As I’ve noted in previous threads on the topic, unless the goal is to get rid of cents entirely and become like the Yen, we’re going to have to shift the decimal point to the left eventually. Or even if we do want to get rid of cents and have the “dollar” be the smallest unit of currency, eventually that will become equivalent to the penny as it currently stands and be too small a denomination to be worthwhile, so again, eventually we will have to shift the decimal point to the left.
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Help me understand what you’re proposing. By shifting the decimal point to the left, do you mean that a product that can be bought now for a dime (0.10 dollars) could then be bought for a penny (0.01 dollars)? So the government would continue to print/mint the same denominations, but all money printed/minted after a certain date would be valued at 10 times its face value? And I guess this new money would be marked in some way to distinguish it from old money. Is this the basic idea?
I don’t know if that’s what Sage Rat is proposing, but this concept is called devaluation or redenomination. Generally it is a sign of a crappy economy (or fixing the inflated currency after a crappy economy has stabilized)! Like in 2005 Turkey just chopped off 6 zeros (1,000,000 TRL = 1 TRY or TL). Romania did the same a few months later (removing 4 zeros). You can also read about Zimbabwe’s crazy currency.
That’s where it’s most commonly used, but I think it’s fair to accept that even normal, healthy inflation, over the span of centuries, is eventually going to start to lead to silly prices.
So let’s say the new money is printed with red ink instead of green. To buy an item priced at $20, I could use either 20 green $1 bills, or 2 red $1 bills?
Usually, it’s you can use two red $1 bills, or else take your old green ones to the bank and exchange them for red ones. Simpler on the merchants. Old money disappears from circulation very quickly that way.
The US Dollar doesn’t need to be redenominated. Most of the top circulated currencies in the world are in about the same range, somewhere between $0.50 and $2.00 US, with a few outliers like the absurdly tiny Japanese Yen. The largest currency unit is the Kuwaiti Dinar which is around $3.50. The dollar itself is not yet too small for comfortable use, judging by that.
Getting rid of small denomination coins is another matter. We don’t need prices down to a penny on everyday purchases anymore. It probably WOULD make sense to just lop off a decimal place, except for the danged quarter. Yeah, let’s issue a twenty cent piece again, in serious quantities this time, take the quarters out of circulation, and do away with the penny and the nickel. We could have fun going through a period of being all nostalgic about our beloved quarters, just like the Brits and their half-crowns, which didn’t come out even when they decimalized (12 1/2 new pence). After all, Spanish coinage hasn’t routinely circulated here since the mid 19th century. I don’t think compatibility with the Spanish Bit really matters anymore.
And rather than saving money by minting larger coins, I would prefer that we issue polymer bills, which wear better. Like others, I don’t really like carting around dollar coins. Plastic bills - eh, OK. Of course, they probably won’t pass the BEP crumple test - I suspect they aren’t flexible enough to be mechanically crushed into a little pill and then unfolded again.
Why is it absurd? Why is $10.99 less absurd than ¥1099? The Japanese probably think it’s weird that we break up dollars into “cents”. It’s just what one is used to.
There’s way to shift the decimal point other than issuing New Dollars: change our unit to the Eagle. The Eagle already exists, at least in theory. The last money denominated in Eagle was issued 80-some years ago, but the unit wasn’t abolished as far as I know.
So we just start issuing bills in 1, 2, 5, and 10 Eagles, instead of 10, 20, 50 and 100 dollars. And stop issuing pennies, nickles, and quarters. Add a two dime coin and we’re set. OK, we could also stop issuing dollar bills. Everyone could start using $2 bills instead.
Actually, the yen has or had subunits - the sen = 1/100 yen and the rin = 1/1000 yen. Eventually, they did away with coins less than a yen. The fact that they cope with their low value currency underscores not needing to redenominate. Prices in Japan aren’t cheap.
I think he means that the 1 yen (which is an aluminum coin) is, like the penny, a rather useless thing (probably more useless than the penny). The yen could also use to be redenominated and probably will within the next couple of decades, since otherwise they’ll have a zero at the end of every price - which is just a waste of space.
I seem to recall the Italian Lire being one of those comically worthless currencies, with prices including lots & lots of zeros.
On our honeymoon in Jamaica (about 6 years ago), somone on a tour bus mentioned dollar stores, and the Jamaican guide said that Jamaica has $100 stores which are the same concept. In terms of purchasing power, this would put the Jamaican dollar on the same general level as the Yen.
Turkish lira were similar, too, until they lopped off six zeroes in 2004. Zimbabwe similarly chopped off 12 zeroes from their currency in 2009. And, of course, if you want to really go back in time, there was the WWII hyperinflation of Hungary, where prices got to 1 USD = 460 septillion (trillion trillion, or 10^24) pengõ.
