The last American penny coin has been minted this week

Miscellaneous and Personal Stuff I Must Share
21

Not as much as you might think, because cash transactions are rounded for the whole transaction—including sales tax—not for individual items. If a person is buying multiple items from Walmart, only the final total is rounded.

This is also talked about in the blog post I linked to, along with a sample receipt from Walmart to make the point.

Anyway, between multiple items and weird sales taxes (like the 6.35% it is here in Connecticut), it would be hard for a retailer to engineer things to always cost more—unless they are using the elimination of the penny as an excuse to round their prices up. Which they probably won’t do, because price comparisons are easy to make—and retailers already set prices to appear cheaper and increase sales, like ending prices in $0.99. I think that is unlikely to change.

22

The retail/food industry is currently requesting guidance from government on exactly how to handle this. At the moment, if a retailer were to round cash transactions but not SNAP transactions, they’d be in violation of the law, and, at the very least, risk losing their ability to accept SNAP payments.

Our organizations are very concerned that when a SNAP retailer without exact change is forced into the position of rounding cash transactions it would be in violation of the SNAP equal treatment provisions3, which as USDA is aware, prohibits both negative treatment (discriminatory practices) and preferential treatment (incentive practices).

The difference charged between rounded cash and ‘correct’ credit card sales, I’m not as worried about. I don’t think there’s any legal issues there. At most, I think, you’ll be bumping up against some MC/Visa/AMEX policies, but since they now allow surcharges for credit cards (and/or discounts for cash), I’m guessing they’ll just consider the rounding error to be part of that.

23

While it might make sense to eliminate some of the lower value coins and round cash transactions even further, I don’t see much to be gained by devaluing the currency.

Also note that problem with lower value coins actually seems to be solving itself. Cash only accounts for 14% of all payments, far behind electronic payments. Cite.

And we live in a country where gasoline prices are set to the tenth of a cent per gallon, which not only is a denomination that has never circulated in this county, but is actually rounded even for electronic payments

24

One issue I can see with this: When there’s a discrepancy of some sort, the cents value can help to find it and fix it. If your register says that people are paying cents and they’re not, though, then your cash drawer will always have a discrepancy in the cents, and it’ll make it harder to find issues.

25

In the year 3000, when the price of an apple is $34,500.00, I think we’ll all understand why you’d shift the decimal.

Whether we have coinage or not, what’s the point of having extraneous 0’s at the tail of your prices? We can toss cents entirely, to continue with the short-term thinking approach. But once the lowest rung of the dollar becomes useless, there’s no other option but to shift the decimal.

If we have to do it eventually, and that will always just be the answer from that point forward, then it’s really just not clear what the purpose is of doing some other thing in the meanwhile that is liable to lose us the whole concept of cents and dollars.

If we want to get rid of cents then, by all means, let’s hold a vote on simplifying down to “only dollars” like the Yen. But I’d venture to guess that most people would vote to keep cents. And if that’s true, you’re better to start the process of preserving them earlier, than later.

26

True enough, although because of symmetric rounding, you would expect the cash drawer to be pretty darn close at the end of a shift. Of course this depends on the number of cash transactions, but you are correct that you should expect the cash drawer to be off a little.

Also, note that if the penny is completely eliminated (and demonetized), there won’t be a cents drawer anymore. So the cash in the drawer is necessarily going to be an increment of $0.05. You would still expect this to be very close to the total calculated by the cash register electronically, which will be to the nearest $0.01.

But because the penny is not being demonetized yet, some people will still pay in pennies, so until that time, you will still typically have some pennies in the cents drawer. This was not the case for U.S. military bases overseas starting in the ‘90s. The penny was completely demonetized. Not only would they not give it as change, but they wouldn’t accept it either. (Of course the military and their dependents are more of a captive audience, so they could get away with this with little pushback.)

