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Canada To Stop Making Pennies
New submitter butilikethecookie writes with news that the 2012 federal budget for Canada calls for the Royal Canadian Mint to stop producing pennies. "The budget calls the lowly penny a 'burden to the economy.' 'It costs the government 1.6 cents to produce each new penny,' the budget says, adding the government will save about $11 million a year with its elimination (PDF). Some Canadians, it says, consider the penny more of a nuisance than a useful coin. ... Rounding prices will become the norm as the penny is gradually removed from circulation, the budget says. If consumers find themselves without pennies, cash transactions should be rounded to the nearest five-cent increment 'in a fair and transparent manner,' it says. Noncash payments such as checks and credit cards will continue to be settled by the cent, however."
Pennies are so annoying here in the U.S. now that I refuse them when they're offered as change (or toss them into the penny jar or charity jar on the counter when they have one).
Sometimes I forget though, and I usually just throw them in the trash. I just hope my Grandma never finds out. She would have a heart attack on that one. I could never get it through to her that they would cost me more in time to deal with than the pennies themselves are even worth.
What political party do you join when you don't like Bible-thumpers *or* hippies?
Here in Switzerland this is already implemented. The smallest unit is 5 Rappen (5 cents)
is going to be rounded up to a nickel.
Phase II of our descent into a cashless society: the elimination of physical currency, starting with the lowest denominations and working up from there.
Now, if you'll excuse me, I'm off to my secret bunker, as I believe I hear the Hyperbole Police coming up the stairs. *dons tinfoil hat* Excelsior!!!
An enigma, wrapped in a riddle, shrouded in bacon and cheese
That's OK. We'll just continue to use American pennies. Thanks, guys!
www.clarke.ca
The new federal budget included a lot of nasties. As much as I'm glad to see the penny go away, I can't help but think it's a ploy by the conservatives to deflect attention away from all the nasties they included in the budget.
I'm god, but it's a bit of a drag really...
Now all they need to do is get rid of daylight saving time and they will REALLY make the US look silly... come on fed, the Canadians are making us look like idiots here.... THEY can get rid of pennies....
When I was deployed to Iraq in '05 the smallest unit of change the PX would give was $0.25, and we all got by with that just fine. When the smallest coin a bubble gum machine will accept is a quarter there's no need for even my children to want any denomination smaller than that. The cost of manufacturing pennies, nickels, and dimes isn't worth the benefit. Add the cost banks and vendors incur in transporting these too-heavy-for-their-worth slabs of metal to the cost of their original manufacture and it's clearly a drain on the economy.
Travel the Galaxy! Meet fascinating life forms...
I think it's time our governments admitted that inflation over the past 20 years has made the penny worthless. We've long since abandoned the half penny, and good riddance. In 100 years it may be time to have $5 be the smallest unit. 3rd world countries deal with this on a regular basis, I think its just 1st world pride that's keeping us from following their example when it's obviously far past time.
Travel the Galaxy! Meet fascinating life forms...
especially since each coin stays in circulation for up to 30 years (last paragraph of the article).
We still have a Liberal deficit. It's called 'Victoria-class submarines/corporate penalties for cancelling original Sea King replacements'.
Hookers, blow, and maple syrup?
This is my signature. There are many like it, but this one is mine.
Here in Norway we been doing this for years:
- The 1 øre and 2 øre coins disappeared in '74
- The 5 øre and 25 øre coins were withdrawn in '84
- The 10 øre coin ended being legal tender in '92
- The 50 øre coin will be withdrawn may 1st this year.
So in a little over a month there will be no coins circulating that is worth less than 1 Norwegian krone... but you know what? The wast majority of Norwegians pay by card anyhow, and the prices has not changed with the smaller coins going away. If you pay by card, you pay the exact amount. If you pay cash, it is rounded up or down to the nearest coin-value.
For those curious; after the retirement of the 50 øre coin, a purchase of 9.49 kroner will be rounded down to 9.00 while a purchase of 9.50 kroner will be rounded up to 10.00 - unless you pay by card, in which case you pay the exact sum owed.
Everything in the world is controlled by a small, evil group to which, unfortunately, no one you know belongs.
Wikipedia to the rescue. They're 97.5% zinc, 2.5% copper, and have been that way since 1983.
The penny should have gone some time ago, it's good that it's finally going away.
This will make exactly 1 difference, half of the stores will go from $3.98 to $3.95 and half will round to $4.
I'm fine with either, and since it will be about half and half it'll work out in the wash.
Actually, no it does not. The dime is currently the lowest denomination that, so far, costs less than its face value to produce. It costs roughly 7 cents to make a nickel (and only 4 cents to make a dime). For what it's worth, right now, quarters cost ten cents to produce, loonies about 15 cents, and twonies about 30 cents.
