COVID-19 has affected every aspect of American life. From brick and mortar businesses to how students attend school, the effects are everywhere. Unsurprisingly those changes have trickled down into the very fabric of the American economy with the circulation of money. Or, more specifically, the circulation of coins. Because of this circulation disruption, myths have emerged about the current American “coin shortage.”
Myth: America is running out of coins, hence the “shortage”
The very term “shortage” is part of the perpetuating myths. It isn’t so much a shortage as a disruption in the circulation cycle. Yiming Ma, assistant professor in the finance division of the Columbia Business School, told Forbes that the concept of the coin shortage in itself is not an accurate description. The disruption of the economy because of COVID has caused a disruption in coin circulation.
“A disruption is a better way to describe it,” Ma says. “It’s reflecting the fact that, once circulation is resumed, these disruptions will ease out.”
Myth: The shortage is intentional as a way for America to become a cashless society
Early in July posts began circulating across social media claiming that the current coin shortage was no accident, that the U.S. government is taking steps to eliminate physical money in the country’s economy. But both economic experts and the Federal Reserve have spoken out against this particular myth. The pandemic has caused a significant decrease in in-person purchases resulting in fewer coins in circulation and a decrease in coin minting.
According to PolitiFact, “U.S. Mint spokesman Todd Martin told PolitiFact that in the early stages of the coronavirus outbreak, the Mint reduced the number of employees per shift in order to enhance social distancing, leading to a reduction in [the] production of 10% in April and 20% in May. At the same time, reduced sales activity meant retailers were ordering more coins from the Mint because they were receiving fewer of them as people stayed home, he said.”
So while the reduction of coin minting was intentional because of lack of need during the shutdown, the decision was not made to create a cashless society.