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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."
A nickel ain't worth a dime anymore
Hell telling people not to do this is like inviting every crook and wannabe to do so, hell now even the dumb ones will know about it.
Just make them out of something worth less than 1c, hell it doesn't even have to be a long term item... plastics should work fine. I would go ceramics but I bet they would break too easily.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
If this were to happen, any funds you had in penny form would immediately grow by a HUGE percentage... And it couldn't really be tracked by anyone, so the tax liability wouldn't exactly be an issue.
So is it time to begin acquiring rolls of pennies? I've got space in the basement...
It was a joke! When you give me that look it was a joke.
We had steel pennys during WWII for a couple of years, they work fine, bring them back.
Does this mean if I buy something priced at $1.96, I have to pay $2.00 because I won't be able to make exactly $1.96?
Why not make ten bigger?
You see? You see? Your stupid minds! Stupid! Stupid!
didn't they start taking them out of circulation when there value was getting close to the cost of the raw materials, rather than waiting untill after the fact?
If information wants to be free, why does my internet connection cost so much?
and get rid of the useless penny! What we did was phase out our 1 and 2 cent coins and now just round up or round down to the nearest 5 cents. Works well.
Automated DNA sequencing software
Just stop making pennies and let the public melt them down - that way the Mint won't have to deal with disposing of them and they'll be put to some better use (recycle! or something) ... but that's just my 10 cents
Copper is valuable enough that thieves are routinely stealing it wherever they can get it, even if that means taking live phone wires.
Weird how you focus on this topsy-turvy.
The U.S. is suffering inflation. It's not that the cost of metal is increasing, it's that the value of your currency is falling. Fast.
This week it very, very, nearly reached £1 = $2 for the first time in my lifetime.
You REALLY NEED TO WORRY ABOUT THIS INFLATION, not the value of the metal in your coins.
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
damn pennies ...
always messing with the man
wearing a hole in the pocket of his grey flannel suit
tasting funny in his mouth
too small to cover his dead eye's
won't buy penny candy for the undertaker's kid
to small to keep up with marching time
poor pennies
damn nickels
Do not look into LASER with remaining eye!
That's ok, 1 == 5 for sufficiently large values of 1.
The grass is always greener on the other side of the light cone.
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.
So YOU'RE the old woman at the cashier pulling pennies out of her change purse!
I see your grandson managed to get you on the Internet. Here's a tip: You aren't really the 1,000,000th visitor to that web site and you didn't win a free ipod.
Reevaluating existing currency? Maybe if we were as desperate as the Germans in the 20's, but at least they evalutated down. I mean hell, why don't we just reevalute 1's to be 5's, 5's to be tens, and on down the line with bills too. Look how much wealthier everyone is! An instant boost to the economy as they go shopping with their new found cash! Or maybe not.
A defense could be made that there isn't enough money in penny form to matter, but it would still be an ugly, embarrassing solution, that might even have an impact on the security of the dollar. Much better solutions would be phasing out pennies, or changing their material so they are no longer overvalued. That wouldn't stop a period of melting, but then at least the problem would be over with. Making pennies worth more to prevent people melting them down is like mailing a stereo to someone before they steal yours. It's not really solving the right problem.
Relax I just want some peanuts.
Follow Australia and get rid of the useless penny! What we did was phase out our 1 and 2 cent coins and now just round up or round down to the nearest 5 cents. Works well.
Or better yet, drop a digit after the decimal, ditch pennies and nickels both and have dimes as the smallest coin. Instead of $9.99 for a product, it will be $9.9. Round to the nearest tenth the way we round to the nearest 100th today. End of problem--at least until inflation makes dollars worth dimes.
The Future of Human Evolution: Autonomy
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.
The US dollar is losing it's value so rapidly, base metal slugs used as coinage are worth more than face value.
See, we stopped making pennies of copper in 1982. Pennies made after 82 are copper plated zinc alloy. Now even that is worth more than a penny (1.73 cents). A pre 83 copper penny is worth about 3 cents.
Pre 65 dimes, quarters and halves, also referred to as "junk silver coin" are fetching about 6 and a half times face value.
The US dollar may soon lose it's status as reserve currency in the world. When that happens, we will be faced with hyperinflation. This is happening because of our burgeoning trade deficit causing by offshoring, our rapidly growing budget deficit caused by this insane war and the government printing currency like there's no tommorrow.
