Why is There a Change Shortage in the US?

How to Save the World by Hodling Bitcoins Instead of “Coin Coins”
Coin Cloud Team
, published on 
August 5, 2020
Why is There a Change Shortage in the US?

If you’ve ventured out to stores in the past month or two, you’ve probably noticed the signs: “Our country is experiencing a national coin shortage. If possible, please use your debit card, credit card, exact change, or other forms of payment.”

You might have even seen posts from Facebook friends, copied from other Facebook friends, warning you about the dire consequences of a true cashless society (we abbreviated it for you):


“A cashless society means no cash. Zero. Cashless means fully digital, fully traceable, fully controlled. I think those who support a cashless society aren’t fully aware of what they are asking for. A cashless society means:

  • No more money in birthday cards.
  • No more piggy banks for your child to collect pocket money & to learn about the value of earning.
  • No more side jobs because your wages barely cover the bills or put food on the table.
  • No more selling odds and ends that you no longer want/need for a bit of cash in return.
  • No more cash gifts from relatives or loved ones.

“What a cashless society does guarantee:

  • Banks have full control of every single penny you own.
  • Every transaction you make is recorded.
  • All your movements & actions are traceable.
  • Access to your money can be blocked at the click of a button when/if banks need ‘clarification’ from you which will take about 3 weeks, a thousand questions answered & five thousand passwords.
  • You will have no choice but to declare & be taxed on every dollar amount in your possession.
  • The government WILL decide what you can & cannot purchase.
  • If your transactions are deemed in any way questionable, by those who create the questions, your money will be frozen, ‘for your own good’.

“Politics & greed is what is wrong with the world; not those who are trying to alert you to the reality in which you are blindly floating along whilst being immobilized by irrational fear. Fear created to keep you doing & believing in exactly what you are complacently doing.”

Obviously, if you’re on this website, these are not outcomes you want. But … maybe they’ve been exaggerated a little bit, because this list doesn’t even address digital currency, like Bitcoin, which is essentially virtual cash. A “cashless society” doesn’t have to take away all your rights.

Bitcoin overcomes all of these hurdles, except for the birthday cards and piggy banks (although physical representations, such as a coupon, IOU or even buttons to represent money are always possible).

But back to the issue at hand:

Is There Really a Shortage of Change?

Technically, it’s not a coin shortage so much as it is a circulation disruption. The coins exist – there’s over $140 in change for every man, woman and child in the US – they just aren’t being spent the same way they used to be.

There are a few reasons for this:

  • Less people are going to stores, opting instead to shop online
  • Laundromats, banks and other places that promote coin usage were closed for two months
  • People have avoided taking public transportation, and drivers have avoided cash payments
  • People think cash is dirty and can transmit the virus, so they don’t carry it as much
  • Businesses have been promoting contactless payment (Apple Pay, Samsung Pay, Google Pay etc)

And that means that yes, a shortage of coins in circulation has now been created.

“The COVID‐19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin,” said the Federal Reserve in a statement. “To ensure a fair and equitable distribution of existing coin inventory to all depository institutions, effective June 15, the Federal Reserve Banks and their coin distribution locations began to allocate available supplies of pennies, nickels, dimes, and quarters to depository institutions as a temporary measure.”

So basically, each bank is being rationed the amount of coin they receive, and each business is in turn being rationed the amount of change they can withdraw from the bank.

If They Can Print, Why Can’t They Mint?

If this is an issue, why can’t they just make more? It seems like minting fiat coins should be just as automatic as printing fiat money. Isn’t it essentially the same process?

Well, it turns out it’s not.

Part of the Fed’s announcement stated, “In the past few months, coin deposits from depository institutions to the Federal Reserve have declined significantly and the U.S. Mint’s production of coin also decreased due to measures put in place to protect its employees.” In other words, the mint isn’t operating at full production or with full staffing.

Also, it’s not as efficient to mint coins as it is to print bills, because it actually costs more than the face value of the coin to manufacture it. According to the U.S. Mint’s 2019 Annual Report, it cost 1.9 cents to make and distribute a penny, and 7.6 cents for a nickel.

Are People Hodling Coins?

Yes, people are “hodling” coins … but not the same way (or for the same reason) that they “hodl” bitcoin.

When we talk about hodling bitcoin, it’s a bit of a joke in the crypto world … it came from a typo in a forum post where one guy couldn’t believe he was still holding on to his bitcoin despite the price crashing. Kind of like the Captain going down with the sinking ship. There’s a loyalty there that has the person perishing instead of jumping to safety.

With physical coins, people are throwing them in a jar and keeping them there so they don’t have to handle them in the short term, but they’ve got them in the long run. It’s not exactly loyalty, or holding on to them for future gain … although it is hoarding. Better safe than sorry, right? Because if change is scarce now, imagine what the scenario will be 6 months from now.

How Can Bitcoin Help?

Bitcoin is referred to as “digital cash” for a reason. It has the same level of anonymity, the same level of personal control, and the same lack of bureaucratic authority. Instead of hodling a jar of pennies, why not hodl some bitcoin in a digital wallet? After all, the latter is the one more likely to increase in value over time … plus it helps the damaged economy to get those coins back into the system, circulating as they’re meant to.

Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.

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