But coins return more to the Treasury than bills do. While coins are more expensive to produce, bills wear out faster–typically, 15 times faster for the dollar bill. (There’s sort of an interesting story here about how the Fed has manipulated this estimate recently.) Moreover, a surprising fraction of coins are never returned to Treasury to be melted, instead being collected, carried abroad by travelers, accidentally ending up in landfills. Coins never returned to Treasury represent a no-interest loan to the Treasury in perpetuity (at least that’s how the Mint always described it, and to my knowledge we weren’t challenged on it. You all might have a different assessment based on the secondary effects on reserves, etc.)

My point is that coins return more to the treasury than bills do. By undermining the circulation of a dollar coin and legislation that would eliminate the dollar bill to force circulation of the dollar coin, the Fed is pursuing its institutional interests over the broader interests of taxpayers.

Some, typically lobbyists for Crain Paper which produces the paper/cloth for the bills, argue against eliminating the bill because a majority of Americans prefer the bill. But polls which first inform respondents of the savings in substituting a dollar coin for the bill find a majority support eliminating the bill.

Virtually all Western governments long ago eliminated their lowest denomination bill in favor a a similarly denominated coin, with no problems. The rub here is that the decision usually rested with the central bank, not parliament. In the US, Congress must act. Good luck with that. The primary obstacle has been the power of the Massachusetts (where Crain has its HQ) delegation on the two committees with jurisdiction over currency. But even now with Barney Frank gone from his chairmanship of House Financial Services, I doubt the dollar coin folks can move their bill.

This was probably more of an answer than you bargained for.

IIRC Philip had something to do with that. Prior to his golden age ( OK, golden dollar age), I believe the Mint had play ” mother may I?” with Congress every year like the rest of the Executive Branch..
http://www.usmint.gov/pressroom/?action=press_release&id=121

All Mint cash is held with Treasury, which is an account internal to the government balance sheet as a whole.

Any cheque written on this account and paid to a supplier must clear through the banking system in order for the recipient and recipient’s bank to get credit, and in doing so it will clear directly back to the TGA account at the Fed, which will be debited, while the payee’s bank will be credited with reserves. So all external disbursements and receipts by the Mint must clear through TGA at the Fed, immediately, with cash effect in the TGA, immediately.

The periodic payment of Mint profits from PEF to the General Fund looks entirely internal to me. I’m assuming reasonably I think that this sort of remittance involves a credit (asset reduction) to the Mint’s cash balance with Treasury, and a debit (funding reduction) to what seems to be classified as “Cumulative Results of Operations – Earmarked Funds”, which seems to be the analogue of a corporate retained earnings position on the liability side of the balance sheet.

Those two accounting entries on Mint books would be swept through to corresponding entries on the Treasury General Fund books. But because all these accounts are internal to Treasury and the Mint, this has no impact whatsoever on Treasury’s cash balance at the Fed, known as the Treasury General Account. All impacts on TGA occur at the same time as any external disbursements and receipts of the Mint are processed.

But if that is the case, then while the cheque does cause a debit to the PEF balance, it also must also clear against the TGA simultaneously .

That happens because three things occur at once – debit to Mint PEF asset balance; debit to Treasury PEF liability balance; and debit to Treasury TGA asset balance. At least, that’s my guess at this point.

I can show you the full consolidated government bookkeeping I imagine for this, if you’re interested in my take, but it sounds like you’re rejecting what I’m saying. Although you may not be considering the possibility that what I describe can be quite consistent with the cheque also being evidenced in a debit to the PEF. It’s just that that part of it is not the whole story, IMO. And it also changes the interpretation of how Mint profits get sweeped into Treasury proper. They don’t actually sweep into TGA the way I see it.

But if you’re quite comfortable I’m wrong on this, I’ll just drop it, no problem at all – I can pick it up sometime down the road if it turns out I don’t understand it here.

IMO this is so wrong. It creates a DESIRE and political impetus for an economic depression. It is phenomenal how these ultra-long treasury bonds surge in price whenever the economy looks like it is taking a nose dive. Money flows in to ride the gilt bubble and out of the real economy. The whole set up just looks like the government has been commandeered to transfer as much as possible to the finance industry.
I don’t understand why well meaning people advocate re-introducing perpetual consol bonds. They have just the same political effect – creating a constituency that wants economic depression.