Government: Shows A Loss While Selling Moneyby Brad Warbiany
I was passed this story by a relative, and thought it was absolutely genius:
Would you take advantage of a federal loophole that gives you a free first-class flight anywhere on Earth?
That’s what hundreds — possibly thousands — of shrewd travel enthusiasts are doing, in light of a 2005 law that unwittingly created a weird case of supply and demand.
The law intended to push more $1 coins into circulation. Dollar coins are cheaper for the U.S. Mint to maintain because coins don’t need to be replaced as often as the $1 bill.
The U.S. Mint sells the coins at face value, using taxpayer money to cover shipping and handling costs. If you want to buy $1,000 in coins, you simply pay $1,000 on your credit card and wait for the shipment to arrive in the mail.
Credit card rewards enthusiasts leapt at the program. They use a simple strategy: Purchase coins. Wait for coins to arrive in mail. Deposit. Use deposit to pay credit card. Repeat.
Brilliant! It’s a bit of a hassle, but no more of a hassle than dealing with the TSA. At least if you’re in the middle of a government groping, you can bask in the solace that your flight is free.
Now, some may suggest that taxpayers paying the shipping & handling is worth it if the coins are making it into circulation, given that the coins themselves are a better deal for the US Mint. So what happens to those coins?
A spokesman for the U.S. Mint calls this an “abuse.” Depositing the coins directly in a bank doesn’t put the coins in circulation. The banks simply send that money back to the Federal Reserve — often still clad in its original U.S. Mint packaging.
Yep. The government doesn’t have the balls to discontinue the dollar bill, so they set up a “voluntary” (& subsidized through packing/shipping costs) circular trade that does nothing but increase costs on all aspects of our system and doesn’t even manage to put the coins in circulation.
Well done, Washington!