DailyDirt: Spare Some Change?
from the urls-we-dig-up dept
There have been proposals to stop minting the US penny for decades, but the little copper-colored coins are simply too beloved to remove from circulation. Rounding to the nearest nickel also probably rubs people the wrong way, but it seems like Canadians are going to find out how that works. Here are just a few other interesting articles on coins.
- Recently, Canada has killed its penny — which cost more to mint than it was actually worth. In the US, it costs more to mint both pennies AND nickels, but it doesn’t look like we’re going to stop making them. [url]
- It’s been difficult to get Americans to use dollar coins over paper bills. Dollar coins last longer and are cheaper to produce in the long run, but the Fed has just accumulated a collection of about 1.4 billion unused dollar coins that it’s just storing in a vault. [url]
- Canada currently mints a $100,000 gold coin that weighs 10kg, but that’s nothing compared to the proposal that the US treasury could mint a trillion dollar coin. A coin worth a trillion bucks was a crazy idea for solving the US debt crisis last year because there’s no statutory limit on the amount of coinage the Fed can produce (while there is a limit on paper currency). [url]
- To discover more stuff on economics, check out what’s currently floating around the StumbleUpon universe. [url]
As always, StumbleUpon can also recommend some good Techdirt articles, too.
Filed Under: canada, coins, currency, gold coin, money, nickel, penny
Comments on “DailyDirt: Spare Some Change?”
“but the Fed has just accumulated a collection of about 1.4 billion unused dollar coins that it’s just storing in a vault.”
Hell, if they can’t use them, send them to me.
Re: Re:
What I find funny is they act like they have really tried hard to push these. I did not even know they existed till very recently. What they expect people to just magically know to walk into their local bank and request coins that they did not even know existed?
Life without the penny in Australia
Australia got rid of their 1-cent coin years ago. Cash transactions are rounded to the nearest .05. Electronic transactions (debit/credit cards, etc.) use the original 1-cent-denominated price.
If a consumer cares enough, they can use cash when the rounding is in their favor, and electronic payment (of the actual amount) when the rounding would go against them. I do not know anyone who cares enough to do this.
Not that reality will prevent any of the whining from the penny-pinching crowd in the US.
Re: Life without the penny in Australia
Hmmm. That penny-rounding process seems like there’s some potential for a Superman III plot to scam lots of small transactions into serious money… 😛
maybe it's the vending machines
You know the ones. Sticker attached that says accepts $1 coins, except it doesn’t really.
Re: maybe it's the vending machines
This is the keystone.
I would never suggest Mandatory replacement of all coin acceptors, but there has to be some way to encourage new equipment to come with dollar-coin accepting gear.
I have seen high-tech brand-new coke machines that could accept a credit/debit payment, but not take a dollar coin.
That and the “collector” series was a bad plan. Maybe after the coins had been out and gaining acceptance for many years, but you don’t start out with a gotta catch’em all scheme when you are still trying to convince people that a dollar can jingle instead of crinkle.
That third one...
There’s a reason that there is a limit on how much paper money can be produced. Minting large (relatively) quantities of money doesn’t solve anything. In fact, it generally causes things to get much much worse.
Re: That third one...
Also, technically.. you have to find someone who will accept a trillion dollar coin as payment. Otherwise the Fed runs into the exact same problem it has with dollar coins — as well as the problem of how to store such a valuable single coin.
Re: Re: That third one...
The fed is a bank. The government can deposit it in their own federal reserve accounts and then pay other accounts using electronic debits.
Re: Re: Re: That third one...
I also wouldn’t be surprised if the coin was retired about 2 seconds after being put into circulation. It would just be a legal formality after all.
Re: Re: That third one...
Well – at least it will probably be a bit smaller than a Ningi
Re: Re: That third one...
Actually, all that matters is that the Fed is willing to accept it from the Mint (and since all US coins are legal tender, they sort of have to)
Since the Fed buys coins at face value, in exchange for a $1T coin, which could be 1 oz or even smaller, the Fed would markup Tsy’s reserve account by $1 trillion.
If the proceeds were used to buy back T-bonds owned by the Fed (approx. $2T currently), Tsy could reduce the public debt without adding a single new dollar into the economy (since its basically a jumbo coin for T-bond swap). The NY Fed could store it easily enough in its underground vault (its not like a thief could ever fence it anyway).
Not so smart
Wait and watch what happens, the value of money is all psychological and without the Canadian penny their 5 cent piece will be demoted to the new perceived worthless coin and the public perception about the value of the Canadian dollar will begin to adjust downward with it. If you wish to verify this trend that has happened around the globe many times before including in the US, watch the exchange rates with other currencies and see what happens with the Canadian Dollar. Sometimes you have to go in the hole in certain areas in order to stay profitable in other larger areas, and that is the case with pennies and the way they prop up the value of their respective dollars.
The minting of excessively high value US coins just like all the over printing and minting being done of late, it is just another way to fleece the American public. Watch this one as well while the US dollars continues it’s value drop around the globe.
Re: Not so smart
“without the Canadian penny their 5 cent piece will be demoted to the new perceived worthless coin and the public perception about the value of the Canadian dollar will begin to adjust downward with it.”
Nope. Totally wrong. Australian 5 cent coins are doing just fine without the now-withdrawn 1 cent and 2 cent coins. Nor is the Aussie dollar doing badly on foreign exchanges. It is currently worth more than the US dollar.
