,'' Pinalto said.
The shortage, said Pinalto and others, is caused when people take their change home and dump the pennies in jars and dresser drawers instead of putting them back into circulation.
Mark Heller, executive director of Americans for Common Cents, a Washington D.C.-based advocacy group in favor of the penny, also supports the theory that the economy is to blame.
``When the economy is doing poorly, people pull money out of their jars and take them to banks because they need the cash,'' Weller said. ``But in this economy, people empty out their pockets and put the coins in jars and they stay there.''
Some people have suggested that pennies are nuisances and should be eliminated.
But Weller said that although people may not like carrying them around, there is strong public support for the penny.
Earlier this year, a survey conducted for the Common Cents group by the Opinion Research Corp. in Princeton, N.J., showed that 73 percent of people want to keep pennies in circulation.
He disparaged calls to eliminate the penny, saying that one study showed that rounding up prices to the nickel would cost consumers more than $600 million a year.
Weller also noted that federal officials have said that some people may be hoarding coins because of the concerns about Y2K -- that computers will malfunction when they roll over into the year 2000, causing power outages as well as transportation, communications and banking disruptions.
Some, concerned about a societal crash, have suggested stockpiling three to six months of living expenses in small bills and coins to use to buy goods.
But in the book, Boston on Y2K, the author -- using the pseudonym Boston T. Party -- says quarters would be the best coins to have. He suggests avoiding ``pennies and nickels for their high weight/low value ratio.''
The $500 billion in U.S. currency in circulation worldwide includes 200 billion pennies, according to the Federal Reserve.
Banks, the Federal Reserve Bank spokeswoman in Cleveland, said the shortage is expected to be temporary.
Demand for pennies, for reasons that are unknown, is traditionally higher in the first half of the year, peaking around July 4, Banks said.
``Normally, the demand starts to trail off after the July 4 holiday,'' Banks said.
-- (firstname.lastname@example.org), July 04, 1999
The same thing has been going on in North Carolina for a few weeks now.
-- Bob Brock (email@example.com), July 04, 1999.
this penny thing has gotten completely out of hand. i love to be able to root through the bottom of my purse amongst the lint and candy wrapers to be able to fondle a few coppers. they also make wonder fuses when that pesky old circuit breaker goes on the fritz. but their true worth won't be realized until after the event. i wan't a whole fistful of the cute little lincolns to place over the eyelids of my stupid, unprepared, ex-neighbors.
pennies from heaven smooc
-- corrine l (firstname.lastname@example.org), July 04, 1999.
Yeaaaaa BAY-BAY!! We're hoarding loose change, gold, bullets and skoal in OUR pickup truck.....ain't that right Billy-Bunched-Butt?? Gahead...tell us all your 'little theory' in some National Address televised LIVE from the Rose Garden. Just look down and check your zipper first pencil dick, before the cameras begin to roll...............
-- Will continue (email@example.com), July 04, 1999.
Could this be a sign that more and more people got tired of plastic
and switch to cash?
****The shortage, said Pinalto and others, is caused when people take their change home and dump the pennies in jars and dresser drawers instead of putting them back into circulation.****
So, if people pay with plastic then they do not get change back to put it anywhere. But if more and more people pay cash then this problem will get worse not better.
After all, our banking system is build on the prinzip of plastic money; Cash is NOT what the banks want you to use.
A first sign of things to come?
Possible, keep your eyes open.
It looks to me as if the fed has put a lot of reserves out there and into storage ----- paper money---- not coins.
Tis could become an indicator of people changing from the *old style of paying with plastic* to the more secure methode of paying with cash
-- Rickjohn (firstname.lastname@example.org), July 04, 1999.
I've heard of but cannot document a story about a German clergyman who had a bathtub full of copper pfennigs (German pennies) during Hitler's reign.
It was said that while he was not wealthy because of them, he always had bread and meat to eat, and wine to go with it, all provided by his stash of "pennies".
If that is correct, it was quite an accomplishment in wartime Germany where shortages and non-availability were commonplace.
Does anyone know who that clergyman was or has anyone else heard the story?
-- Hardliner (email@example.com), July 04, 1999.
Rickjohn....simple but brilliant conclusion there. Yep. No doubt. Our coin bucket contributions have grown tremendously, for the very reason you've just described.
-- Will continue (firstname.lastname@example.org), July 04, 1999.
U.S. Mint targets piggy banks, seeks pennies
July 10, 1999
Web posted at: 2:17 a.m. EDT (0617 GMT)
WASHINGTON -- A penny for your thoughts? Maybe not.
The U. S. Mint and the Federal Reserve Board report that the nation is experiencing a penny shortage. Demand so outstrips supply that the Philadelphia and Denver Mints -- the largest mints in the world -- are now manufacturing pennies at least six days a week, round-the- clock.
"Demand for pennies has increased dramatically in 1999, which has led to instances of temporarily low local penny inventories at commercial banks and financial institutions in several regions of the nation," according to a statement by the U.S. Mint and the Reserve Board.
Over the last 30 years, the Mint has produced more than 312 billion pennies. That's more than 114 billion pennies circulating in the United States -- more than 426 pennies for every man, woman or child in the country.
But not all those pennies are being used.
According to published reports, businesses have temporarily run short on pennies in places including the Philadelphia area, Charlotte, North Carolina, Cape Girardeau, Missouri, over the last couple of months.
The problem is that people hoard coins, and also, demand surges, especially in the summer or around holidays, coin experts said.
"Most members of the public stash them away in coffee cans and desk drawers. So it's really a reycyling problem," said Donn Pearlman, spokesman and legislative liaison for the Professional Numismatists Guild.
Pearlman said demand for pennies and other coins rises in summer when people are on vacation and traveling, and during the holidays when people are shopping more.
Shipments of pennies from the Mint to the Federal Reserve are running 33 percent higher than last year, said the Mint and the Reserve in their joint release.
From January through April, the Mint shipped 3.6 billion pennies compared to 2.7 billion pennies shipped during the same period last year, the Mint and Federal Reserve said.
This year, projected demand for all coins is running 21 percent above the all-time high demand of 1994, officials said.
The Mint and Reserve are encouraging banks to accept coins from the public so the coins can be recirculated.
The Associated Press contributed to this report.
-- A penny (email@example.com), July 10, 1999.
Midwest Is In A Penny Pinch
Coin Shortage Prompts Federal Reserve To Produce More; Solicit Coin Recycling
MINNEAPOLIS, Posted 8:47 a.m. July 16, 1999 -- Benjamin Franklin once said, "a penny saved, is a penny earned." The prophetic statement is just as true today, but for a reason even old Ben couldn't have foreseen.
There's a shortage of coins in the Twin Cities and other areas around the Midwest, reports WCCO-Radio. As a result, pennies -- and nickels -- are being rationed by the Minneapolis Federal Reserve Bank.
Local banks are being allotted fewer coins and are encouraging customers to deposit coins.
Despite a 33-percent increase in the production of pennies this year, there is still not enough.
Minneapolis Federal Reserve Bank spokesperson Chris Power said the Fed is shipping coins elsewhere to make up for the shortage.
-- (firstname.lastname@example.org), July 17, 1999.