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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
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!
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
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
Well I'm from the UK and I've been reading the Wikipedia Cent (US coin) article, which says:
1982- present 97.6% zinc core, 2.4% copper plating 2009 (planned) New designs in bronze per the Presidential $1 Coin Act of 2005
Rather than getting rid of the cent, will it be replaced with bronze? Is this worth any less?
DugUK
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.
That's a fair question - fortunately the answer is fairly simple.
The value of the metals used to make pennies didn't just increase along a gentle slope, they jumped. A lot. According to kitco.com, zinc went from 40-50 cents per pound in 2003-04, to over $2 per pound this month.
Copper is similar (although pennies don't use much copper anymore.)
As everyone knows, the government does not move fast. They knew the day was coming, they had no idea it was going to happen this fast. Now they are scrambling, and that scrambling could take a few years yet.
The easiest thing to do is not to "re-base" the penny, but simply pull it from market and eliminate it. Re-basing would make the penny the same value as the nickel, which would cause havoc.
Nickels have the same problem actually, the price of nickel has nearly tripled in the last year. We probably need to get rid of both the penny and nickel, or at least make nickels out of much less expensive metals (which will fuck up machines that take coins.)
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.
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=
I'm definitely for dropping the penny. I'm not sure about the nickel... That's a bit much, I think.
As for the dollars becoming coins... I can agree with $1 bills being coins, but I think $5 is too much. I can't say 'Oh well, I lost $5. I won't even bother to look for it.' A $1... I'd still look for it, but I wouldn't be heartbroken if it disappeared. That's what happens to coins. They get dropped. Bills don't get dropped because they are easy to put in a wallet. (If you suggest a coin wallet, I'll slap you. That'd be huge with the number of $1s I carry for the vending machine.)
Pennies, I never look for it they drop. Dimes I usually look for.
"If you make people think they're thinking, they'll love you; But if you really make them think, they'll hate you." - DM
I don't know. Making pennies out of plastic might make them seem cheap and not really worth anything.
You stopped short of the "bitter reality". Not everyone here has studied economics, so you're going to have to spell it out for them:
:\
When inflation hits a certain point, your currency becomes worth next to nothing, salaries fail to keep up, mortgages are too high (those real estate deals people are so happy about making cash off of...), and we fall into a deep depression. Happened in the early 90's, happened when the tech bubble popped, and the parent is talking about us being on the verge of it happening again.
It's a lousy hole to dig yourself out of, because it's a cycle that no one knows exactly how to break. It just seems to take time (and lots of it) for values to fight their way close enough back to equilibrium and life goes on.
It makes me sick every time I see articles about people flipping real-estate. They HAVE to know properties are over-valued. They just have to. With each sale, the next owner expects the property to either keep its value or go up. When people are flipping properties so quickly, everything has a sale price higher than its actual value. Here in St. Louis, the impact of it has already started to take hold: no one is buying. The market will only bear so much insanity.
As for the mints running money like mad, he's mostly right. For each dollar in circulation, the less each dollar is actually worth. The catch there is circulation. I know many older bills have been coming out of circulation, but I don't know at what rate, so I can't start jumping up and down at that point just yet, but he may very well be right. So we're over-valuing the land we live on, we over-value our money. We're in debt up to our eyeballs to other nations, and we're fighting a war with no clear-cut objective for victory or retreat. Without any bias toward or against our president, we are nearing par with Vietnam, the difference here I have to say is that our body count is not anywhere near the same (thank goodness!) and there is no draft.
Those who study economics have to realize something here too: all of our really serious depressions in the past have been resolved by wars. War creates jobs. War stirs the economy, makes individuals wealthy. Morality aside, each time we've gotten into a bind, a war has bailed us out. This may very well be the first time that *while* at war, this is happening. A war won't bail us out this time (or at least, we'd all best pray it doesn't, because if it does, it means we as a country p*ssed off the rest of the world and they come here to set us straight).
It really is sad to see. I bought my first home 3 years ago. I *thought* the value was a bit high, and managed to buy it just short of what it was appraised at, and was praying my wife and I didn't become too screwed by the real-estate market bombing. Here's to hoping.
Karma: Chameleon (mostly due to the fact that you come and go).
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.
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.
Getting rid of $1 and $5 bills is madness! Think of how it would affect the adult entertainment industry! You can't stuff a $1 coin in a G-string.
Hello Mr10cents!
- Disclaimer: Information in this post deemed reliable but not guaranteed.
So YOU'RE that guy ahead of me in line... :)
My wife does the same thing. It drives me nuts. I'm much more into never dealing with change, putting all of my coins into a huge pile, and then dumping them into the free Commerce Bank change counter after the pile achieves critical mass and things begin to orbit it. Last time I had $80 worth, and that's with me removing the quarters for laundry.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
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...
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
Have you ever considered piracy? You'd make a wonderful Dread Pirate Roberts.
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.
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.........
Pi Ran Out
I said that it's completely legal for a group to decide amongst themselves to exchange two things for each other (I could wash your car if you fix my computer, if one of them happens to involve little IOU notes of some type so be it). What I said, is "If a city or state government attempted to force a business to accept something as legal tender, the Federal Gov't would shut them down". Flooz was completely legal. If the State of Arizona attempted to force business to accept flooz, or would only accept tax debts paid in flooz the Federal Gov't would take them to Federal Court and crush them with a fairly straightforward argument.
As far as what is or isn't legal tender, the $20 bill in my wallet says right on it, "This note is legal tender for all debts, public and private". So I'm reasonable confident that printed bills are in fact legal tender. I'm also sure that any state that attempted to print such a thing on a piece of paper they printed would find themselves in a whole lot of trouble. It is one of the few rights the Federal gov't retained for itself.
What'd I screw up about the barter system? I'm fairly sure bartering is when folks agree to exchange things of value. Weather they be legal tender, things or services, it's bartering. I specifically mentioned that these local currencies are legal, but it's completely voluntary that anyone participate in it. If you have a debt to me, if you hand me "LETS Money.", I can laugh at you. If you hand me US Dollars, I have to accept them (assuming I'm in the US).
Kirby