I’ve seen notices in a lot of stores that mention the shortage of coins in the U.S. All the coins have to have gone somewhere. Where did they go, or more so, how does this work?
In: Economics
The purpose of actual, physical currency in the economy is to “circulate.” I give the store money for food, the store gives the employees money for work, the employees come to MY store and give me money for whatever I make, etc. The same coin will be used thousands of times over its lifecycle. That means it matters not just how much money there is in the system, but also how long people hold onto it before they spend it.
COVID-19 has significantly reduced the rate of cash transactions. This means that most individuals actually have *more* coins than they usually do, probably sitting on a dresser somewhere. However, as these coins sit in people’s houses, places that need a lot of coins, like a coffee shop that does a lot of cash business in small amounts, are having a harder time finding them. These issues affect paper money too, but it’s much faster to print that than it is to mint coins.
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