Penny Dreadful - Currency Discussion

[Danoff]

Polymer notes are said to be cheaper to produce, harder to counterfeit and they are more durable, so perhaps the US Mint could switch to polymer in the future, if they haven't already.

I actually hadn't heard of polymer bank notes. Pretty cool, I'm sure we'll switch eventually.

 

[Liquid]

Yeah, we're switching over from cotton-linen at last. Some countries like Australia have had them already for years though.

Only downside to our switchover is that the new notes, the £5 in particular, will be smaller so cashpoints will have to be refitted to accommodate, which could be a pain in the arse for communities of less importance who get theirs done much later. I don't have enough faith that they'll actually get it done on time.

 

[Pupik]

Inflation is inevitable but I'd always had an inkling that small denominations kept the rate of inflation lower than it might otherwise be, because prices and the arithmetic gap between prices is minimal year on year, increasing by 1 or 2 pence instead of 5 or 10.

I figure there would still be a trifling inflationary increase if the smallest unit of monetary value was removed from use; rounding most items to the nearest 0.05/unit or 0.10/unit would be an immediate, but slight change. But on the other hand, wouldn't some businesses prefer a smaller denomination, if they so desire to undercut their competition (i.e. could offer something that's just 1-4 cents cheaper)?

I guess if gasoline has that silly $x.xx9 per gallon, we'll always be rounding one way or another.

 

[BobK]

I actually hadn't heard of polymer bank notes. Pretty cool, I'm sure we'll switch eventually.

We'' have to wait until the Kennedys die off or something first, or at least lose their political influence. The company that supplies the paper for US notes is located in New England and they're very well connected politically.

 

[Liquid]

I don't know why Kennedy is even on the half dollar apart from cronyism, and the fact that he died prematurely; the Senna effect, if you will.

 

[Pupik]

I don't know why Kennedy is even on the half dollar apart from cronyism, and the fact that he died prematurely; the Senna effect, if you will.

Er, maybe. Then again, he'd "ousted" Ben Franklin from the half-dollar, who was never a president. The Eisenhower dollar was brought about after his passing in 1970, and that denomination wasn't used for coinage in decades. I've kind of imagined that they were both relegated to less-favorable coinage for a reason - nobody was going to (or probably ever will) replace legends like Washington, Lincoln, Jefferson, and Roosevelt. (Although the last one's up for debate in another thread.)

Then again, people stopped regularly using those two types of coins by the 1980s, likely due to their bulk. Circulation stopped for one year (1987) to no outrage whatsoever; for over a decade now, they are only available in collectors' uncirculated mint sets and proof sets. You can still spend them, just like so-called silver dollars. Heck, you could probably still legally use a three-cent piece in a transaction, although you'd probably confuse nearly everyone.

Personally, after going to Spain for a couple of days, it was convenient to buy inexpensive goods (say, those at the equivalent of $1-$5) with just a couple of coins in your pocket. In the waning pre-Euro days, they had a 500 peseta coin; at an exchange of 140-150 per USD, it was handy. But I can't imagine it being useful for larger transactions, since a large quantity of large coinage is bulky and smaller ones are easy to lose. Smaller dollar coins have never been popular, even when we made them "golden" around 2000, they were either collected or largely ignored or undesirable.

 

[LancerEvo7]

All previously made coins are legal tender. The Trade Dollar was demonetized for a while but it was re-monetized in the '60s or '70s.

 

[Liquid]

Smaller dollar coins have never been popular, even when we made them "golden" around 2000, they were either collected or largely ignored or undesirable.

Which is still happening now, with the Presidential series, right? Surely if the coins are minted with a collectable scheme, they'll only appeal to collectors? (I have a Jefferson $1 coin). If they're going to make it for the public, give it a uniform design and just do it. Or, keep the dollar bill. Don't pussyfoot around.

 

[Pupik]

Which is still happening now, with the Presidential series, right? Surely if the coins are minted with a collectable scheme, they'll only appeal to collectors? (I have a Jefferson $1 coin).

I looked it up, and the series was quietly shelved around 2011. I have three or four of them, can't recall which presidents. Maybe when they need to put more cash in the public money supply, they'll emerge again. I've heard that's why we see occasional bursts of $2 bills, which are somewhat rare, but not really valuable. Since a stack of bills is lighter...I doubt it, unless there's a sudden production issue at the Bureau of Printing and Engraving.

That said, people really seemed to enjoy the State Quarter trend from 1999-2008. Maybe because it cost just $12.50 to complete a set (or $25 if you wanted both mintmarks).

