WASHINGTON -- The European continent has gifted some of history's greatest cultural icons to the world. The Louvre. The Colosseum. The Cologne Cathedral. Plato, Dante, Gibbon. The Clash.
But Europe has also committed great crimes. In particular, Europeans go around paying for things with coins valued in whole units of currency. Fussy Europeans use 1-euro coins and 2-euro coins, as if a paper note would not suffice. This abomination shall never be replicated in the United States, if Sen. David Vitter (R-La.) has his way. Because Charlemagne was overrated, and you know what? Fuck Pericles.
This week, Vitter filed an amendment with the Senate Budget Committee that would "strike out a provision that makes it easier for Washington elites to force Americans to give up their dollar bills and use dollar coins, like Europeans." Go ahead, read the whole amendment. It's only a page long, and it actually says that.
Like any blue-blooded American, Vitter knows that God intended coins to be used only for fractions of a single unit of currency. This is why coins are known as "cents" or "change" in These United States. For whole units -- one dollar, five dollars, what have you -- paper notes have long been recognized as the chosen medium.
But Senate Budget Committee Chairman Mike Enzi (R-Wyo.) has blasphemed against the paper. His latest budget proposal includes a provision (see Section 414), that would require any proposal that contemplates shifting from a paper dollar bill to a dollar coin to note the budgetary impact of such a proposal.
Enzi is really into dollar coins. And according to the Government Accountability Office, moving from dollar bills to dollar coins would create about $5.5 billion in budgetary savings over the course of 30 years, making the bill-to-coin move a way for his committee to open up other avenues for spending.
The GAO has been recommending this switch for years, noting that many of those pesky European nations (and Canada, which, let’s face it, is sort of the same as Europe, conceptually speaking) managed to "obtain a financial benefit."
But the GAO also acknowledged that these gains were kind of fake. Yes, dollar coins last longer than paper money, but this extended durability doesn't actually outweigh the higher upfront costs. The GAO said the budget gains it projected were due solely to "seigniorage" profits: money the government makes by printing new money.
The difference between what a government pays to create its currency and what it can buy with the face value of that currency is seigniorage. If it costs 30 cents to make a $1 coin, the government can make 70 cents in seigniorage off of that coin.
Now, each $1 coin costs more to produce than each $1 bill. But if the U.S. were to replace a lot of its bills with coins, it would need to mint a lot of new coins. And production of this new currency would create the savings (in seigniorage for each coin) that Enzi lauds.
So it's kind of fake. But who cares? Money, after all, is pretty much fake. Even hard-money Ron Paul acolytes are just fetishizing shiny stuff. But it turns out that carrying around coins instead of bills can actually be a burden on the overall economy. It's more sluggish and more expensive, according to a December 2013 Federal Reserve analysis, which means increased costs for the private sector.
The trouble is, neither the Fed nor the GAO considered just how European this whole thing is, which is far more important. Byzantium, shmyzantium.