27

But we’re nowhere close to that point, unless the U.S. experiences hyperinflation. In which case the U.S. will likely devalue the currency and move the decimal point. Of course since the U.S. dollar is still the global reserve currency, the global economy will also likely collapse if this hyperinflation occurs.

28

And? If I’m building a 100 story skyscraper then, on day 1 of the build, I have no structures anywhere near the 100th floor. That doesn’t mean that I can’t foresee the need for an elevator and start building the infrastructure for it.

Saying, “Well, if a genie magics the main body of the skyscraper into place over the course of the next week, then we might think about elevators.” Would be a ridiculous response, when someone’s saying, “No, look at the blueprint. We are going to build out to 100 stories. We will have to have an elevator.”

If we do the math, it looks like I was actually being optimistic about how fast inflation grows. At 2.6% inflation per year (the average over the last few decades), if an apple is $0.20 today then in the year 3000, we would expect it to cost…

  • Present Value (PV): $0.20
  • Annual Inflation Rate (r): 2.6\% (or 0.026)
  • Number of Years (n): 3000 - 2025 = 975 \text{ years}

The formula for future value (FV) using compound inflation is:

FV = PV x (1 + r)^n

Plugging in the values:

FV = $0.20 x (1 + 0.026)^975
FV ~ $14,781,099,894.07

So… Are you sure we don’t need to think about that elevator? Judging by the above, 10-11 of those digits are basically junk. That seems to imply that (975 / 11, 975 / 10) every 88-98 years, we need to shift the decimal. We’re going to be back on this question around 2110, 2200, 2290, etc. Why not just do what we’re going to have to do eventually?

29

I think you’re also being [overly] optimistic that in the year 3000, there will be: (a) a United States of America still in existence, and (b) a U.S. dollar still being issued by the Federal Reserve.

Sure, at some point, well before the year 3000, we will likely find it convenient to devalue the currency and issue something like new Federal Reserve notes that are equal to 1,000 old Federal Reserve notes (for example). But I don’t think we’re there yet, and this transition will have costs of its own.

And it doesn’t necessarily have to happen any time soon. The English/British have used the same pound since the reign of William the Conqueror. But due to inflation, a pound buys you a lot less than it did then. (It was nominally equivalent to a pound of silver then, which now costs about £38.50 per ounce, or about £616 for a pound of silver.) That’s less than three orders of magnitude in a thousand years. (I could do a similar—likely more accurate—calculation by comparing the relative change in wages or the cost of staples, but my point still stands.) Because it took 1,000 years for this to happen though, people got used to it. In transactions where they used to use farthings (one quarter of an old pence), they now use pounds.

Using your formula above, it looks like it will actually take about 269 years for prices to increase by 1000 times at 2.6% annual inflation. So let’s talk again at the U.S. Quincentennial in 2276. :wink:

Or if 1,000 times is too much, let’s talk in 179 years when prices have only increased by 100 times.

Short of hyperinflation in the meantime, I think we’re nowhere near needing to devalue the U.S. dolllar.

30

And what groundwork is there to lay, anyway? When it becomes necessary, we’ll do it, and the process for doing it then will be the same regardless of what we do now. Surely, nothing we do with physical money-tokens will have any relevance by then, when we’re long past using those physical tokens.

31

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32

I think it’s the opposite. Big Business is leading us into a cashless society by making cash so inconvenient – chiefly by continuing the use of cent pricing, with pennies nickels and dimes.

When I was young, cash purchases were significantly easier, because if you are paying with exact change, no change is required. And you were paying with exact change, because the smallest coin was 1 cent, worth maybe 25c now.

I say ‘maybe’ because the official ‘cost of living’ inflation figure is much smaller than the true ‘coinage’ inflation figure, because expensive items are so much cheaper now, which moves the ‘average’ inflation figure. For stuff where I actually used coins, the inflation figure is more like 100 to one: stuff I could get for 10c now costs me $10.

And, apart from the pain of getting coin change on a $27.53 supermarket purchase, the coin volume is so much greater now. It used to be that you could carry enough money for a meal in a coin purse or your change pocket. Try that now.

