Canada still has 5% GST (essentially a federal sales tax) as well as most provinces having a provincial sales tax (in some provinces the two are combined into an HST - Harmonized Sales Tax). The fact that we got rid of our penny hasn’t changed that.
Inflation has been going on since 1776 in the U.S. For example, a carpenter earned $1.50 per day in 1815, but $2.97 in 1870. A mason went from $1.75 to $2.95 per day. All of this on the gold standard at $33 per ounce of gold.
In certain periods of time, we had rapid inflation where inflation was higher than 6% per year. These occurred during war periods or rapid growth. The worst was the 1960s to the 1970s when inflation hit over 10% – a dangerous level because the rate of inflation can spiral just because people expect prices to rise, and plan accordingly.
There are ways of fighting inflation like pulling full stop on the economy by raising interest to unheard of levels like the Fed did in the late 1970s. That broke our inflationary spiral and we’ve been experiencing mild, and well controlled inflation ever since – even during times of rapid growth.
In Brazil, they fought their high inflation (about 40% to 90% per year) by creating an imaginary currency called the Real. Prices were posted in this imaginary currency and daily tables were printed to convert Reals to Cruzeiro, Brazil’s currency at the time. When people got use to prices in Reals, and stable prices, real Reals were printed and replaced the Cruzeiro.
Actually, it’s impossible to compare salaries and inflation between distant periods. In the 1850s, an average American could live on $10 per day, but they had no TV, air conditioning, radio, nor running water. And, they worked six days per week, ten hours per day.
Bathing every day? Hot coffee in the morning? Taking the weekend off? What are you the Rockefellers?. Those people earned well over $100 per day! Or, around the average salary of a typical American now earns.
Canada discontinued use of the penny in making change less than two years ago. There is no need to be concerned about getting ripped off with rounding. For starters, that only applies to cash transactions - most people these days are using plastic for all but very small purchases. When you pay cash and do get rounded, you get rounded up OR down, depending on the amount. So if the amount per the till is $1.28, you pay $1.30, but if the amount is $1.27, you pay $1.25. I am not missing the penny a bit. Lots less weight in my wallet.
It was not long after the appearance of “take a penny, leave a penny” dishes at every till that the penny went out of circulation altogether, here, so if the USA is seeing those dishes, now… it probably won’t be long before the penny is taken out of circulation there.
If only… The convenience store in my hometown has had such a dish for twenty years or more.
Make a batch out of steel or RIFD embedded plastic then. Once no one has an advantage, everyone will give up on the argument.
Interesting article from Newsday’s Daniel Akst: Whaddya zinc? Let’s kill the penny.
He claims it takes 2 cents to produce each penny (and more than 11 cents to produce a nickel).
Not really sure if it relevant how much it costs to make a penny or other coin or bill vs. its face value. I would have thought the issue is how much value everyone gets out of it during its useful lifetime.
Thing is, a penny just isn’t worth much in exchange, doesn’t add much value. One can get along perfectly well without it, by rounding - as we do here in Canada.
If you look at it historically, it used to be that chunks of metal had value because, well, metal is valuable. People argued about whether this chunk or that chunk was slightly larger or slightly smaller, so governments starting stamping an official seal onto a lump of metal of a particular weight, all of them exactly the same size as each other. Those became the first coins. So a 1/4 ounce gold coin was certified to weigh exactly 1/4 ounce and it was exactly as valuable as 1/4 ounce of gold. But the govt had to spend slightly MORE than this to collect the metal, melt it down, weigh it, stamp it, and distribute it. So then they hit upon the great idea that you could say this coin is worth a pound of silver even though the coin itself weighs a whole lot less than a pound. So they made coins which cost LESS to make than the face value of the coin. Brilliant!
The irony is that now we’ve swung the pendulum back the other way to where the coins cost more to make than their face value (which was normal 1,000 years ago) and suddenly people get upset about it, thinking it’s against the rules of capitalism or something.
Australia discontinued our one cent and two cent coins quite a while back. We have managed to survive. Prices are still quoted in cents and totals paid are rounded off to the nearest five cents.
More recently, the PTB (Powers that Be) have announced that 5 cent pieces cost more that five cents each to make. Are they testing the waters for the demise of the five cent piece?
Eventually inflation (currently slow here) will presumably lead to the demise of the five cent piece and the creation of “new” currency where the current ten cent coin will equal one “new cent” etc. Such is progress.:o
[QUOTE=Santa Cruz’n’;17745849I’m carrying pennies in my pocket all the time and using them every day. Without them is there any doubt that “honest retailers” will always round up, not down, ensuring a neat, hidden profit?[/QUOTE]
Without pennies, retailers would be forced to price to 95c instead of to 99c.
When I did some retail, I was amazed to find that it is really true: people actually see $3 and don’t notice it is actually $3.90
But that suspicion allowed retailers here in AUS to continue to price at .99 even after the penny was discontinued. Personally, I’d have discontinued 5c at the same time they discontinued 1c and 2c here, and I’d be ready to discontinue everything smaller than the dollar now.