Be sure brain is in gear before engaging mouth. — sign at the Air Force Academy in Colorado
Yes, Australia has a very good money and cash system, we lead the world in our cash note technology we have “plastic notes” with holograms, impossible to counterfeit.
we used to have
Coins
1 cent
2 cent
5 cent
20 cents
50 cents
Notes:
$1
$2
$5
$10
$20
$50
Now we dont have 1c and 2c coins, coints start at 5c.
We have a
$1 coin
and a $2 coin
we now also have a $100 note
The way you get the people using coins instead of cash, is to take the cast out of circulation. As notes get to a bank the bank issues coins in return.
those changes were made 20 years ago, try to keep up 🙂
Re: Re:
“we have ‘plastic notes’ with holograms, impossible to counterfeit.”
I was skeptical when I read that and Wikipedia agrees…
“Polymer banknotes also incorporate many security features not available to paper banknotes, making counterfeiting much more difficult.”
Macs don’t get malware either.
Trillion dollar coin???!!!
What the hell would they do with that? Just give it directly to the largest Wall Street investment firm?
Trillion dollar coin???!!!
What the hell would they do with that? Just give it directly to the largest Wall Street investment firm?
The comparison between the value a coin represents and what it costs to manufacture it is ludicrously irrelevant. Stop stupidly comparing apples to oranges. The coin performs a function in society, and if that function, over the lifetime of the coin, is worth more than it costs to manufacture the coin, then people should shut up and stop comparing the cost of the coin to the value it represents.
The real disgrace here is the paper dollar, that idiotic Americans refuse to give up, despite the indisputable fact that a dollar coin, which Canada adopted over 20 years ago, would actually save money. Compare the cost of a coin to cost of the same denomination in paper, and you’re comparing apples to apples. But Americans don’t have enough sense to do that.
The problem with recent dollar coins has been that they’ve been too similar to quarters and can be mistaken for such.
Yes, you could argue that paper bills are too similar, but they have large, distinctive numbers to differentiate them. With coins, you have to look closer. Even if they’re a different color, if you’re looking at them in dim lighting, it can be hard to tell them apart.
Plus, paper bills weight less and are more convenient to carry.
Coins vs notes
Didn’t the American people complain when the treasury swapped the old (precious metal) dollar coins for paper – now they complain about the opposite – no pleasing some people!
design for a $10^12 coin
For the design of the trillion dollar coin, I suggest a disk of either pure iron sulfide or irridium-plated tin, engraved thusly:
Obverse: Lady Liberty playing three-card monte, emblem of U.S. Treasury in background suspended by fraying thread, flying elephants if space allows.
Reverse: ghosts of John Adams and Benjamin Franklin weeping over shards of broken piggy bank.
I'm just a simple rocket scientist...
Could someone please explain this to me? To prevent massive inflation from the sudden minting of trillions of dollars, the plan is to do the following:
“[I]f the Fed doesn?t want… to create looser money, all they need to do is reflect on the fact that two rounds of quantitative easing have left them owning over $2 trillion worth of securities of various kinds. If they sell $2 trillion worth of securities to investors, then $2 trillion will be sucked out of the economy to replicate the $2 trillion worth of platinum coins the mint cooked up.”
Wait… If they sell $2 trillion worth of securities, then they’ll have $2 trillion dollars to play with, which is what they wanted. So why also create $2 trillion out of nothing? Are they planning to burn the $2 trillion they get from the sale before they strike the coins?
Honestly, it’s as if these people didn’t play with the same blocks I did in kindergarten.
And I can’t believe nobody’s mentioned the Mark Twain story yet.
Re: I'm just a simple rocket scientist...
They are more worried about deficits and debt than inflation. They tried tax and spend. That worked, but the rich complained.
To stop the rich from complaining, they decided to try borrow and spend. Borrow and spend is the same as tax and spend, only you promise to pay MORE for your project in the future instead of paying less now. This had the political benefit of making it some other Congress/President’s problem. This, of course, lead to very high debt and deficits and to America owing money to enemies, despots, and anyone with enough sense to realize that they could force the US government to subsidize their activities.
Now they are trying print and spend. If the printed money goes to the middle class/poor, the rich will complain like they did with tax and spend. If the printed money goes to the rich, the middle class and poor will subsidize the lifestyle of the rich through a steadily and continually declining quality of life, leading to politicians being booted out of office.
Why Dollar Coins Suck
I would love to have a good dollar coin, ***If the ones they made weren’t the exact same size and weight as a quarter coin*** Who was the idiot who made that decision?!! Do you know how many dollar coins I have spent, and were received, as quarters? I didn’t realize it until later when I went to count my change. The 5-cent piece, which is not really much in use, is much larger and could never be confused for a dollar. Why don’t they make the dollar a unique size or shape? Why do all coins have to be round in the US? Make the dollar bigger than a quarter and smaller than a 50-cent piece and either make it a hexagon shape or put a hole in it or something so it feels and looks different so it won’t be mistaken for a smaller-denomination coin. Then Americans will use dollar coins.
It’s not so much that it’s difficult to get Americans to use dollar coins ??Americans have never been given a choice to. The only time I have any in my possession is when I go out of my way to do so.