Canada abolishes the penny
1 - Retirement age to be increased (like I'm surprised by this, I've already planned to work through to 70 unless I hit it rich before then)
2 - The penny will be eliminated as a coin and prices will be rounded to the nearest nickel - CBC story
Mostly posted as I know Mr Paco Martin has discussed this in the past.
Companies will have a tendency to set their prices at a point where they round up. And our money shouldn't be so valueless that we can just start getting rid of low denominations.
This isn't a sign of progress, it's a sign that our money is becoming valueless.
Are people actually happy with a currency that has been devalued to the point where it's OK to just get rid of the lowest denomination?
What's next? Are we gonna get rid of nickels? Dimes? Quarters? Dollar bills? Eventually with rampant inflation, 100 dollar bills will be worthless, and in 100 years I can see people saying "Hey let's just get rid of $100s and round up to the nearest $500." That's what scares me.
Quote: Boney526What's next? Are we gonna get rid of nickels? Dimes? Quarters? Dollar bills? Eventually with rampant inflation, 100 dollar bills will be worthless, and in 100 years I can see people saying "Hey let's just get rid of $100s and round up to the nearest $500." That's what scares me.
Between 1982 and 1993 the peso went from 25 for one US dollar to 3,500 per dollar. In 1993 three zeroes were dropped from the currency. By that time the smallest banknote was worth 1,000 pesos, and such things as the 50 peso coin were all but unobtainable.
That didn't end it, but I'm guessing canada and others will drop zeros too, before far too long.
To continue, between 1993 and 2012, the peso has moved from about 3.5 per dolalr to 13 per dollar. The really bad news? as bad as that sounds, for a while briefly in 2009 it dropped to 14.50 per dollar. So 13 sounds good in comparison, and it may be as "little" as 12.70 by year's end.
Prices are going up anyway so I wouldn't use the rounding up argument.
Quote: WongBoWhy not get rid of nickels? Sounds good to me. Imagine how much time And money is wasted in their production and use.
Prices are going up anyway so I wouldn't use the rounding up argument.
IMO Canada should start making the nickels at the same size and composition as the previous pennies were. At least in the US, nickels have the same problem as pennies, in that it costs more than five cents to make them. If it costs 1.8 cents to make a penny (I've seen figures anywhere from 1.5 to 2.5), then that would be an acceptable cost for a nickel. Maybe make them silver-colored on the outside to avoid confusion with the still-in-circulation pennies.
If there were enough in circulation, the mint wouldn't be making them. Or ANY coins for that matter.Quote: slytherI'd rather not abolish the penny. I get the issues with cost. Don't we have enough pennies floating around to cover the necessary transactions anyway? More and more being done electronically.
Frankly, I wonder how many coins are produced simply because some got removed from circulation because they are in a jar somewhere, or lost behind the cushion...
Yeah, it's only cash transactions that are affected. Get rid of them.
Quote: slytherI'd rather not abolish the penny. I get the issues with cost. Don't we have enough pennies floating around to cover the necessary transactions anyway? More and more being done electronically.
That is my thought. How many millions of pennies are out of circulation in people's change jars? Find a way to motivate those people to put that change back into circulation instead of making more.
Whoa! Then you're INCREASING the need to print new bills.Quote: buzzpaffMy dad had a similar idea back in the 50's what if US issued new $1, $5, $29, $100 dollar bills and after 5 yeras or so old bills were not worth anything? Any guesses how much would not be redeemed ??
Sure, bills in frequent circulation generally only last about 18 months, but there are plenty of bills that aren't circulated that frequently, and last a LOT longer.
Quote: DJTeddyBearWhoa! Then you're INCREASING the need to print new bills.
Sure, bills in frequent circulation generally only last about 18 months, but there are plenty of bills that aren't circulated that frequently, and last a LOT longer.
I play in poker games where the old 50's and 100's are still common and still see them almost nightly when I play in casinos. Those are at minimum 15 years old. Imagine how many of those are vaulted outside the U.S. Recalling cash would have worldwide implications.
Quote: AcesAndEightsIMO Canada should start making the nickels at the same size and composition as the previous pennies were. At least in the US, nickels have the same problem as pennies, in that it costs more than five cents to make them. If it costs 1.8 cents to make a penny (I've seen figures anywhere from 1.5 to 2.5), then that would be an acceptable cost for a nickel. Maybe make them silver-colored on the outside to avoid confusion with the still-in-circulation pennies.