It would make cash transactions much easier. When you use 10c to buy 10c, you don’t need 1 penny change. When you use $1 to buy $1, you don’t need 1 penny change. My personal experience is that a credit transaction is now easier than a cash transaction, and one of the reasons for that is that cash transactions now are more likely to involve making change.
AUD:USD exchange rate is around 80c now, down from $1.10. Penny about the same worthless value in both countries, but we got rid of ours years ago.
Australia got rid of 1c and 2c coins in 1992. Civilisation did not collapse, and even the stupidest and most paranoid members of our society eventually managed to grasp that they weren’t getting ripped off by greedy retailers.
New Zealand went one better and discontinued everything under 10c, and took the opportunity to redesign their surviving coinage. That happened in 2006. Civilisation in NZ didn’t collapse.
Yes, but these are little countries compared with U.S.A. and do not have our problem of ethnic diversity.
(My non sequitur is intended as parody. This is the typical American response of why your Euro-fascist solutions won’t work for us.)
The U.S. makes money when a coin that costs 5 cents to produce is sold for 25 cents. That’s called Seigniorage. Coin minting is a profitable business for the Treasury Department. When it costs more to produce a coin than you can sell it for, the Treasury department loses money.
If the U.S. treasury made money on pennies, there would be a reason why the U.S. to continue making pennies even though no one wants one. In fact, it would be especially true because it’s a constant income stream. Imagine if you sold something that everyone needs, but constantly lose. People would come and keep buying your item, lose it, and then have to come back to buy more. That would be a pretty nice business. Now imagine if you actually lost money on each item you sold.
So, the U.S. Government is losing money making pennies that no one even wants. That gives us an even better reason to get rid of the penny.
Maybe you Aussies and New Zealanders can help us on this one:
[ul]
[li] US: Mints coins and low as a penny.[/li][li]Australia: Mints coins only down to the 5 cent piece.[/li][li]New Zealand: Mints coins down to the 10 cent piece.[/li][/ul]
You could place these countries in order of the lowest coin amount produced:
United States <> Australia <> New Zealand
Now, all you have to do is figure out whether this order goes from the most desirable to least desirable country, or the least desirable to the most desirable.
Remember: No biting or hitting below the belt. (Come to think of it. We’ll allows those. It’s more entertaining that way.)
Here are a few facts to help you get started:
[ul]
[li] New Zealand has a fence with hundreds of toothbrushes on it.[/li][li] Australia has a diverse menagerie of mammals that are found no where else in the world.[/li][li] The U.S. has nuclear weapons and knows how to use them.[/li][/ul]
In the modern world, coin-based seigniorage is a reasonably minor consideration; I would have thought the real concern was whether the coin was actually useful in circulation. Admittedly, the penny is not.
Not necessarily. We have gasoline prices that end in .9 cents even though there’s no such thing as a one-tenth-of-a-cent coin. Heck, we could eliminate coins entirely and still have prices like 1.99 and .79 and $2.39. All you’d have to do is add up the individual prices and then round off the total to the nearest whole number. That’s how they do it in Mexico.
If we (Americans) all agreed to just round off, you could still have a bottle of ketchup for 1.99, a can of beans for .79, and a loaf of bread for $2.39, then add up the total to $5.17 and then round it off. The only problem is that we’d have to agree, are we going to round off to the nearest .05 or round off to the nearest .10 or round off to the nearest .25 or round off to the nearest whole number. If some stores rounded off one way and other stores rounded off another way, people might get upset. One store might take $5.17 and round it off to $5.15 while another store would round it off to $5.25 and yet another would round it off to $5.00. But if we all agreed on how to do it, I don’t see a problem.
What about that country just north of you?
Is there a country North of us?
Every time this question rolls around, someone, or several someones, explains how Australia has been successfully dealing with that very issue for 22 years now. And no American ever seems to notice the answer, and they all ask the same question again, over and over again. It’s been explained already in this very thread. Asked and answered.
Truthfully, the penny issue is dead. The same is true for the paper dollar, and whether the U.S. should like other countries (cough… Canada! cough…) stop printing paper dollars switch to dollar coins. This might have been relevant a couple of decades ago, but it’s no longer worth debating the issue. It’s been resolved.
I will get about $60 worth of bills from an ATM, and carry that around for emergency cash. Sometimes I carry that same $60 around for months. I just don’t use that much cash. Even tiny transactions (where the total bill is under $10), I use my credit card. It’s just much easier and faster than dealing with money. Most places don’t even bother having me sign a paper slip or the signature pad for such small transactions. Yesterday, I bought a bottle of soda for 95 cents. All I had was a $20, and the clerk asked me if I mind using a credit card. She didn’t want to break a $20 for a transaction that small.
I don’t even bother with cash when paying friends or office workers any more. My bank accounts are either tied to PopMoney or a similar service. When they pass around the envelope at work for a coworkers’ baby present, I use that.
About the only time I use cash is to give someone asking for money a buck, or if I’m buying something from a street vendor – and even those are now taking credit cards! (street vendors, that is – not panhandlers – yet).
I maybe a bit ahead on the technology curve, but one day, all of mankind will hold up their heads in pride and march proudly towards a brighter future – a future without change jangling in their pockets!