But coins are insanely expensive compared to bills. Printed paper bills cost about 10 cents each. The newer plastic bills that Canada has started to use cost about 19 cents to manufacture, but last more almost 3 times as long (the plastic can also be reused to print other bills later, so the cost on the polymer bills will probably drop over time, although it probably will not ever be as cheap as the paper ones are).
File under 'M' for 'Manic ranting'
I wish I could handle all my money with the swipe of a card too, but that would mean sacrificing all anonymity of transactions (you think any government is going to allow yet another form of payment that can be laundered?), so I'll gladly continue to handle annoying, stinky physical money.
"When information is power, privacy is freedom" - Jah-Wren Ryel
So in a little over a month there will be no coins circulating that is worth less than 1 Norwegian krone... but you know what? The wast majority of Norwegians pay by card anyhow, and the prices has not changed with the smaller coins going away. If you pay by card, you pay the exact amount. If you pay cash, it is rounded up or down to the nearest coin-value.
That's the problem, and my biggest problem with this boneheaded move...
1. Not everybody has access to a card.
2. Unless you keep a certain minimum balance in the bank, or pay a monthly fee, you get hit with a service charge every time you use your card in Canada
3. The merchant gets hit with a service charge every time anyway.
4. (and my main personal concern with it) it's harder to budget when you're paying with plastic, because the money is not tangible.
I have quite happily been using folding money for small expenses for a while. It's much easier to budget if I take $100 cash out of the bank every payday, and tell myself that's my whatever money, and when it's gone it's gone. If they force me to start using a card for that, I will have to actually open a new bank account or buy a prepaid visa specifically so that I can have a card with separate funds from the money I use for groceries, gas, the rent, etc.. And yes, this would force me to use a card, because there's no way "rounding to the nearest $0.05" will work out in my favour.
This, of course, will mean that the merchants have to eat the increased costs of running a merchant terminal, and decreased margins, which means that it will increase the costs for everybody. The price of a cup of coffee will go up because of this.
First the penny. Then the nickel. Then the dime. Then the quarter. Then the loonie. Then the twonie. Everything will eventually be in $5 increments.
Calm down. It's taken 100 years for anyone to even propose the elimination of the most pointless of those coins. We won't have to legislate the removal of the others. At this rate of legislation, we'll run out of metal to make them first.
The point is, the penny wasn't worth the expense of minting it, and the hassle of carrying the extra coins around. Nobody said the penny was utterly worthless though. The cash transactions being rounded will surely wind up rounded UP to the next closest 5 cent mark, not DOWN, in almost all cases -- because merchants don't want to lose that 1-4 cents per transaction that adds up over a month's time.
can you imagine all the looney tunes shouting about Bilderberg this, world domination that, UN plot this, communist muslims that...
all countries have nut jobs, but what is it about my country that the nut jobs are so loud?
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Here in Holland we don't use Eurocents anymore. Before the Euro, when we used Dutch Guilders (0,45 Euro) we already stopped using cents. The smallest coin then was 5 cents.
When we got the Euro in 2001 we shortly used the Eurocent. But soon it was discarded. Every shop now rounds to 5 Eurocent. Only when you use your debitcard you pay in cents.
At first there were some people complaining about losing cents in the rounding, but now most people can accept it. Of course rounding goes both ways anyway.
I already think 5 Eurocents is too much hassle to bother with. But I guess that one will last for some years to come.
Well, don't worry about that. We can get you back before you leave. (Dr. Who)
And yes, this would force me to use a card, because there's no way "rounding to the nearest $0.05" will work out in my favour.
So what you're saying is that for something that has cost $0.99$, which once 13% sales tax is added (e.g. in Ontario), the merchant will up the price to $1.00 just to make sure he can rip you off of 2 cents, or that something which now costs $2.00 will be priced $2.02? Stores won't change their pricing scheme and everything will keep ending in .99 where it currently ends in .99 and everything will have nice (before taxes) rounded prices where they currently already have nice (before taxes) rounded tax.
Bitching about merchants who will rip you off for all of 2 cents because of this, without considering all the logistics they would have to go through just to do that reeks of tin-foil hatism from conspiracy theorists.
After 3 days without programming, life becomes meaningless
- The Tao of Programming
Both Canada and the US should have gotten rid of not only the penny but also the nickel by now, rounding transactions to the nearest ten cents. The waste of good metal in making pennies which are worth less isn't even half the story; much more importantly, though the whole purpose of currency is to make transactions easier, pennies and nickels simply complicate transactions and waste everybody's time.
See also this well-done youtube video.
The problem here is that the article claimed that they are eliminating the penny for cash transactions and still using it for non-cash transactions. This means that paying cash in a transaction can legally save up to 2.49 cents over the same non-cash transaction.