 

[LancerEvo7]

Which is still happening now, with the Presidential series, right?

Even when we started minting the Sacagawea dollars, I remember them being marketed more as collectibles than money.

 

[BobK]

For the first couple years of the Presidential Dollar series the mintages were 50 million or more per type (over 300 million for the first one, Washington), and there are four different types issued each year. But they just kept piling up in bank vaults because nobody wanted them except for the occasional oddball such as myself. Eventually they gave up (no more room to store the dang things?) and cut back to just enough to oversaturate the collector market.

Normally the Mint has items for the collector market available from the year of issue only, sometimes for only a few months. Occasionally some will still be available early in the following year. In the case of the Presidential dollars, they still have some items in their catalog from 2010.

As for Kennedy on the half, after his assassination there was a popular movement to put him on a coin but there would have been a lot of resistance to replacing Washington, Lincoln or Jefferson. That left Roosevelt and Franklin. But the Democrats didn't want a Democrat taken off the coinage (Roosevelt) so Franklin was the one who got the axe.

 

[Grayfox]

I don't know why the US doesn't start using polymer notes.
They spend a lot each year stopping counterfeiting.

Polymer notes are near impossible to counterfeit.

 

[BobK]

I don't know why the US doesn't start using polymer notes.

The reason why has been mentioned twice in this thread.

 

[Liquid]

Found a relevant article on the penny debate; Obama has stated, in February of last year, that the United States should retire the penny.

It may only save $60 million a year, but that's $60 million less Government expenditure. Small steps and all that.

 

[RC45]

I don't know why the US doesn't start using polymer notes.
They spend a lot each year stopping counterfeiting.

Polymer notes are near impossible to counterfeit.

In other words they can still be copied.

There is no reason to change the material the US money is printed on.

Nope.

Prices are not held in check by the existence of small denominations of money, they're held in check by supply and demand. Pennies do not hold prices down, and the introduction of a half-cent would not reduce prices either.


Edit:

Suppose for a moment that $100 were the smallest denomination of currency that were allowed. How would you buy a hamburger at McDonalds?

Well, for starters the lack of a smaller denomination would cause pressure on a barter system - a new currency would likely develop if allowed to enable people to exchange portions of $100 rather than an entire $100. Let's pretend that the government squashes that attempt. How would you buy a hamburger at McDonalds?

You wouldn't, you'd buy a membership card at McDonalds that entitled you to 100 hamburgers and you'd use it over time. McDonald's would not raise the price of their hamburger to $100.

Actually they would.

If the smallest unit of currency was $100 then that is the price the cheapest cash commodity would be priced at.

 

[Liquid]

There is no reason to change the material the US money is printed on.

Allegedly they are cheaper to produce, but not at first.

Primarily, they are more counterfeit preventative than cotton-linen, whilst not being perfectly counterfeit preventative. And, crucially, they last much longer, which will save on production costs.

I've not felt many polymer notes, possibly a few Brazilian and Thai notes, so I don't have a great idea how they feel. Tactile sensation can play a big part with banknotes.

 

[Danoff]

Actually they would.

If the smallest unit of currency was $100 then that is the price the cheapest cash commodity would be priced at.

...the cheapest cash commodity in this case being 100 hamburgers - so each hamburger costs $1. So no they wouldn't.

 

[Liquid]

What if you only wanted 1 burger?

Would you be forces to pay for the other 99 anyway with the $100 lowest denomination or have I misunderstood the scenario?

 

[RC45]

...the cheapest cash commodity in this case being 100 hamburgers - so each hamburger costs $1. So no they wouldn't.

No - the smallest cash denomination would determine the price of the commodity. The price of a single burger would be raised to $100 as soon as it was determined that buyers did NOT want the other 99 burgers.

This has been shown time and again when the minimum denomination is increased in any monetary system that the cheapest cash commodity will see its price increase to the size of the smallest denomination if that commodity previously had a lower price.

'x for the price of y' only works IF the buyer wants '2 of'. If they want '1 of' then the price was just doubled. In your case the price increased 100 fold.

 

[Danoff]

No - the smallest cash denomination would determine the price of the commodity. The price of a single burger would be raised to $100 as soon as it was determined that buyers did NOT want the other 99 burgers.

This has been shown time and again when the minimum denomination is increased in any monetary system that the cheapest cash commodity will see its price increase to the size of the smallest denomination if that commodity previously had a lower price.

'x for the price of y' only works IF the buyer wants '2 of'. If they want '1 of' then the price was just doubled. In your case the price increased 100 fold.