Canadian mint did a survey five years ago, and foun 63% of small businessmen ,and 42% of consumers were in favor of getting rid of the penny.
By my calculation the Canadian pennies in circulation since 1996 are worth about $125 million. Prior to that they were made of copper, and are mostly in collections or melted down. Just declare by fiat that all these pennies are now worth 5 cents. The cost to the government is $500 million (chump change to a government). Then all the nickels will vanish into collection, and the mint won't have to make any nickels for at least ten years.
A handful of people with big penny jars will make a little bit of money.
Quote: teddysIt's about time! When is the U.S. going to get on board?
Actually it has been proposed, and for a lot longer time that your realize. Proposals in congress to do this go back to the mid-90s. Big mining companies and their lobby have found any attempt to do this. The mining companies make too much money off uncle sam (and your tax dollar) to cut off any of coinage.
About a dozen years ago I was on a trip in south America for 6 weeks. In Chile they have the Chilean Peso. At that time the exchange rate was about 500 to 1. The smallest paper bill was the 500 peso bill, almost exactly the same value as the US $1 bill. I remember I asked someone if they had a 1 peso coin. They told me yes, but they were hard to find. All stores normally rounded to the nearest 10 pesos (2 US cents). And this was in 1999. I did get my hands on a 1 peso coin. It was small, but it's value was 1/5 of a cent. I figured no matter what metal was in it, it had to more valuable that 1/5 cent. I suggested a dump truck backed up to a bank and fill her up with 1 peso coins. I'll melt them down and sell the metal.
Quote: buzzpaffMy dad had a similar idea back in the 50's what if US issued new $1, $5, $29, $100 dollar bills and after 5 yeras or so old bills were not worth anything? Any guesses how much would not be redeemed ??
Most countries in the world do demonetize their old money after a certain amount of time. The US has never demonetized anything. However, most very old bills and coins are worth more than their face value as collector's items.
Actually, if the US did that they would lose a lot of money in the aggregate. The number of people in the world holding onto billiions of $100 banknotes would shift to another currency or store of value. The profit from those banknotes far exceeds the money that the government would make from old people who forget where their cash is buried in the basement.
Officially there are 10 billion $1 notes in circulation. If the government demonetized them, I imagine that several billion would never be redeemed.
Quote: pacomartinCanadian mint did a survey five years ago, and foun 63% of small businessmen ,and 42% of consumers were in favor of getting rid of the penny.
By my calculation the Canadian pennies in circulation since 1996 are worth about $125 million. Prior to that they were made of copper, and are mostly in collections or melted down. Just declare by fiat that all these pennies are now worth 5 cents. The cost to the government is $500 million (chump change to a government). Then all the nickels will vanish into collection, and the mint won't have to make any nickels for at least ten years.
A handful of people with big penny jars will make a little bit of money.
1/2 billion is about 2% of the projected Canadian overspend this year. The conservatives expect to be running a small surplus by 2015. They expect the total deficit to be around 30% of GDP, or under 500 billion.
It's a small country, after all.
Quote: thecesspit1/2 billion is about 2% of the projected Canadian overspend this year. The conservatives expect to be running a small surplus by 2015. They expect the total deficit to be around 30% of GDP, or under 500 billion.
It's a small country, after all.
EH?
Quote: thecesspit1/2 billion is about 2% of the projected Canadian overspend this year. The conservatives expect to be running a small surplus by 2015. They expect the total deficit to be around 30% of GDP, or under 500 billion.
It's a small country, after all.
You mean the total debt will be around 500 billion (actually it will be a little higher than that). The deficit of the USA is under 10%. Canada does much better than the USA in balancing their budget.
But you would have to subtract from that 1/2 billion, the savings from not having to make any nickels for ten years. Once all the pennies come out of the jars because they are now worth 5 cents, there should be plenty to last for more than a decade (if not longer).
That would create havoc with vending machines.Quote: AcesAndEightsIMO Canada should start making the nickels at the same size and composition as the previous pennies were.
While cash transactions make a very small percentage of all transactions, I would venture a guess that a considerable percentage of those transactions that are in cash, are made via vending machines.