Tommorrow will come and we will be confronted with a bitter reality.
Wansu, th' chinese sailor
This is kinda a side-note, but I found the article didn't explain what was going on very well.
The article implies that copper prices ($4.16/pound last May) are the reason pennies can be melted down profitably.
Since pennies are 97.5% zinc, 2.5% copper (says US Mint via google), the issue is that, at 154 pennies per pound, it's the zinc price rising above ~$2.00 that becomes an issue. And that happened last November (although it's now ~$0.77/pound for Zinc.) Zinc prices are the problem, not copper.
--LP
United States Code
Title 18 - Crimes and Criminal Procedure
Part I - Crimes
Chapter 17 - Coins and Currency Source
What you describe is called forgery, which is also illegal and is punishable on a whole other level.
=Smidge=
It's actually a "good" thing that our pennies are worth 5 cents in metals. The "bad" part though is that we kicked the gold standard so our dollar isn't actually worth as squat compared to what it once was. If we really wanted an honest currency, all our currency would hold its face value in metal or other hard resources. We might have to redo our currency where one penny is equal to such and such grams of x metal. All our other coinage could change sizes and weights to match their relative worth. The problem comes with paper money. Let's be honest, our paper money is worthless except for whatever value we currently give it. At this time, it would be more practical just to eliminate paper or coinage as form of currency in the US. The US Treasury could issue every entity that currently holds US currency an ID/debit card with 0.00$ on it. The treasury, banks, or other places could credit/debit the amount from the card as needed. I see problems in that it would be possible to walk around with all your savings on this card instead of somewhat secured behind a bank and through fraud the entire amount gets drained away. I don't think that we are quite ready for that, but it would be the easiest tech thing within our reach to replace our paper and coinage with. One bonus as well is that they could define units of currency of less than a penny by just extending the decimal place and removing a smaller slice. This would help in the on-line world where there is the crowd that wants micropayments for things.
So surely the government will give me a discount if I pay my taxes in pennies and nickels!
"In the United States, U.S. Code Title 18, Chapter 17, Section 331 prohibits "the mutilation, diminution and falsification of United States coinage." The foregoing statute, however, does not prohibit the mutilation of coins if the mutilated coins are not used fraudulently, i.e., with the intention of creating counterfeit coinage. Because elongated coins are made mainly as souvenirs, mutilation for this purpose is legal." http://en.wikipedia.org/wiki/Elongated_coin#Legali ty
OK, OK, Jeez. I'm worried, OK? If I promise to worry, will you quit yelling at me?
Actually, you're referring to the dollar/pound exchange rate, not necessarily inflation in the US. Since most goods and services purchased in the US are denominated in dollars, not pounds, the relative strength of the pound has little to do with prices in the US. In fact, consumer and manufacturer price inflation is pretty low.
British products may be more expensive in America, but this only really affects the price of my cheesy comestibles. That's not trivial, but I can make do with less. In the meantime, you should take advantage of the situation and purchase cheaper US goods. I wish I could recommend a visit here to you, but ever since the "Department of Homeland Security" was created this country has had all the charm of a prison camp.
Exchange rates are rather volatile. When I was visiting Canada on vacation in Fall 2000, the USD:CAD exchange was 0.65 USD per CAD. Canadians I talked to were concerned about two things: that their currency was going to become worthless and that it looked like a bloodthirsty Texas redneck might get elected US president. At least their currency rebounded.
I am not a crackpot.
I knew you guys had nickels and dimes, but nobody told me you guys had pennies, farthings, and ha'pennies!
;-)
You'll be telling me you've got thruppenny bits and silver sixpences next...
Somebody just let me know how many US guineas there are to the dollar
ill let them keep the extra few cents that would cost me to not have a giant bag of pennies around the house waiting for me to be bored enough to wrap them.
I rarely have any pennies with me. I have a wallet with a change purse. I put my change in my change purse, and when I make a purchase, I use the pennies in my change purse.
The only thing I have to think about with change is NOT spending the quarters and Loonies, as I need them for doing laundry.
When our name is on the back of your car, we're behind you all the way!
One yen coins (currently worth about 0.84 US cents) are made of aluminum. I'd go for aluminum pennies (they're fun to play with... and as they're made of less than a cent's worth of metal, they wouldn't mind if you do all those cool experiments with them). :)
Both my parents and I keep an eye out for abandoned pennies. Walk across a parking and we scan the ground to see if one is lying around. You'd be surprised how many pennies one finds this way. They've thought about putting all these found pennies in a jar and see how much they could collect over time.