What if you only wanted 1 burger?

Would you be forces to pay for the other 99 anyway with the $100 lowest denomination or have I misunderstood the scenario?

Both wrong.

If you want just 1 burger, they'll bundle it with things that you do want. If they can't, they'll go out of business and burgers won't be purchased at any price. There is no economic force driving prices based on available currency denominations.

 

[RC45]

Both wrong.

If you want just 1 burger, they'll bundle it with things that you do want. If they can't, they'll go out of business and burgers won't be purchased at any price. There is no economic force driving prices based on available currency denominations.

In other words if they want to sell single burgers for cash the lowest price they can price them at is $100 if $100 is the smallest currency denomination.

Whether the market will accept that price is another thing. If it does the price of burgers just went up to $100, the smallest denomination of currency. If the market does not accept the price then they will not sell.

In other words, I was correct.

 

[Tornado]

The reason why has been mentioned twice in this thread.

I do agree with Danoff that the switch is probably an inevitable one, though. Certainly more likely than the switch to more coinnage-bases transactions, because polymer notes can probably be spun a lot easier.

 

[Danoff]

In other words if they want to sell single burgers for cash the lowest price they can price them at is $100 if $100 is the smallest currency denomination.

Whether the market will accept that price is another thing. If it does the price of burgers just went up to $100, the smallest denomination of currency. If the market does not accept the price then they will not sell.

In other words, I was correct.

http://www.amazon.com/dp/B00006IBK6/?tag=gtplanet-20

1000 paper clips for $4.49.

That's game, set and match. End of discussion. Next please.

 

[Pupik]

Both wrong.

If you want just 1 burger, they'll bundle it with things that you do want. If they can't, they'll go out of business and burgers won't be purchased at any price. There is no economic force driving prices based on available currency denominations.

Businesses would likely want something a lot more practical than some high denomination. I could see where they'd want the penny history, but if they want every last bit out of the customers willingness to spend, they'd set the prices just as fine as possible to apply towards the laws of supply and demand.

There has to be some sort of middle ground, other than using a Benjamin as an example. If they really wanted a "33 and 1/3 cent piece" - they'd probably put pressure on the mint on being able to produce it (although I'm sure that would probably be one example of a denomination they wouldn't want). I don't think folks would stand for the tactic of bundling a $2 item with $98 of extras, so there would have to be a useful middle ground which would allow the convenient trading for goods and services.

It's inconvenient to expect that barter would take over in any significant way - there's not always the ability to store goods received (even if they want them) and the potential purchasing power that money has. It works well on a very local level: the neighbor on your block who helped you fix the car or your lawnmower deserves a couple of free beers and have them over for dinner and what-have-you.

Sure, it degrades in value somewhat over time, but if you're not ready to store away 100 hamburgers, 12 goats, 6 pounds of aluminum, then money is a far more convenient means of doing so. I think humans also like things in decimalized form; electronic transactions take away a lot of the guesswork over the silly penny transactions just about every day, anyhow.

 

[RC45]

http://www.amazon.com/dp/B00006IBK6/?tag=gtplanet-20

1000 paper clips for $4.49.

That's game, set and match. End of discussion. Next please.

No - you just proved you cannot read.

Again - I will type the SAME message - this time the pertinent information will be bolded.

In other words if they want to sell single burgers for cash the lowest price they can price them at is $100 if $100 is the smallest currency denomination.
Whether the market will accept that price is another thing. If it does the price of burgers just went up to $100, the smallest denomination of currency. If the market does not accept the price then they will not sell.
In other words, I was correct

***********************************************

So - again - typed s l o w l y so you can keep up.

In other words if they want to sell single PAPERCLIPS for cash the lowest price they can price them at is $100 if $100 is the smallest currency denomination.
Whether the market will accept that price is another thing. If it does the price of PAPERCLIPS just went up to $100, the smallest denomination of currency. If the market does not accept the price then they will not sell.
In other words, I was correct

***********************************************

See - your example simply ignores the facts we know.

People DO want to buy more than a SINGLE paperclip at a time.
1c is the smallest currency denomination.

YOUR contention was that if the lowest denomination was $100 that SINGLE CASH TRANSACTION burgers would not be priced at $100.

Using bundled paperclips bought for credit/PayPal at $4.99 when the lowest currency denomination is 1 cent does not in anyway support your premise.

I believe rather that 'game set match' you just double faulted.

 

[Danoff]

No - you just proved you cannot read.

Again - I will type the SAME message - this time the pertinent information will be bolded.

