Canada- bye, bye penny

[publius]

How does that work for change? If I pay for something with two $10s with different expiration dates, what am I entitled to demand be the expiration date on the $5 and $1s I get as change?

Keep in mind this is desperation measures, but all the money would have the same expiration date. Same the period is a month. At the end of the month, you must pay a certain tax (negative interest rate) on all the currency you hold and get it stamped for the next month in order for it to be legal tender to use. The idea is this makes currency a "hot potato" and everyone tries to spend it before the end of the month, thus increasing monetary velocity.

That was actually done here in the US back in the Depression. It was done with a local paper currency, not the dollar. It's funny. It's legal to implement your own paper currency if you like (provided you don't try to represent it as real US currency), but illegal to do it with coin, and that is due to the different legal nature of coin vs paper currency. The power to "coin money" lies exclusively with the federal government and no other entity may exercise it. Congress has the power to make paper legal tender, but others can use their own paper and whatever non-coin tokens they want as currency (but have to pay tax on the equivalent value of transactions done with it, and in legal tender. ).

[Ara Pacis]

I don't see the difference. Please explain.

What difference don't you see? Quarters are not dollars. A Dollar coin may not be the same size as a quarter, it may be larger. Even if it were the same size, to get back to the original point, a quick look shows that you can only fit 60 quarter-sized coins in the same volume as 100 bills if stacked in 12 piles of 5. If stacked sideways in two columns, an unlikely configuration without using a new tray design/insert, you'd still only get 178 where you could fit 200 bills.

[HenrikOlsen]

So, you want a deadline at which stores will no longer accept the older bills, and anybody who still has older bills has just lost the value of that money?

Should they just print bills with an expiration date on them?

Stores will not, banks will still.

At least that was the way it's been done in Denmark whenever a specific design or coin value has been withdrawn, most recently when the 25 øre coin was pulled. Now our smallest coin is worth bit less than a dime, with the penny and nickle equivalents dropped a while ago.
Oh, and the cutoff point between coin and paper is at the $5-$10 mark, smallest bill is worth about $9 (50 kr), largest coin about $3.5 (20 kr).

[publius]

What difference don't you see? Quarters are not dollars. A Dollar coin may not be the same size as a quarter, it may be larger. Even if it were the same size, to get back to the original point, a quick look shows that you can only fit 60 quarter-sized coins in the same volume as 100 bills if stacked in 12 piles of 5. If stacked sideways in two columns, an unlikely configuration without using a new tray design/insert, you'd still only get 178 where you could fit 200 bills.

To do it right, the new dollar coin (that would be used) needs to be readily identifiable as different from every other coin. We could make it smaller than a quarter, but to make it work, it would need to be easily distinguished. I'd go with a different color, making it gold or tan looking, and try to give it some distinctive feel. Let's see, I think the current presidential and Sacagawea coins are brass colored, but they have a tendency to tarnish, especially on the raised areas. I think they've suspended production now, as they're doing nothing but piling up in the Fed vaults.

[publius]

The more I think about it, the more I enjoy the idea of carrying around a coin pouch tied to my belt a-la ... well, any time prior to the early 1900's?

And if I ever turned to the dark side, I could carry around a small dagger with which to cut purse-strings of the more fortunate. Society lacks that level of olde-fashioned highwayman'ism that we see in the movies.

I've always loathed to carry around change in my pockets as well. The trouble with that is change piles up at home. One of my aunts gave me a little change purse for Christmas one year, and told me I'd like if I ever started using it just like her husband did. I didn't bother for a while, but then I started, and sure enough, I like it.

It's not a bag, but a stiff pouch of an affair that will fit in the palm of your hand nicely. It has a little flap that serves as a tray. You open it up in your hand and turn it upside down and all the change slides out in the tray, allowing you easy access. When done, you turn back around, the change slides back in the pouch and you close the tray/flap. It fits in your pocket nicely. In the winter, when I'm wearing a coat, I prefer to keep it in my inside coat pocket rather than my front pants pocket.

Because of that, I now give as much change as I get, and it doesn't pile up anymore.

[Nowhere Man]

Does anyone here remember if those big dollars and half dollars were common in transactions? I got those a lot as a kid (kids get impressed at those kinds of things), but don't know how readily they were circulated.