Anyway, I took them down to D.C. a year or so ago to visit one of the Smithsonian museums. As my mom is standing on the sidewalk, waiting for me to get out (traffic coming), I notice she walks between the cars and bends down. When I get out of the car I see there is a penny lying in the street.
Only problem is, she can't pick it up. She calls my dad over who also tries to pick it up. The penny has been lying on top of joint sealant which has softened enough that the penny is now held fast to the street unless one has a screwdriver to pry it out.
As I'm standing there watching this, I remark to them, "You know, I'll bet there's a camera somewhere recording this. I'll bet someone put that penny there and is trying to find out how many people are desperate enough to try and pry that penny off the ground. Congrats, you're on Candid Camera!"
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
Of course, the government can make you turn them in and give 50 cents for fifty of them. Then they turn around and melt them down and sell them for $2.50. Maybe that's part of the new deficit reduction plan going through congress?
Hello Mr10cents!
- Disclaimer: Information in this post deemed reliable but not guaranteed.
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.
and if you say any cost is unacceptable, then you really aren't in mental acceptance of the obvious shortcomings of current us currency. any minimal cost involved in a changeover will be greatly overshadowed by the cost gains due to currency with a superior design: efficiency, ease of use, etc. but that you don't seem to give much weight to these factors brings me to point
#2. this argument baffles me. that the us currency must always look the way it does is a sort of mindset i can't comprehend. why is this so important to you? doesn't functionality and intelligent design trump sentimentality and nostalgia? it doesn't even make sense from a point of view of a traditionalist: look at how different us currency is from the 1800s. what did you say?: "There is a certain elegance and history to the look of the bills, which was established centuries ago." excuse me, what are you smoking? centuries ago? you need to familiarize yourself with the history of american currency to a level that a casual elementary school coin collector already grasps
you could be saying that the us needs to be conservative about its currency since its so important to the world economy. well that's completely wrong. #1: the euro has only been around for a few years and is already supplanting the dollar as the de facto currency for reserves/ exchange on the international market. so much for the value of tradition. and #2: counterfeiting, especially the extremely good north korean kind is an argument for a radical redesign in the interest of preserving the hegemony of the american dollar in international exchange. in other words, you have it completely backwards: international confidence in the dollar is served by radically changing its design, and is undermined by allowing it to stay the same, in its easily counterfeited form (for the excellent north korean forgers). recent changes to the $50, $20, and $10 in fact is exactly because of this kind of counterfeiting. too bad the us mint only considered counterfeiting, and not ease of use, in their recent redesigns (and so much for your vending machines can never change argument too right?)
i really don't understand sentimentality and nostalgia as the prime motivating factor when it comes to currency. frankly, who the f*** cares what the currency looks like? usability, a concept a website populated with techies should easily grasp, trumps all. or at least this concept should trump all, but it obviously doesn't with you. the concept that seems to trump all in your mind is inertia. i frankly don't understand how your thinking on the subject has any value. sentimentality and nostalgia are completely useless subjects on the topic
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
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?
I was going to lay down a thick bed of sarcasm here, but instead I'll just ask you to consider the surveillance, privacy, economic, and tax implications of replacing a fungible, untraceable medium of exchange (cash) with one that's inextricably linked to your identity, records every transaction as an inherent part of the transaction, and can be watched in real-time from anywhere on the planet.
Reality has a conservative bias: it conserves mass, energy, momentum...
A modest proposal:
1. Release a new half-dollar coin that is about the size and cost of a nickel. Make it maybe a little smaller with a rough edge so that coin mechs won't see it as a nickel. The existing 50-cent coin is too big, too expensive to produce and unsupported by automated coin mechs.
2. Release a new dime design that looks and works just like current dimes except its a "tenth dollar," not ten cents.
3. Cease production of the penny and nickle.
4. Phase out production of the quarter over the course of a decade. The new system calls for tenths of a dollar and the quarter is an odd quantity.
5. At the same time, increase the mass production of the dollar coin. With room for it in the cash register, it'll see increasing use.
The result: US currency moves to a system of dollars and tenths of a dollar, leaving the old system of cents behind. Nobody feels cheated by rounding because its no different than rounding to cents is now.
It also creates a precedent for phasing out the sub-dollar coins 50 years from now.