I didn't notice this the first time I saw it.Quote: buzzpaffMy dad had a similar idea back in the 50's what if US issued new $1, $5, $29, $100 dollar bills and after 5 yeras or so...
Quote: pacomartinYou mean the total debt will be around 500 billion (actually it will be a little higher than that). The deficit of the USA is under 10%. Canada does much better than the USA in balancing their budget.
Yes, I meant debt... durghle :)
Quote:But you would have to subtract from that 1/2 billion, the savings from not having to make any nickels for ten years. Once all the pennies come out of the jars because they are now worth 5 cents, there should be plenty to last for more than a decade (if not longer).
Very true, I'm sure there could be savings to be had. I just don't see anyone going for it...
Quote: DJTeddyBearThat would create havoc with vending machines.
While cash transactions make a very small percentage of all transactions, I would venture a guess that a considerable percentage of those transactions that are in cash, are made via vending machines.I didn't notice this the first time I saw it.Quote: buzzpaffMy dad had a similar idea back in the 50's what if US issued new $1, $5, $29, $100 dollar bills and after 5 yeras or so...
I know. I had a phony $29 bill. Fooled a guy at Walmart. Bought a $1 pack of gum, and got 2 $14 bills change.
Quote: buzzpaff
I know. I had a phony $29 bill. Fooled a guy at Walmart. Bought a $1 pack of gum, and got 2 $14 bills change.
I'll trade you 7 of my $4 bills for them.
Quote: Boney526Are people actually happy with a currency that has been devalued to the point where it's OK to just get rid of the lowest denomination?
It's not a matter of being happy with it or not, it's a matter of deciding what should be done now that the penny has reached a point of near uselessness
Wikipedia tells us that American copper pennies go back to the 1700s. Seeing our currency devalued by such a small factor over 220 years seems like a good argument that it is holding up well, even if it's time has past
As much as I would prefer deflation, that isn't going to happen. The most efficient set-up would be three coins, 10-cents, 50-cents and $1, with three paper bills, $5, $20 and $100
But since that hasn't happened yet I find myself as one of the very few that do try to make use of the pennies I come across
Quote: 98ClubsSo I guess the 2c piece is out. One could get rid of nickels using a 2c piece. Aluminum is still cheap enuff.
It really isn't worth the trouble. Most countries still have the equivalent of a nickel. Only Norway & Denmark have as their smallest coin the US equivalent of 8.7 cents .
I am not positive, but for credit cards they probably don't go finer than 1.74 cents .
If Britain, Australia and NZ follow Canada's lead and abolish the penny, then USA is going to look pretty stupid.
Quote: TomGThe most efficient set-up would be three coins, 10-cents, 50-cents and $1, with three paper bills, $5, $20 and $100
It may seem efficient, but no country in the world has so few denominations. The closest is Iceland with four denominations, where two of them are a tiny percent of the banknotes in circulation. But at the very least the $1, $2, and $50 denominations are pointless.
Too many vending machines depend on the quarter.
But Iceland is probably the closest country in the world to eliminating the need for banknotes & coins. Almost all transactions are electronic. So it must be considered the most extreme example.
86.7% 5,000 kr.
01.7% 2,000 kr.
08.7% 1,000 kr.
02.8% 500 kr.
Quote: pacomartinIt may seem efficient, but no country in the world has so few denominations
The US has 12. Half-dollar and $2 bill barely register. So many don't bother with pennies as all. More people are starting to even include nickels with that as well. For whatever reason I so rarely see $50s compared to $20s and $100s. Our current set-up really isn't that far away from what seems so different. I'm not familiar with other countries
A major problem is that too few vending machines accept or give out dollar coins. Previously minted quarters would disappear from circulation far slower than the engineering could be changed
Quote: TomGThe US has 12. Half-dollar and $2 bill barely register. So many don't bother with pennies as all. More people are starting to even include nickels with that as well. For whatever reason I so rarely see $50s compared to $20s and $100s. Our current set-up really isn't that far away from what seems so different. I'm not familiar with other countries
Circulation figures in billions of banknotes and per capita (for end of 2011). I assume that all of the $2 banknotes are in collections. A lot of people don't see the point in $50 banknotes. It's like if you need more than a $20 banknote, then $50 seems too little. The $10 is only slightly more prevalent than the $50.
