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US Pennies To Be Worth Five Cents?
Z-MaxX writes to point out Reuters coverage following up on last month's news that the US Mint has made it illegal to melt or export US coins in bulk, since the value of their constituent metals — in the case of pennies and nickels — now exceeds their face value. The new story quotes Francois Velde, senior economist at the Federal Reserve Bank of Chicago, who thinks the new rules will not be enough — he believes that determined speculators are already piling up pennies. Velde suggests "rebasing" the penny to be worth five cents. Quoting Velde: "These factors suggest that, sooner or later, the penny will join the farthing (one-quarter of a penny) and the hapenny (one-half of a penny) in coin museums."
We had steel pennys during WWII for a couple of years, they work fine, bring them back.
Copper is valuable enough that thieves are routinely stealing it wherever they can get it, even if that means taking live phone wires.
other idiocies:
1. the nickel itself is worth more than a nickel for the same reason the penny is worth more than a penny. the penny should just be gotten rid of
2. bills are the same color (the salmon pink $10 bill is a recent relief from that) and size so they are hard to tell apart easily, and impossible to tell apart for the blind... who in fact recently sued and won the us govt over this fact
3. a dollar coin you can't tell apart from quarters easily (still, i am talking about the sacagawea: same approximate size/ weight)
the usa is the largest important economy in the world, but its currency is designed worse than the coinage/ bills of some third world countries. i wrote a story about it recently on kuro5hin. i think australia has some of the best designed currency in the world (different colors/ sizes for the blind, made of plastic, not linen, etc.)
the us should do a dramatic rethink of the design of their bills and coins, what we have now is depressingly outdated, archaic, and not very user friendly
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
A few similar stories...
About 15-odd years ago, South Africa replaced all their coinage (and paper currency too). One unexpected side effect was that the new 20 cent coin was a similar size to the old one cent coin. Some older badly calibrated vending machines, notably parking meters, were unable to tell them apart, so there was a sudden rush to aquire old one cent coins, and lots of people got away with very cheap parking for a while.
The problem was fairly short-lived, though -- all the old one-cent coins used this way went straight to the banks and were destroyed, so although it caused a short-term revenue issue for vending machines, it did a very effective job of removing all those old coins from circulation much quicker than they would otherwise have been.
Further back, the British decimalised their currency in the 1970s, but kept the same sizes of coin, so they were interchangable. The older silver coins (shilling, two shilling, etc) had previously been made with a pretty high content of actual silver metal, the older the coin, the more it contained. And since the coins were still in circulation, it was possible occasionally to get in your change a hundred year old coin worth a lot more than the ten pence (two shilling) face value. My grandparents kept a collection of the really old ones they got for years. I don't know what happened to it in the end, but it would probably be quite valuable. (The UK coin sizes were changed relatively recently, so you won't get the really old coins any more)
More recently, again in Britain, the news media carried excitable stories about the two pence coin being worth three pence for it's scrap copper value. It has been illegal to deface British currency for a long time, and you'd have to collect a vast number of two pence coins to make it worth the effort, so as far as I know, no-one has bothered actually trying to make any money from it, but in theory it is possible.
In the way back of American currency, there were these strange things called "folding quarter dollars" that were paper money worth 25 cents. Perhaps now would be a time to stop all metal coin production and switch over to all paper currency? Hell, it wouldn't even need be paper, could be something like polyester or other durable plastic that's a recyclable.
Once upon a time, there were mille coins in the U.S., and my parents remember them. The individual states often minted them, which would likely not be allowed under our increasingly powerful central government of today.
We do not have anything smaller than a penny actually minted any more, specifically because each of the smaller coins experienced this same situation of costing more than its own value. Many things are still priced in half-penny or tenth of a penny denominations, especially things sold in bulk. The final price is just rounded to the nearest penny. (Or sometimes bumped up to the next penny in favor of the vendor for any fraction).
If the penny goes away, the same thing will probably still be done, only we'll be rounding to nickels or dimes.
Our bills are different color ($5, $10, $20, $50, $100). However, they are still the same size. What's interesting is that all bills have braille, so that the blind can read them.
I always thought, what happens to braille in very used bills, say, after 10 years...
Because of colouring, though, our money looks.umm... colourful. It's OK for what it is, but it doesn't have that striking appearance of the US dollar. When you hold US bills in your hands, it looks like real, solid money, and the graphics/print on them speak of a solid state.
If you're not sure what i mean, listen to the USSR anthem sang by their soldier choir - that will send shrivels down your spine, it's definitely very powerful and makes a statement. US money do the same, IMO.
Quote from this interview:
That's deceptive. The rate of inflation is actually horrendous, especially for low-to-middle-income people, who spend their money on food and fuel, and clothing and medical care. Even if inflation was as low as stated, it's the same type of deception that occurred in the 1920s. They kept saying there's no inflation. Inflation is measured by the increase in the money and credit. The distortions sometimes lead to higher prices, but many times you can't predict where those higher prices will emerge. Sometimes it's in a stock market bubble, sometimes it's in commodities, sometimes it goes into the consumer price index. So inflation emerges in different ways. Meanwhile, the biggest problem is the deception that interest rates are low, which causes people who save, people who invest, people who spend to do things they otherwise wouldn't do.
Interestingly, the Federal Reserve does no longer publish M3 - the interview with Ron Paul might explain why.
I hope I didn't brain my damage.
1) Show all prices after sales tax (if applicable)
This would solve the problem right away.
Stores would start pricing things to the nearest nickel or dime except for small items under a dollar, where differences of under a nickel are significant.
Japan had a similar situation before instituting a 3% consumption tax in 1989. Before that, in general, prices of items over 1000 yen usually ended in a zero, so people didn't have to carry 1 and 5 yen coins around as a matter of course; they were used sparingly.
Then the consumption tax came in and the government found itself having to produce many more of these aluminum and brass coins because of all the odd prices that people were paying.
But very recently they went to tax-inclusive pricing, which has smoothed things out quite a bit. You only really need three significant figures in prices anyway. If you're shopping for a baseball glove or a suit jacket, you can leave the small coins at home.
Sales tax, which creates odd prices, is the real culprit here, not the existence of a small unit of currency. I actually favor the existence of a small unit because little kids buy things with their own money and learn how to manage it. They can't learn these skills if 25c packs of gum and 3c Tootsie Rolls are only sold in bulk (and consequently bought by their parents) because cents aren't in use anymore.
I recognize that tax-inclusive prices would pave the way for "stealth" increases, and shift the preceived burden of consumption tax from the purchaser to the retailer, but it's just smoother. Either this or have retailers set prices that result in round totals after tax, such as charging $5.67 + 6% tax for a $6 item.
I'd really like to convince governments to return to inflation-proof hard currency, or to eliminate consumption taxes, but since that doesn't look very possible, how about a solution more creative than eliminating small coins?
Then, that does give some weight to what I've read recently that the Federal Reserve bank is constitutionally illegal?!?! They are privately owned, not a branch of the Federal Govt. This is a new argument to me, and I'd not known it in the past, but, it bears some looking into...?
Reference 1 and Reference 2 ....are among many links I found Google pertaining to this.
Any opinions out there? I've read on some sites, that if we did away with the Fed tomorrow...we could wipe out our debt almost overnight...due to the bonds and such they give out...and the Fed. Govt. would then own the money it has 'borrowed' from the Fed....
I don't know much about finances, but, it sounded interesting.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........