Moderating "-1, Disagree" is simple censorship. Have the guts to post your opinion.
the equating of the look and the feel of the american dollar and its "heft" is just a subconcious connection that depends upon factors going on in your emotions, not in any intrinsic value to the actual design or look or feel of the bill. pick up a roman coin and you will think "gee, nice old coin" and thats it. but a germanic tribesman from roman times though would pick up the same coin and fell the "heft" you are talking about, because he equates that coin with the dominant military and economic machine of his time in his mind. same with you
you have no such equating going on in your mind about the roman coin. and that same germanic tribesman, upon seeing an american dollar, would not feel the "heft" you speak of either. he'd just think it was pretty paper, and probably wipe his ass with it. so the design of the dollar itself is not what gives you the feeling you get when you see it, it is your own mind. therefore, the design of the dollar can be changed, and 20-30 years from now, assuming the usa remains a strong country, a younger canadian tha yourself would feel the same "heft" you speak of, no matter what fruity colors a new radically different dollar would sport
i remember picking up a nazi coin in a friend's collection of coins when i was a teenager, and the thing had menace. i thought it was evil. it definitely had "heft" in my mind. but in actuality, it was quite worn and light weight and cheap looking, since the nazis needed all of their valuable metals for their war efforts. in essence, there was nothing intrinsic about the design of the nazi coin that gave it the "heft" i felt... in fact, it was quite cheap in design. my feeling about it was all psychological, and it all went on in my mind, and that feeling depended completely upon factors that had nothing whatsoever to do witht he actual look and feel of the coin itself. same with your feelings and the american dollar
in short, your canadian currency is superior to american currency. simply because its more usable than ours. and that concept completely trumps your weird psychological feeling of "heft" that you speak of
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
So he'd be switching his login name to binary?
Pennies haven't been 100% copper since 1982. They're currently made of Zinc, with only a thin copper plating. 97.5% Zinc, 2.5% copper. Even still, the zinc in a penny is, according to Wikipedia, worth 1.1 cents now, so the penny is still worth more than a penny. If you find a pure copper penny laying around, that's worth quite a bit more, at 2.224 cents a pop. So the new law makes sense, but what would make even more sense would be getting rid of pennies altogether.
Horseshit. Inflation has exactly one root cause - the use of fiat ("non-specie") currency.
Horseshit. Gold has no more innate worth than any other currency. Not to mention that you can be proven wrong by example, namely that inflation was quite well known in economies in the past that HAD NO PAPER MONEY.
Long-term, productivity increases force prices down, not up.
That's quite correct, which is why you see inflation in recessions quite often.
Why is it worth less? Because the man behind the curtain has printed a few trillion copies of the dollars in your pocket, and handed them out to his best friends, making yours worth less/worthless. Wasn't that nice of him?
This is an incredibly simplistic view of things, and still doesn't go back far enough to the root problems of macroeconomics. The problem isn't some clown with a printing press (unless he's as dumb as Germany was between the wars; that's how they paid off their war debt and screwed their economy). The problem is that more money is coming out of banks and being spent than is being saved during an economic downturn, at the same time that fewer goods are being produced. This increases prices. Note that this effect would be the same regardless of whether the currency is digital, paper, gold, or cowrie shells. It doesn't matter a bit. This is something I'll never successfully pound through the heads of the gold nuts who have absolutely no grasp of economics.
The dangers of fiat currency are legion and well-known of old; we were warned, well in advance, that the establishment of a fiat currency provides limitless, subtle, and inevitably abused powers to its wielders. We're still being warned, today. Few listen, even as the signs of such abuse are evident.
This naive approach forgets that any currency, by definition, is NOT something of innate value. EVERY currency is a fiat currency. Go study the gold/silver fights in England of a few hundred years ago; that was the man foisting a gold standard on the populace to keep money at a denomination they couldn't afford, thereby disempowering the poor. Any currency can be wielded as a weapon by those in power. Also, if gold wasn't accepted as a type of currency, what the hell would you do with it? Make rings, for God's sake? That gold you're hoarding is only worth a damned thing if someone comes around and buys it from you. So it's still a fiat currency as much as anything else. Who says it's worth anything? Only those with a false sense of security who feel that a bit of metal will serve as their security blanket. And what happens if people decide they don't want it? It's not useful at all on its own outside of the semiconductor and jewelry industry. What do you do then?
