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One a penny, two a penny, … where are all the pennies? (Hot Cross Buns)

Where did all of the money go?

If you’ve been road tripping recently… or gone to pick up a quick bite at a fast food restaurant, you’ve likely seen the “Coin Shortage” signs. They say something along the lines of

“Coin Shortage. Due to COVID-19 there is a nationwide coin shortage. Please use exact change or credit card if possible as we may be unable to provide exact change.”

We’ve had toilet paper shortages, flour shortages, yeast shortages, meat shortages, Dr. Pepper shortages, … and coin shortages.

Don’t worry. The money is still there. It’s just not there. Make sense?

Let’s go back in time. Back to March 2020 – that month that seemed to last a year.

Everything shut down. We were told to stay inside. Restaurants closed. People left their groceries in the garage for a couple days and wiped them down with Clorox wipes. Traffic was non-existent. (I was actually worried one of the first nights that I would get pulled over FOR driving. I was prepared to tell the officer I was on a toilet paper run.)

What were people NOT doing? Using cash. Think about it. How do you pay for Amazon deliveries? With credit card. Curbside pick-up? Credit card.

With people not going to the grocery as much, they also weren’t taking their change to Coin Star. You know Coin Star – those big green machines at the front of stores where you bring in your jars of change and walk out with either a gift card or some cash (with a fee taken out by Coin Star). People stopped using them.

Additionally, some stores and restaurants were closed for a few months (and some still are). The cash in the cash registers just sat there.

According to the Fed, about 83% of money in circulation comes through retailers and coin recyclers (like Coin Star). (U.S. Mint Press Release)

Let's walk through it. You put your coins in a Coin Star. The coins are packaged up and deposited at the bank. The bank sends some to restaurants. Restaurants then give out change. That change is then used to buy groceries. Excess change is returned to banks. The banks then “give” some to laundry mats which require quarters. People get quarters at the laundry mat for the machines. And so the cycle continues. (The Federal Reserve is involved here too… but for the most part, this is the main picture. For more on the Fed and how money circulates into the economy, read here.)

Coins just circulate throughout the economy naturally. Nothing forced about it.

But, when people stop using cash and some shops close up, it causes a problem. That natural flow is slowed. It’s not that there is less money (or much less) than before. It’s just that it isn’t moving through the market. The Federal Reserve doesn’t have enough money to meet the demand from Banks and have to resort to rationing. Banks then don’t have enough coins on hand to give out as they usually do.

Why do we care if there is a coin shortage? Can’t we just use credit cards? According to an FDIC survey, around 6.5% of households (8.4 million people) are unbanked – they don’t have bank accounts. Only 7.2% of those households had a credit card – leaving just under 7.8 million people without traditional banking or credit cards (FDIC). Now, if those people go to a store and pay in cash, they might not be able to get change back (if the store is short). Maybe it’s a quarter the first time. Fifty cents the next time. Over time these transactions will add up. Especially in an already lower income population who may have lost their jobs because of the pandemic, it could really hurt.

What is being done about it? Well, you might have calculated from my comment above that about 17% of the money in circulation is not from retail or coin recyclers. Where is it from? Mints! The places that make money. While some production declined when the pandemic first started, they are actually increasing production for the rest of the year by 2/3 each month – 1.65 million coins versus the normal 1 million coins, monthly. (Fed article)

What else? Usually banks don’t accept loose change. They are changing that policy. Further, a task force (which includes people from Coin Star) has been formed to help solve the issue (FRB Services). And finally, there are simply just calls to use coins. For example, this tweet from the Secretary of the Treasury Steven Mnuchin:

Because if twitter can’t solve our problems, what can?

So, go out, deposit your change in a Coin Star and get the money moving.

* Note 1: the post was not sponsored by Coin Star. In fact, I never knew what an integral part of the economy it was until I started prepping this post.

** Note 2: there is a whole argument that we should get rid of the penny. One of my college professors (I had him for Intermediate Micro 2 and Current Economic Analysis – or something along those lines), Professor Whaples, has one of the main papers on that. It’s easy to read, and fun!


I tried two different hot cross bun recipes, and I ended up with a delicious hot cross loaf. It wasn't supposed to be a loaf. But... that's what it became. I didn't have a mixer, so I just used my hands to knead it, and it probably could have used a little more mixing.

I recommend eating them the day of... or even the hour of taking them out of the oven. That is when they will be best.

I followed Kind Arthur Baking Company's recipe exactly, so I'd just recommend you go here!


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