Sure, but the Japanese probably think it weird that we still break down prices to 1/100 of a dollar (or even 1/1000 for gas prices). The buying power of the Yen may be unusual but it’s not absurd; it’s just what one is used to.
Oh, come on, they have not. The fact of the matter is, any choice between dollar bills and dollar coins was never presented to most of us in any meaningful way. Coins enter the system based on what retailers order to fill their cash drawers. This is how the general public gets coins, 99% of the time. If the local chain grocery store and Starbucks coffeehouse decide not to use dollar coins, then most likely you won’t be using them, either. This is because retailer preferences with regard to coin orders trickle up to what the neighborhood branch banks themselves decide to keep on hand, and this makes dollar coins hard to get locally. If you really want them, I suppose you could go to a downtown main branch of a national bank, assuming you’re in a sufficiently large city. But even then, once you buy yourself a couple rolls of the coins, you’ll just be spending down what you have. Almost never will you get dollar coins in change the way you routinely get quarters, dimes and pennies. Actually, I should simply say “never”, because the only time anyone ever got dollar coins in change was if they happened to notice the in the cash drawer and asked the clerk for them, instead of dollar coins.
As far as pennies are concerned, they, along with nickels, present a case which is perhaps a first in monetary history. Historically, there have been “standard” or “full-bodied” coins like the pre-1933 gold coinage of the United States; by statute (and government price control), whose value was about equivalent to the gold they contained. We’ve seen token or fiat coins, whose metal value is far less than their denominations. But now we have coins not only whose legislated values are far less than the materials and labor that go into their making, but also whose denominations have been rendered infinitesimally small that they have no meaningful relationship with the prices of the most utterly inexpensive things you might want to buy. How many pennies would you need to save to buy a pack of gum, or dinner at McD’s? Today, a complete collection of fifty State Quarters, worth just $12.50, will barely buy burgers, fries, and sodas for two people–never mind the one-thousand-two-hundred-fifty pennies you would need to do the same. Why on earth do we need such a small denomination? If it’s only because that might allow us to pretend a dollar is still worth what it was in 1933, or even 1962–well, that’s simply not a good enough reason. The stubbornness of retailers, who see any change in their currency handling procedures as an unwanted cost, simply results in the cost of handling, counting, and exchanging pennies being fobbed off on the rest of us.
Also, rightly or wrongly, the Susan B. Anthony dollar is derided as being too similar to a quarter, and the Sacagawea dollars were made to be compatible with existing machines, so the last time a new dollar coin was introduced it was impossible to ask the bank for them. If you wanted to hand out dollar coins in change but didn’t want to get Susan B Anthony dollars, you were out of luck even if your bank did carry dollar coins because their coin-sorting machines would just spit a random assortment into each roll.
The value of a penny was already nearly meaningless by the late 1970s, though at that time a penny might still buy you an ounce of soda, instead of a teaspoonful. What you’re telling us is that over a period of twenty to forty years, these coins have passed through the hands of God only knows how many owners who were members of the public like yourself. Every one of these people was forced to deal with that penny in one manner or another, each of which incurred a cost in time, handling fees, or lost opportunity. I won’t go over the different ways one can convert pennies to usable currency; we all know what they are. However, the root cause is the same in any case: we break a bill to buy something, and supposedly get back change for the full value of the bill less the price and tax on the merchandise, but the fact is we don’t get back the full proper value of the difference. This is simply because it’s inconvenient to carry pennies and nickels with us and spend them; they are worth so little it makes more sense just to let them pile up at home and deal with them in the future. But in the meantime, this means burning through a $20 bill that much faster, hence more frequent trips to the ATM, and so forth. One might raise the objection: why can’t we just put in the effort to spend pennies and nickels as we receive them? Why are we so lazy? It’s money after all. But here’s the thing: the use of cash isn’t supposed to be a process that requires this kind of effort, particularly when it’s money that you * already* worked to earn and pay taxes on.
Well, the SBA dollar did look awfully similar to a quarter; no getting away from that fact. But by the time of the Sac dollar, IIRC, most vending machines could handle them, or so I thought. I never had enough of them to waste that way. When I did have them to spend, I wanted there to be a human being on the other end of the transaction, by way of spreading the dollar coin message, as it were.
If you get a change pouch, you end up using your change. The reason that people don’t use their coins are because they dump them into the bottom of their pockets, where they’re a hassle to fish out. But with a pouch, you just pull it out with your wallet. If there’s a line behind you, you dump change into the pouch. If there’s not, then you use the coins. Laziness never lets the coins collect into a horrible mass because they start to weigh down your pocket and that staves off the laziness. You want to use them.