If the shit really hits the fan, the only worthwhile currency will be food, so I suggest you cash in your hoard of gold and invest in baked beans and twinkies, those things last forever.
Here in Canada we have to tip with $5 bills instead. It sucks bad dude...
09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0
Just put the coins in the slot -- problem solved!
There are two problems with that:
1) "Hard currencies" and metal only have value because people agree on it beforehand. Gold has no intrinsic value assigned to it by the universe, only by human beings. So keeping your money on a gold standard is only marginally less absurd than our current system.
2) Money is a reflection of wealth, and limiting the money supply limits wealth creation and distribution. There's a reason why there are more millionaires (and billionaires) in the US today than in the 19th century: there's more money available. With an effectively unlimited wealth base, it's easier for more people to become wealthy, not just the few misers who hoard all the gold.
God invented whiskey so the Irish would not rule the world.
Allow me to expand on my concerns:
1) Now all people with whom I wish to conduct transactions need to be capable of accepting electronic money. I've bought several used cars in private sales from people who were unable to accept Visa. The possibility exists of introducing generally-available third parties who can mediate the transaction (as PayPal already does, obviously), but that introduces a new cost to the transaction that is not necessarily matched for either party: there's no benefit to me or the seller individually (though you could argue we derive an indirect benefit from the society-wide benefits).
2) All those transactions are now taxed. While some would view this as a good thing, an awful lot of transactions are performed currently that are not taxed, and, in my view, should not be. For example, I helped a friend paint his house a couple years back, and he paid me $100 (plus beer and pizza). I felt no ethical or moral obligation to pay income tax on that money, much less the taxes involved in being a seller of a good or service.
3) There are privacy concerns, as well. For example, who wants to tip a stripper with a credit card? How will she accept the money without disrupting the show? Even if the logistical hurdles are overcome, who wants that particular transaction recorded in a master government database? Or, more personally, who wants that transaction recorded in a place his wife can see it (as would be mandated under some states' financial regulations regarding marriage)? While you can make a case that these sorts of transactions shouldn't happen in the first place, I think such an argument ignores human nature - not to mention that even if true, since when is it government's job to curtail legal activities?
4) Truly illicit transactions become impossible to conduct in money. This sounds like a good thing (who wants to make heroin easier to purchase?), but I don't believe it would be. The transactions would still occur (if waiving most of your Constitutional rights isn't enough of a disincentive, I sincerely doubt lack of cash would be), but now they'd be in some more chaotic barter system. I suspect this would lead to increased violence.
4a) Moreover, the economic impact of that might be significant. How much construction, cleaning, and other menial labor is paid for under the table? I suspect rather a lot. I also recall finding out that the drug trade is Florida's second- or third-largest industry. Whether or not this is a good thing, suddenly taking that out of the economy would have potentially disastrous effects.
The most important thing, here, is I don't think society as a whole will, in the foreseeable future, shift over to an entirely electronic monetary system. Even if the US government goes for it, I strongly suspect there would be sudden, widespread adoption of non-fiat fungible currency, á la the liberty dollar for all the reasons I've already stated.
Of course, it's entirely possible I've just proved your point: the government should get out of the business of selling currency, and shift to an entirely electronic system. Then let the free market decide what kind of currency it wants to use.
Hrm.
Reality has a conservative bias: it conserves mass, energy, momentum...
1) "Hard currencies" and metal only have value because people agree on it beforehand. Gold has no intrinsic value assigned to it by the universe, only by human beings. So keeping your money on a gold standard is only marginally less absurd than our current system.
2) Money is a reflection of wealth, and limiting the money supply limits wealth creation and distribution. There's a reason why there are more millionaires (and billionaires) in the US today than in the 19th century: there's more money available. With an effectively unlimited wealth base, it's easier for more people to become wealthy, not just the few misers who hoard all the gold
1. While the human desire for gold is, from the point of view of the universe, just as absurd as the human desire for pieces of greenish paper, the key difference is that the supply of greenish paper is limited (effectively) by the issuing government, the supply of gold is limited by the planet, the laws of physics, and the relative scarcity of particle accelerators. This means that the value of gold is tied directly to how much people like gold. The value of greenish paper is tied to how much people like greenish paper, which is in turn tied to how much greenish paper the issuing government decides to produce.