If the Gov shifted to $1 pennys and $25 quarters, we’d be back to a situation where coins represented real capital, and could conveniently be used for real transactions.

33

Nitpicking myself, the quoted price here was per troy ounce, of which there are 12 troy ounces per troy pound. So a troy pound of silver would go for about £462 today.

The historic English pound (for money) at the time of the Norman conquest was apparently based on the Saxon pound, later known as the tower pound or moneyer’s pound. This was apparently a bit smaller than a troy pound. More info here.

34
35

I love this!

Re: institutions accepting pennies: I asked my bank if they still accepted penny rolls and they said they actually wanted them as they were running short.

I have an old cookie jar full of change that’s been around longer than I can remember so I will start mining the pennies and roll them up for removal.

36

I wonder how many more weeks this kind of attitude from banks and retailers will last. I keep seeing it being treated like a temporary shortage that just needs to be smoothed out.

I guess it’s a sign of the whole thing being done so haphazardly. In Canada there was a set date where all of the banks (admittedly there aren’t as many of them there) agreed to stop distribution, and that was it.

37

There is a niche hobby of collecting older copper-rich pennies in anticipation of .the day it is legal to melt them down for scrap. Not sure when/if that day will come. Should those people be happy because that day seems closer? Or unhappy that the supply of pennies to be sifted through has been diminished?

38

TLDR, most businesses would prefer to kick this can down the road for as long as possible.

What attitude are you referring to? Do you mean banks and stores trying to get more pennies instead of rounding? It’s going to last for a while. No one wants to be the first to run out of pennies. Or, more specifically, no one wants to be the first to start rounding. However they choose to do it, a good chunk of people will feel that it’s the ‘wrong’ way. I expect the first handful of business that start doing it will see arguments erupting on their social media pages. And those arguments are going to involve accusations of the store stealing from them or ripping them off. Being told they’re rounding the wrong way or otherwise incorrectly. People will be mad that they have to pay more if they use a credit card. SNAP-paying customers will threaten to report the business if they have to pay more than cash paying customers. People that don’t support SNAP will threaten to report the business if SNAP-paying customers pay less than them.

As I mentioned above, I have quite a few extra pennies on hand at my business because I don’t want to be first one in my area to start rounding. I don’t want to be on the wrong side of that argument. I’d rather, at the very least, take into consideration how the general public thinks this should work.

Also consider the public-facing employee that has to, well, face the public. For anyone that’s run a cash register in a retail environment you can understand what these cashiers are about to deal with. People treat cashiers like absolute shit. I can’t tell you how many times I’ve had a cashier walk away from the register in tears because of how a customer treated them. This transition to rounding isn’t going to be fun for them. They’re about to deal with a lot of angry customers. Like retail businesses, the longer they have pennies on hand, the longer they can put off having to deal with this.

WRT to bank tellers, I have to assume banks really can’t be rounding anything so they’ll likely still deal in exact numbers (not exact change), but it’ll be more complicated. For example, if I want to cash a check for $100.03, I assume I’ll either take 2 cents out of that account or deposit 3 cents into it. Not a big deal, but an extra step and could get you backed into a corner if you have an account that limits the number of transactions you can make.

And, having said all that, remember that the general public, as a whole, isn’t terribly smart. I can almost guarantee that even if a store rounds their credit card, SNAP and cash transactions in exactly the same manner and always in favor of the customer, some people will still find a way to piss and moan about it. Either because they don’t understand it, they understand it but don’t like it or because, and these are often the worst people, they’re the type of person that seemingly has to complain about everything all the time and they can get a lot of mileage out of something like this.

39

Rounding only needs to be done on cash purchases. Round down. Four cents is far less than the credit card processing fee.

40

It’s fascinating to see you all expecting resistance and reluctance and confusion. Every other country that went through this handled it without even a minor issue. It’ll be fine.