$2 - 0.9 billions, 2.9 banknotes per capita
$50 - 1.4, 4.2
$10 - 1.7, 5.5
$5 - 2.4, 7.4
$20 - 7.1, 21.0
$100 - 7.8, 22.6
$1 - 10.0, 31.3
In Canada the per capita circulation numbers are
$10 - 3.5 banknotes per capita
$50 - 5.1
$5 - 6.3
$100 - 8.7
$20 - 25.3
They aren't radically different than the USA, except for a lot fewer $100 banknotes. Most of the US $100 banknotes are circulating in other countries. Of course, they don't have the $1 and $2 banknotes.
With the new polymer banknotes, the Bank of Canada may try to encourage more use of the $50 banknote instead of the $20. Canada being a much smaller country and being smart enough to mint and use $1 and $2 coins, only has 1.6 billion notes in circulation for all denominations.
Quote: TomGA major problem is that too few vending machines accept or give out dollar coins. Previously minted quarters would disappear from circulation far slower than the engineering could be changed
Every other country simply stops printing the bill. They don't leave a choice.
And... it might finally payoff for those two blue Whitman Folders of Lincoln Cents that I have from 50 years ago.
Quote: TomGIt's not a matter of being happy with it or not, it's a matter of deciding what should be done now that the penny has reached a point of near uselessness
Wikipedia tells us that American copper pennies go back to the 1700s. Seeing our currency devalued by such a small factor over 220 years seems like a good argument that it is holding up well, even if it's time has past
As much as I would prefer deflation, that isn't going to happen. The most efficient set-up would be three coins, 10-cents, 50-cents and $1, with three paper bills, $5, $20 and $100
But since that hasn't happened yet I find myself as one of the very few that do try to make use of the pennies I come across
It's a matter of policy. We COULD see deflation, if we forced our politicians to take a look at the Federal Reserve. Easier said than done, but still, the point is that our currency has been devalued by a HUGE factor, not a small one. around 97% of our currencies value has been lost since the creation of the Fractional Reserve Banking system.
It's not necessarily the case that inflation WILL occur, it's the case if we ALLOW it to occur.
I also realize that this is about Canada's penny, but the arguement is moving into the US and the US and Canadian Dollars are basically the same value.
Quote: thecesspitThe US and Canadian Dollars exchange one for one. I don't think they have the same value :)
Interesting comment. USA has about 9 times the population of Canada. The GDP of the USA is about 11 times as big. The USA circulates 19 times as much currency (mostly because roughly 75% of USA $100 banknotes are overseas). Canada has more natural resources in it's economic mix, and millions of acres of empty land.
Which currency do you think has more value?
Quote: thecesspitThe US and Canadian Dollars exchange one for one. I don't think they have the same value :)
That's an interesting comment.
I'm not really too familiar with Canada's monetary policies, so I can't really answer that question in any serious manner. I can say that the US Dollar, and I believe the Canadian dollar, have Fiat value, so their value is based on trust. I don't really think any Fiat currency has real value, only what people are willing to trade it at before its demise. Sure all currency and commodities value are based on market functions like supply and demand (dollars, gold, etc.) but only commodities are limited in supply. The thing is I can't - and I don't think anybody can - accurately predict when that demise will occur without just getting lucky.
Quote: pacomartinInteresting comment. USA has about 9 times the population of Canada. The GDP of the USA is about 11 times as big. The USA circulates 19 times as much currency (mostly because roughly 75% of USA $100 banknotes are overseas). Canada has more natural resources in it's economic mix, and millions of acres of empty land.
Which currency do you think has more value?
I'm not actually sure on that, but my short/mid term view is that the US currency is worth less than the Canadian dollar, due to the rental economy we have up here. Remember those acres of empty space are cold, damp and remote, at least a lot of them are. Also there's a general resistance to building out into the wildnerness (that's a general felt resistance at least... the reality is not so much that way).
Quote: Boney526That's an interesting comment.
I'm not really too familiar with Canada's monetary policies, so I can't really answer that question in any serious manner. I can say that the US Dollar, and I believe the Canadian dollar, have Fiat value, so their value is based on trust. I don't really think any Fiat currency has real value, only what people are willing to trade it at before its demise. Sure all currency and commodities value are based on market functions like supply and demand (dollars, gold, etc.) but only commodities are limited in supply. The thing is I can't - and I don't think anybody can - accurately predict when that demise will occur without just getting lucky.