Of course, you already know this, as demonstrated by your second point, which I also disagree with:
2. This depends on your definition of wealth. Real wealth is best described as utility: that is, how much stuff you have the power to obtain. That value of wealth does not have anything to do with the numbers used to describe it. For example, at any given instant, you can convert dollars into yen at a particular exchange rate with no loss of wealth (that is, after all, what the exchange rate means). A quick check of Yahoo! indicates it's currently trading at ~121 yen to the dollar. So, if a hundred millionaire switched all her money to yen, she would suddenly become a billionaire, without changing her wealth in the slightest.
Reality has a conservative bias: it conserves mass, energy, momentum...
Pi Ran Out
$1 coins would never work for them.
Actually this can easily be worked around.. See my comment here
Today I didn't even have to use my AK; I got to say it was a good day -- Icecube
Your grasp of macroeconomics is remarkably weak. We live in a world where more goods are being made every day, as China and India rev up their production. Go to your local car dealer, and look at the inventory piled up on his lot. Yet we have inflation, which is actually far higher than the government's posted CPI. (Government and business love to keep the CPI low, as it lets them avoid cost-of-living-adjustments.) Why? Because there is too much money being created, thanks to the US deficits and the fractional banking system.
Your statements contradict each other and fail to account for the fact that they take place at different timescales. We live in a world in which more goods are being made every *decade*. However, on a year to year basis, the GDP is quite capable of going down, which is a definition of recession/depression. If you're not aware of this,then you're not in a position to question anyone's understanding of macroeconomics. Second, while India and China do ramp up their production, that hardly helps our GDP, does it? Third, what the hell this has to do with money being created no one knows. If we were creating extra money, we wouldn't have the deficit but we would have more inflation. Instead, we have incredibly low inflation (check the numbers, it's below 4%), and a high deficit. So, through your line of reasoning using actual evidence that does exist, we should be printing more money. Fractional banking doesn't have that much to do with inflation, but if done wrong, results in banking disasters like teh S&L crisis in the 80s. This hasn't happened lately, so your evidence is woefully out of date.
Look at Great Britain from the end of the Napoleonic wars to WWI - a span of roughly 100 years, during which Britain was on a bimetalic standard of gold and silver. It cost 2p to mail a letter when Victoria ascended to the throne; it cost 2p when she died 75 years later. That's price stability. I paid C$3,500 for a Honda Civic in 1975; 30 years later, when presumably it should have moved way down the cost curve, it costs $15,000 for a base model. That's monetary inflation
Your examples are extremely weak, and the aggregate inflation in Britain over that period was not 0% regardless of what they chose to charge for a stamp. Your Civic example works out to under 5% inflation annually which is quite in the healthy range and fails to account for the fact that the 2005 model is a far better car than the 1975; the real rate of inflation on cars (assuming the same product in 1975 and 2005) is far less than 5% and quite likely would be negative if it were legal to sell a vintage 1975 car today. So again, your point is moot. There's no inflation there.
As for why gold should be used, it has many unique qualities. First, it makes pretty, shiny things that ladies have liked for thousands of years. So ladies want it. Men have learned that if they give ladies pretty, shiny things, they can get sex. So men want it. Gold is not too abundant, so scarcity makes it desirable. Gold is perfectly fungible - one gram of gold in China is exactly the same as a gram of gold in Burkina Faso. (Diamonds, for example, are also pretty shiny things that ladies like, but they don't function well as a currency because clarity, colour, flaws, etc. mean your 1 carat gem might not be worth as much as my 1 carat stone.) Gold is easily divisible into smaller amounts to facilitate smaller transactions, while retaining its value. (Gemstones lose much of their worth as they become smaller; check out the difference between the cost of a 1 carat solitaire at your local jeweler, versus a ring with "1 carat total weight" of teeny tiny diamond chips.) Gold, unlike copper or silver, doesn't tarnish easily.
Lame. The love of ladies for baubles is not enough to sustain a real economy in a time of crisis, which is the only time that any sort of paper economy would fail. If the revolution comes, metaphorically speaking, no one will care how much gold you have. Scarcity doesn't make a
Lots of people seemed to be concerned about how transactions will be rounded. Will something that costs $1.96 be rounded to $1.95 or $2.00? My big question is, what happens to those of us who seldom pay cash for anything? If I have the option at all, I pay with my debit card, so there's no reason I can't pay $1.96 even. Would rounding apply to credit/debit cards, checks, and other method payments that don't involve cash?