In other words if they want to sell single burgers for cash the lowest price they can price them at is $100 if $100 is the smallest currency denomination.
Whether the market will accept that price is another thing. If it does the price of burgers just went up to $100, the smallest denomination of currency. If the market does not accept the price then they will not sell.
In other words, I was correct

$100 is the smallest currency denomination, my premise is that nothing can be sold for less than $100 in a single transaction. That's my premise, and I've never said otherwise.

So - again - typed s l o w l y so you can keep up.

This is an AUP violation and, generally, immature behavior in a conversation about finances. Let's try to focus on the technical issues rather than personal attacks shall we?

In other words if they want to sell single PAPERCLIPS for cash the lowest price they can price them at is $100 if $100 is the smallest currency denomination.
Whether the market will accept that price is another thing. If it does the price of PAPERCLIPS just went up to $100, the smallest denomination of currency. If the market does not accept the price then they will not sell.
In other words, I was correct

If you want just 1 burger, they'll bundle it with things that you do want. If they can't, they'll go out of business and burgers won't be purchased at any price.

See - your example simply ignores the facts we know.

People DO want to buy more than a SINGLE paperclip at a time.
1c is the smallest currency denomination.

YOUR contention was that if the lowest denomination was $100 that SINGLE CASH TRANSACTION burgers would not be priced at $100.

Don't rephrase my argument into a strawman. Here is what I said (and my example backs it up perfectly):

Prices are not held in check by the existence of small denominations of money, they're held in check by supply and demand. Pennies do not hold prices down, and the introduction of a half-cent would not reduce prices either.

Using bundled paperclips bought for credit/PayPal at $4.99 when the lowest currency denomination is 1 cent does not in anyway support your premise.

It supports my premise about as perfectly as is possible. I made a statement about how a company would handle having a product that is worth less than the smallest currency denomination. Then, when asked to support that statement, I was about to go out and find exactly that happening right now. That's about as clear as it gets. Paperclips (and hamburgers and anything else) do not rise to the price of the smallest currency denomination. If your product is worth less than the smallest currency, you bundle until you can make a sale for the smallest currency (or above, in the example I cited). McDonald's would not even attempt to sell hamburgers for $100 each, it would not happen, there is too much competition in the hamburger market. McDonalds also would not suddenly go out of business because nobody wanted to pay $100 for a hamburger - they would bundle, and it would work out.

McDonald's could even go to a no-cash transaction model, where people bring in vouchers for burgers that they got for other things. Someone fills up their tank and a gas station, or buys some groceries, and if they buy enough they get a voucher for a burger. McDonalds gets paid by Shell or Safeway instead of the customer, but they still get paid and burgers still get moved at the cost of much less than the smallest currency denomination.

So again, here is my point - prices are not held in check by the existence of small denominations of money, they're held in check by supply and demand. It is not worth arguing this point with me, I have demonstrated it in action today.

 

[RC45]

I will place this quote first as a prime exmple of a child on the degfensive - quote the aup - where it has no bearing.

This is an AUP violation and, generally, immature behavior in a conversation about finances. Let's try to focus on the technical issues rather than personal attacks shall we?

This is what to fall back to? Really? All of your responses from now on will be viewed in the context of petulant snivelling child.

$100 is the smallest currency denomination, my premise is that nothing can be sold for less than $100 in a single transaction. That's my premise, and I've never said otherwise.

Don't rephrase my argument into a strawman. Here is what I said (and my example backs it up perfectly):

It supports my premise about as perfectly as is possible. I made a statement about how a company would handle having a product that is worth less than the smallest currency denomination. Then, when asked to support that statement, I was about to go out and find exactly that happening right now. That's about as clear as it gets. Paperclips (and hamburgers and anything else) do not rise to the price of the smallest currency denomination. If your product is worth less than the smallest currency, you bundle until you can make a sale for the smallest currency (or above, in the example I cited). McDonald's would not even attempt to sell hamburgers for $100 each, it would not happen, there is too much competition in the hamburger market. McDonalds also would not suddenly go out of business because nobody wanted to pay $100 for a hamburger - they would bundle, and it would work out.

McDonald's could even go to a no-cash transaction model, where people bring in vouchers for burgers that they got for other things. Someone fills up their tank and a gas station, or buys some groceries, and if they buy enough they get a voucher for a burger. McDonalds gets paid by Shell or Safeway instead of the customer, but they still get paid and burgers still get moved at the cost of much less than the smallest currency denomination.