- In 1858, Canada's currency became aligned with the US currency, although the British gold sovereign continued to remain legal tender.
- At the outbreak of the Second World War, the exchange rate to the US dollar was fixed at 1.1 Canadian dollars = 1 US dollar.
- This was changed to parity in 1946.
- In 1949, sterling was devalued and Canada followed, returning to a peg of 1.1 Canadian dollars = 1 US dollar.
- Canada allowed its dollar to float in 1950, returning to a fixed exchange rate only in 1962, when the dollar was pegged at 1 Canadian dollar = 0.925 US dollar. This peg lasted until 1970, after which the currency's value has floated.
- 1972 reaches parity
- 25 April 1974 reaches $1.0443
- 15 Nov 1976 Canadian dollar begins 10 year slide
- 4 Feb 1986 Canadian dollar bottoms at 69.13 cents US
- January 21, 2002 hits an all time low of $1CAD = 61.72 cents US
- Nov 7, 2007 hits an all time high of $1 CAD = $1.10 US
Canada exports such a large percentage of their products to the USA, that I would think that they would be severely hampered by the Canadian dollar going too far above the American dollar.
| Exports | Imports | Country |
|---|---|---|
| 73.7% | 49.5% | United States (U.S.) |
| 4.2% | 2.3% | United Kingdom (U.K.) |
| 3.8% | 10.8% | China |
| 2.4% | 2.9% | Japan |
| 1.2% | 5.5% | Mexico |
| 1.1% | 1.5% | Korea, South |
| 0.9% | 2.9% | Germany |
| 0.7% | 1.2% | France (incl. Monaco, French Antilles) |
| 88.0% | 76.7% | SUB-TOTAL |
| 12.0% | 23.3% | OTHERS |
| 100.0% | 100.0% | TOTAL (ALL COUNTRIES) |
Unlike the USA, Canada has a trade balance to less than 1%
I will note that the US withdrew from making $500, $1000, $5,000, and $10,000 bills in 1969.Quote: pacomartinThe US has never demonetized anything. However, most very old bills and coins are worth more than their face value as collector's items.
The only time I ever saw them was on old 70s episodes of Let's Make a Deal.
Quote: PGBusterI will note that the US withdrew from making $500, $1000, $5,000, and $10,000 bills in 1969.
But the old bills have never been demonetized. They are still worth their face value as money.
The banknotes of the higher denomination were printed in 1928 and 1934 only in very small numbers (less than a million banknotes for all denominations). People only used the $500 or the $1000 very rarely in 1969. For the most part they remained in private safes where people treated them as stores of value. The government decision was merely to clarify the de facto policy. There were very few large banknotes actually destroyed.
Total number of higher value notes printed:
420,000 $500
372,000 $1,000
24,000 $5,000
84,000 $10,000
42,000 $100,000
Total number of $100 banknotes printed.
231.71 million the 1928 to 1966 series total (41 years)
600.96 million the 1969 to 1977 series total (12 years)
For most countries the small headed $100 banknote would no longer be considered money as it has been 16 years. If you had one, you would have to take it to a bank to use it.
I have some 25-cent notes that could still be used in place of a quarter... but they won't work in a parking meter.
Quote: pacomartinBut the old bills have never been demonetized. They are still worth their face value as money.
As far as I understand "demonetized" means the instrument (coin or note) loses all recognition as money, or in other words ceases to be legal tender.
Mexico has made a lot of changes to its money just over the course of my lifetime (and more than that previously), and we also dropped three zeros from the currency in 1993. Now, while doing some browsing on the subject of notes, I found that while old bills can't be used as money anymore, el Banco de Mexico will exchange them for current face value. This means an old 1,000 peso bill can be exchanged for one current peso. But the ntoes themselves are demonetized.
Quote: pacomartinFor most countries the small headed $100 banknote would no longer be considered money as it has been 16 years. If you had one, you would have to take it to a bank to use it.
This reply has nothing to do with Canadian coins or currency or demonetizing of any currency, so it is probably as far off-topic as most of the posts in the thread. I was just reminded of something when I saw the above comment by pacomartin.
