Just how much does it cost to make a penny?

[Brian]

Yes and the Fed gets the seigniorage from issuing the FRN's. This seigniorage is part of the profit that is turned over to the Treasury less the 6% dividend kept tax free for the owners of the Fed. The Treasury then gets to tax all of those who used the notes to circulate as money in order to prevent the over supply of currency not issued directly by the Treasury.

On the flip side of that IF one were to be paid in say dollar coins. The Treasury would realize a potential 70+ cents of direct seignoirage for every dollar it supplied to the Fed to make up for you getting paid in coin. The Fed has to pay the Treasury 1 dollar of credit for a 1 dollar coin. The mint makes dollar coins for roughly 30cents of cost. The Fed's 6% dividend is reduced by this type of transaction.

Perhaps this is the reason they suspended making boat loads of dollar coins a few years ago. Not because the Fed was pissed that they had to store them in new warehouses but because it eats their profits.
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