I don't really remember, as such, but I've done a bit of research. Half-dollars were quite common until the changeover from silver alloy to clad copper. This happened a year or three after Kennedy was shot, and subsequently put on the half, so a combination of sentimentality and silver hoarding drastically reduced the number of half-dollars in circulation. By the time the mint produced enough replacement coins, people had gotten out of the habit of using them.

Probably something similar happened with the old wagon-wheel dollars. In The Maltese Falcon (1931), Spade gives a cabbie a dollar coin in exchange for information. They were common enough that the size was used as a model for many casino tokens.

I wish the US would drop the dollar bill (and the two-dollar bill), and start making one- and two-dollar coins.

Fred

[SeanF]

Keep in mind this is desperation measures, but all the money would have the same expiration date. Same the period is a month. At the end of the month, you must pay a certain tax (negative interest rate) on all the currency you hold and get it stamped for the next month in order for it to be legal tender to use. The idea is this makes currency a "hot potato" and everyone tries to spend it before the end of the month, thus increasing monetary velocity.

Got it. That makes sense.

[publius]

$2 bills: They've never been that popular (and their are tales of young store clerks thinking $2 bill weren't real and calling the cops when someone tried to use them), and I got interested and looked it up. It's been so long, we've all forgotten it, but in the old days, $2 bills got a reputation as being unlucky and even uncooth. In the old days a short session at a house of ill repute was $2 (as late as the '30s), and thus $2 bills became associated with that. Then, they became associated with voter fraud, with supposed ringers who would fradulently vote being supposedly paid $2 per fradulent vote. And finally they became associated with betting on horse racing, $2 being some common bet amount.

So being in possesion of $2 bills came to be a blemish on one's reputation and thus bad luck. The term "deuce" has negative connotations anways. If you received a $2 bill, that meant bad luck, and a supposed superstitutious antidote was to tear off a corner of that $2 bill.

But that was in the old days, and we've pretty much forgotten it, although we still don't use them much. There were no Federal Reserve $2 Notes until 1976, at which time they were authorized. Before that, most of the $2s in circulation were US Notes (whether they existed in silver and gold certificate form, I didn't look up, although they did exist as national bank notes in the Free Banking era in various forms). They don't regularly print them, only as needed when enough banks demand them. The last series was 2003, and the last printing of that was in 2006.

[SeanF]

Geez, maybe I shouldn't be carrying that thing around.

[Jim]

$2 bills: They've never been that popular ...

There is a local scrap metal dealer who advertises that he will "pay you in two dollar bills!"

[Solfe]

I like dollar coins and two dollar bills. I do have to admit that if you spend them, both have a tendency of confusing cashiers. I have a tiny collection of both. We need to bring back the 50 cent piece.

[DonM435]

There was a magic trick that I learned as a kid: You asked the subject to extract a $1 bill from pocket/purse but keep it out of sight. Then you squinted a bit, shut your eyes, and announced the date on the bill. People checked it and were stunned.

It worked because, for a stretch of several years, virtually every bill in circulation had a 1958 date on it. (I think that was the year.) So, the U.S. Treasury must have had an efficient turnaround in removing and replacing old bills, and must have let that dating go on for a few years.

But, right about the time that I learned the trick, it stopped working. 1963-dated bills were issued and began to take over.

[NEOWatcher]

What difference don't you see? Quarters are not dollars.

That's not quite the difference I was thinking. I was thinking that we handle quarters just fine, so dollars would handl just fine.
A dollar slot is at least 2 to 3 times larger than a quarter slot in a register.

A Dollar coin may not be the same size as a quarter, it may be larger.

The volume difference between a loonie and a quarter is 25%.

a quick look shows that you can only fit 60 quarter-sized coins in the same volume as 100 bills if stacked in 12 piles of 5. If stacked sideways in two columns, an unlikely configuration without using a new tray design/insert, you'd still only get 178 where you could fit 200 bills.

RARELY do businesses keep that many singles in a slot. Most work off the bundle of 50s or 100s. When they start getting low they will put another bundle in. So; most of the time, we are talking between about 20 and 120.
By the way. My company configures cash register systems. There is plenty of room in the drawers to accomodate this coinage and room for extras. They are not so custom that they can't handle any exceptions. There is the need for coupons, checks, various other documentation, paper clips, extra bills, un-common denominations (50s,100s), etc.

I don't even know why this is a big deal. Tell me why Canada didn't have trouble with both paper and coin during thier transition, or even why they didn't have trouble introducing the toonie.