Doesn't sound like much, but when you're in a business that handles hundreds of thousands of transactions a day, that kind of difference can add up fast. 500K transactions = ~$12,500 a day, ~$4.5m a year. Some companies will gain that much, and other companies are going to lose it...
If they want to eliminate the penny, they should do it for all transactions, at the same time.
Hookers, blow, and maple syrup?
And Poutine, I'm told.
The government aren't complete idiots (nearly, but not complete). There are regulations surrounding how this is all going to work. It isn't being left up to the retailer to decide.
Basically, all prices will still be in cents. So something that costs $9.99 will still cost $9.99 after the penny is gone.
When you go to pay your bill, if you pay cash, then the after tax price (remember there's sales tax in Canada) is rounded following government mandated rules.
And the rules are as you'd expect. x.y1 and x.y2 round to x.y0; x.y3 and x.y4 round to x.y5, etc.
It would never work. Our politicians will always be dicks.
For crying out loud, people are so ignorant...You do realise that of the 9 majority governments in the past 50 years, only 1 managed to be elected with over 50% of the vote? The largest majority government in history was 53.66% popular vote back in 1958. Here, take a look at all the "illegitimate" Canadian majority governments.
2011 Conservative majority 39.62%
2000 Liberal majority 40.85%
1997 Liberal majority 38.46%
1993 Liberal majority 41.24%
1988 PC majority 43.02%
1984 PC majority 50.03%
1980 Liberal majority 44.34%
1974 Liberal majority 43.15%
1968 Liberal majority 45.37%
As a Canadian, I would have been happy with eliminating the nickel too. That way, they stick with a nice round decimal system, and drop one zero from all commonly used monetary calculations. 10 dimes makes a dollar, so a dollar and thirty dimes would be written $1.3. Newly printed dimes wouldn't say "10 cents" on them, they would say "1 dime". That way the dime becomes the new penny as the smallest denomination of coin. This would eliminate all confusing rounding rule. It also makes sense because dimes are the physically smallest coin anyways.
Dime for your thoughts?
No one is forcing you to get a card. All they would do is get rid of denominations that inflation has caused to cost more to produce than they are worth. The price of a coffee is already too high and it is caused by forcing staff to count out small change when they could be doing something productive, and you are paying for it. This move will actually REDUCE the real price of a cup of coffee.
If you are worried about "rounding to the nearest "0.05", then logically you should be worried about rounding to the nearest "0.01" as well, since this is already what is being done. Are you up in arms about that? Do you want to bring in a "0.005" coin to stop the merchants you with the rounding? Well, once you get that "solved", you can move on to bringing in a "0.002" coin. And it's turtles all the way down.
If you go back far enough in history to when the dollar was worth 10 times what it was now, the value of a fictional "0.005" coin then was worth more than the "0.01" coin is today but presumably you were happy about that state of affairs.
If I have seen further it is by stealing the Intellectual Property of giants.
And this is EXACTLY what happens when your nation issues currency that is backed by nothing!
Inflate away. Good luck finding a savings account with interest (which, of course, is going to be taxed) that can even match the true inflation rate.
[...]there's no way "rounding to the nearest $0.05" will work out in my favour.
Why qouldn't there? In Norway it works fine, same in Denmark (almost same system). Merchants are required by law to round the way GP describes.
What?
I wish I had a nickel for ever time I heard about the costs of a penny...
"If the only tool that you have is a hammer, every problem looks like a nail." Donny Rumsfeld
the paranoid schizophrenic fringe perks up
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
at that level of rounding people WILL start gaming the system, hell i know i would. coffee costs $1.51 - i'm going to pay with a card. coffee costs 1.49 - i'm going to pay in cash.
So you're going to pay $0.01 more for each coffee?
$1.51 with card = $1.51, with cash = $1.50
$1.49 with cash = $1.50, with card = $1.49
The Federal Reserve bank in the US measures the money supply using two formulas, neither of which include your "money from nothing" premise about lending: http://www.ny.frb.org/aboutthefed/fedpoint/fed49.html As banks lend money, particularly the so-called "signature loans" (credit cards and other unsecured loans), they have to increase their cash-on-hand under minimum capitalization regulations by a corresponding percentage as well, and that only comes from operating capital, not thin air.
As far as inflation goes, a gold standard would certainly help, but would not address every motive in capitalistic economy that drives inflation, i.e., the rise in cost to the consumer for goods and services. The fact is there is no single solution that does that. The US economy was on a gold standard until 1972, and the reasons it was suspended had more to do with competing with other countries than with the domestic economy, and being on the gold standard did not result in "economic collapse".
Your assumptions about the UK banking system being applicable elsewhere are not entirely true either. While there are international standards on minimum capitalization, the US has additional standards in place, and while these standards appear shockingly low to the average person (6% and 10% respectively), they are sufficient to monetize an bank in a way that encourages it to operate in a risk-averse manner in both the short- and long-term. And the US Fed works differently than the Bank of England, as the US Fed is a private corporation, not an arm of the federal government.