So again, here is my point - prices are not held in check by the existence of small denominations of money, they're held in check by supply and demand. It is not worth arguing this point with me, I have demonstrated it in action today.

You cant have it both ways. You claim supply and demand controls the price of the smallest cash denominated transaction AND you now claim nothing can be sold for less than the smallest denominaiton.

Pick a side.

Anyway - I tire of your silly nonsense.

I have lived through a currency change where the 1/2c piece was done away with.

For a short time merchants attempted to sell 2 for the price of 1 items that had previously cost 1/2c.

Gum, single matches, single cigarettes, small gobstoppers - all where sold '2 for a cent' - however as soon as people wanted to buy 1... the merchants realised that they could no longer sell single units for cash. Bundling was not the answer - the price of all the 1/2c items went to 1c.

In other words, the loss of the 1/2c piece caused the price of the cheapest cash commidity to rise to 1c.

This is not theory, this is reality. In a cash only economy the denomination of currency plays an important part in determing price.

And now shall bow out of these forums for a couple years again - interacting with snivelling liberals online is more trouble than it is worth.

 

[Danoff]

I will place this quote first as a prime exmple of a child on the degfensive - quote the aup - where it has no bearing.


This is what to fall back to? Really? All of your responses from now on will be viewed in the context of petulant snivelling child.

Attacking the person is a well known tactic here on the opinions forum, it's a logical fallacy, and nobody is going for it. I'd suggest you stop, because the moderators here at GTPlanet care about maintaining civil discussion unlike any other forum I've seen.

You cant have it both ways. You claim supply and demand controls the price of the smallest cash denominated transaction AND you now claim nothing can be sold for less than the smallest denominaiton. Pick a side.

Nothing can be sold for less than the smallest denomination is the entire premise. I started the thought experiment out by explaining that $100 is the smallest currency, and the black market for smaller currencies is to be assumed to be squashed by the government. That's the starting place for the conversation - that no transaction can be made for less than $100. This is not inconsistent with any other position I've taken, and it's not a conclusion or result - it's the starting point.

Anyway - I tire of your silly nonsense.

What exactly do you think this added to your post?

I have lived through a currency change where the 1/2c piece was done away with.

For a short time merchants attempted to sell 2 for the price of 1 items that had previously cost 1/2c.

Gum, single matches, single cigarettes, small gobstoppers - all where sold '2 for a cent' - however as soon as people wanted to buy 1... the merchants realised that they could no longer sell single units for cash. Bundling was not the answer - the price of all the 1/2c items went to 1c.

In other words, the loss of the 1/2c piece caused the price of the cheapest cash commidity to rise to 1c.

There is no way this is correct. I'll need documentation because it flies in the face of basic economics. You're telling me that customers refused to buy 2 cigarettes for 1c, and instead bought 1 cigarette for 1c. That customers scoffed at getting two sticks of gum for 1c and instead decided to buy 1 stick of gum for 1c. It defies logic, it defies economics, it defies human nature - you're going to need to back it up.

This is not theory, this is reality. In a cash only economy the denomination of currency plays an important part in determing price.
And now shall bow out of these forums for a couple years again - interacting with snivelling liberals online is more trouble than it is worth.

I'm a liberal now? Now that's funny.

 

[BobK]

McDonald's could even go to a no-cash transaction model, where people bring in vouchers for burgers that they got for other things. Someone fills up their tank and a gas station, or buys some groceries, and if they buy enough they get a voucher for a burger. McDonalds gets paid by Shell or Safeway instead of the customer, but they still get paid and burgers still get moved at the cost of much less than the smallest currency denomination.

Actually, should the $100 bill suddenly become the smallest unit of currency, something like this is what would result. Possibly even more likely would be McDonald's would sell coupon books for hamburgers, twenty or twenty five coupons per book.

I will place this quote first as a prime exmple of a child on the degfensive - quote the aup - where it has no bearing.


This is what to fall back to? Really? All of your responses from now on will be viewed in the context of petulant snivelling child.

You did indeed launch a personal attack on @Danoff, and yes, that's an AUP violation. Perhaps a moderator will bring this more forcefully to your attention.

...interacting with snivelling liberals online is more trouble than it is worth.

Why @Danoff ... you're a snivelling liberal?!? I had no clue! This comes as a complete shock to me.

 

[Tornado]

To think, all this time he's been posting in this subforum, Danoff was a socialist. How could we all be so naive?

And now shall bow out of these forums for a couple years again - interacting with snivelling liberals online is more trouble than it is worth.

I wonder how we'll make it without your continuing insight about how not worth your time everyone else is.