I was traveling home from Greece in late 1983 and changed money to U.S. currency at the Athens airport. I received two $1 silver certificates, which caught me by surprise. I hadn't seen one in years, but I noticed that the money changer had a big stack of them. I would have bought a bunch of them to bring home, but I didn't have any more Greek currency to exchange, and the teller didn't seem interested in exchanging U.S. currency for U.S. currency. I was so caught off guard by seeing silver certificates at all that I didn't pursue any of the double/triple-swap options that might have worked.
I still have those two silver certificates and I have them on display at my house along with some other rarely seen coins and currency, even though I am not really a collector.
A hundred pennies ($1.00) would cost $1.80.
I would suggest a way to save them money.
They should buy back existing pennies at the rate of 100 pennies for $1.30. The US mint would save money and consumers would make a 30% profit.
They would probably tax that 30% profit!!!
Quote: FatGeezusI would suggest a way to save them money.
The Mint and the Bureau of Engraving and Printing are two of the most grossly inefficient departments of the government. The Mint runs two separate facilities, and half the coins made are pennies. The BEP runs two facilities, and half the banknotes printed are dollars.
If the government declares that all existing pennies are now worth 5 cents apiece, they won't have to make pennies or nickels for 20 years. If they acknowledge that almost nobody uses 50 cent piece, they can stop making those. If they stop printing dollar bills, they can use the stockpile of dollar coins that are cluttering up the warehouses. They can shut down some of these facilities.
When our dollar gets too valuable against the greenback, tourism and non-resource exports take a pretty big hit as it's less expensive to buy elsewhere.
Back on topic, good riddance to the penny. It stains clothes, fills our junk drawers, and is pretty much collected and not spent. I have never really seen the purpose of collecting pennies, taking them to the bank, and cashing them. I hardly ever pull out a penny to spend, and nowadays at the grocery store they don't bother giving the pennies -- they just round up to the nickel.
Quote: pacomartinThe Mint and the Bureau of Engraving and Printing are two of the most grossly inefficient departments of the government. The Mint runs two separate facilities, and half the coins made are pennies. The BEP runs two facilities, and half the banknotes printed are dollars.
If the government declares that all existing pennies are now worth 5 cents apiece, they won't have to make pennies or nickels for 20 years. If they acknowledge that almost nobody uses 50 cent piece, they can stop making those. If they stop printing dollar bills, they can use the stockpile of dollar coins that are cluttering up the warehouses. They can shut down some of these facilities.
Isn't there warehouses full of the dollar coin as well?
Genius!
Quote: boymimboMore than 70% of our exports are US bound, I believe, and we are trying to put together some pretty big trade agreements with Japan and China.
The number for 2011 was 73.7%.
Unlike the USA, Canada keeps its trade balanced.
| Canadian Exports | Canadian Imports | Country |
|---|---|---|
| 73.7% | 49.5% | United States (U.S.) |
| 3.8% | 10.8% | China |
| 1.2% | 5.5% | Mexico |
| 2.4% | 2.9% | Japan |
| 0.9% | 2.9% | Germany |
| 4.2% | 2.3% | United Kingdom (U.K.) |
| 1.1% | 1.5% | Korea, South |
| 0.7% | 1.2% | France (incl. Monaco, French Antilles) |
| 88.0% | 76.7% | SUB-TOTAL |
| 12.0% | 23.3% | OTHERS |
| 100.0% | 100.0% | TOTAL (ALL COUNTRIES) |
As a you no doubt know, the most profitable export of the United States is the $100 banknote. There are some 8 billion Benjamins in circulation, and about 75% are overseas. As you may also know, the US Treasury has been struggling for years with printing a reliable new color $100 note. They printed hundreds a billion notes, with an unacceptable number of "gullies".
Canada is replacing their current supply of roughly 300 million $100 notes with polymer. Now 300 million is a tiny fraction of 8 billion. Iceland may need 2 to 3 million notes if they adopt the Canadian dollar.
How do you feel about Canada hawking their $100 bill and taking a small percentage of this profitable business away from America (and the EMU)?
Quote: thecesspitIsn't there warehouses full of the dollar coin as well?
Genius!
Over a billion $1 coins the last I heard. They finally got the authority to stop making them.