You have to go back to before Nixon if you want to blame a US president. It was FDR who took the first major steps in getting the US off a precious metal standard. What he did was worse than Nixon in that FDR did have people's gold confiscated and prevented US residents from owning gold coins or bullion (this wasn't changed until 1986). Under the FDR administration the dollar also went from $20.?? per ounce gold (I forget the exact value) to $35 per ounce of gold. Later in the 60s under Kennedy and Johnson administrations the other precious metal standard ended when silver certificates were no longer redeemable for real (90% pure silver) silver dollars and later not even redeemable for silver. All Nixon did was close the international gold window which removed the last semblance of the US being on a precious metal standard as the silver standard (the US was a bi-metallic standard) was ended during the previous administration.
Time to offend someone
I should have been more clear. The money from nothing is not a premise. It's a fact of fractional reserve banking which pretty much every country practices. Let's take a 10% reserve requirement - that means a bank with $1 in acceptable assets (varies some by jurisdiction) can "lend" $9. How is that not creating $8 out of nothing? Assuming they do "lend" that $9, that means for $1 in real money (federal reserve notes (cash) or deposits at the federal reserve in this case), there is an additional $8 in circulation (electronically usually). That means the real *usable* money supply is considerably more than the total cash in circulation. (I haven't shown the math but it's relatively easy to work out.)
Every country that does fractional reserve has a similar situation, regardless of local regulations or specific structure. Thus, United States, Canada, United Kingdom, etc., which all have quite different specific rules, still have the same problem with money being created by bank lending.
Incidentally, fractional reserve lending is exactly the same thing as renting a house to three different parties simultaneously except fractional reserve lending is legal and renting the house three times is fraud. In both cases, the same object is being let to different parties at the same time. It's clearly ridiculous to do so with physical objects so why is is okay with money? (And before you pounce, I am *well* aware of the way economics works and the history and reasons for fractional reserve. I still don't agree with it.)
If it works in theory, try something else in practice.
And let's say that I discover an item (or possibly a group of items) in a store such that after tax, the total price in pennies ends with the number 8.
And let's say that I intend to buy something from a store such that its price in pennies, after tax, would end with the number 4, 3, or 2.
If I combine these purchases into one, and then pay in cash, then the resulting price will be rounded to the nearest nickel, which means they would round down.
If I then later exploit the store return policy to return the first items on the list for a refund, since I paid in cash, I should receive cash back, which again, should be rounded to the nearest nickel... but this time, they would have to round it up, and I would get an extra 2 cents back.
Lather, rinse, repeat.
File under 'M' for 'Manic ranting'
I'm old enough to remember half pennies and pound notes in the UK. The pound coin was met with bemusement when it came out but I came to like them very quickly. I was passing through Vancouver airport one time and the airline guy who was checking my boarding pass noticed the coins I'd taken out, he was fascinated by the British pound coin because I set a few of them on the counter (while digging something out of my pocket) and a few of them stood up on their edge. He asked me all sorts of questions about these coins, like what it was worth and what it could buy. He was a sweet old fella too, I let him keep one.
Drill baby drill - on Mars
All they would do is get rid of denominations that inflation has caused to cost more to produce than they are worth.
In other words, curing the symptoms, not the actual problem. (Which is inflation.) And in the process, introducing all kinds of second order effects which will inconvenience many.
What else do we expect from the government?
I don't understand these people:
http://pennies.org/
http://www.pennylovers.org/
Just checkout this unassailable logic from pennies.org:
Over three-quarters of Americans (77%) are concerned merchants would raise prices without the penny. And they're probably right. Raymond Lombra, Ph.D., Professor of Economics at Penn State University, told a Congressional committee in 1990 that rounding cash sales up or down to the nearest nickel would cost consumers over $600 million annually.
So that's what, less than $2 for every man, woman and child in the nation each year? I'll gladly pay $2 a year to never have to waste time with pennies. My time is worth that much to me.
This sig is inappropriate in a post-9/11 world.
Bit of relevant trivia: There is a US precedent for eliminating a coin for being too small in currency. The US Half Cent was around until just before the Civil War. We ended that program without any major currency problem popping up.
Just like we tossed the half cent and rounded up or down, it's probably time to do the same with the penny. In a decade or two (or sooner, depending on the coming wave of inflation), the nickel should probably follow suit. I'll miss what you WERE, Mr. Penny, but I won't miss what you are today.
A question for the remaining defenders of the penny: Do you have a pile of pennies in your car or at home that you haven't touched or forgotten about for more than a month? If so, your own economic sensibilities should see the problem and want to eliminate it.