I also find it interesting that on another thread you are willing to impose a drastic change in transportation on the general public, but resist something as simple as a coinage change that has already been done in other countries with no issues.

To do it right, the new dollar coin (that would be used) needs to be readily identifiable as different from every other coin.

I wholeheartedly agree. The SBA dollars were a flop because they were too hard to distinguish from quarters. They tried that (11?) sided indentation around the edge, but since it was an interior surface it was very hard to tell. I didn't like those.
I actually liked the Sacagawea. Although it could tarnish (like any coin) it at least had a smooth edge that was easy to feel. Yes, a quarter's edge will wear over time to be smooth, but the thickness still made it feel much different.
Besides, I have that trouble today between pennies and dimes. They get old and hard to distinguish.

[Taeolas]

I lived in the states when the Sacadollar was out and I liked it a lot because it was similar to the Loonie in many ways; (similar size and colouring IIRC).

Just to clarify as well, unlike the States, Canada had no qualms about using a 2$ bill in regular circulation, so when the Toonie came out, it just took over the 2$ bill slot in the cashier drawers, and the bills were shifted over a bit as the 2$ bill became less and less used.

You know, it seems to me that the opening sentence of that paragraph is almost completely contradicted by the rest of it. It seems that you "prefer" the $2 coin, not the $1 coin, and you only "prefer" it in the sense that you "prefer" to get rid of it again as soon as you can.

Well it's more of a habit than anything. If I know I have toonies and loonies on hand, I'll generally use them up before I go to the bills. The coins make it easier for me to tell I have them instead of having to sort through bills. And the coin sizes are large enough that they're easy to see and pick out of a handful of change. (Easier than quarters IMO). It's probably just my own personal preferences, but having grown up with loonies and toonies, I greatly prefer them over the bills; they just seem easier to use. Easier to pick out of the pile of coins instead of finding 1$ and 2$ bills in a pile of bills.

Of course Canadian Currency is fully colour coded too, so even bill picking isn't too difficult. IMO the only thing worst than the fact that the US hasn't ditched the dollar bill, is that they haven't gone to different coloured bills. (And no, a purple number on an otherwise green bill doesn't count)

[Ara Pacis]

That's not quite the difference I was thinking. I was thinking that we handle quarters just fine, so dollars would handl just fine.
A dollar slot is at least 2 to 3 times larger than a quarter slot in a register.

I was using a dollar tray as mentioned above.

The volume difference between a loonie and a quarter is 25%.

We're talking about the differences between US quarters and an imaginary US dollar coin.

RARELY do businesses keep that many singles in a slot. Most work off the bundle of 50s or 100s. When they start getting low they will put another bundle in. So; most of the time, we are talking between about 20 and 120.

Right, but that doesn't change physics, which is what I was talking about. It just means that the limitation may not make a difference. Different argument.

If we want to start talking about vending machines, on the other hand...

By the way. My company configures cash register systems. There is plenty of room in the drawers to accomodate this coinage and room for extras. They are not so custom that they can't handle any exceptions. There is the need for coupons, checks, various other documentation, paper clips, extra bills, un-common denominations (50s,100s), etc.

Appeal to Authority? Okay... Since I have a degree in Poli-Sci and know people who knew Hastert and Obama, et al, you can trust that I know the change to change won't happen on their watch.

I don't even know why this is a big deal. Tell me why Canada didn't have trouble with both paper and coin during thier transition, or even why they didn't have trouble introducing the toonie.

Apples and Oranges. Canada also has universal healthcare.

I also find it interesting that on another thread you are willing to impose a drastic change in transportation on the general public, but resist something as simple as a coinage change that has already been done in other countries with no issues.

Because that would be optional. Now, if we had both dollar coins and paper money in circulation so that it was optional I'd be fine with it, but then registers would have to accommodate an additional coin. And the point of my posts in that thread was to replicate and simulate the driver. If you can make a coin that replicates the softness and fold-ability of paper money...

[Ara Pacis]

To do it right, the new dollar coin (that would be used) needs to be readily identifiable as different from every other coin. We could make it smaller than a quarter, but to make it work, it would need to be easily distinguished. I'd go with a different color, making it gold or tan looking, and try to give it some distinctive feel. Let's see, I think the current presidential and Sacagawea coins are brass colored, but they have a tendency to tarnish, especially on the raised areas. I think they've suspended production now, as they're doing nothing but piling up in the Fed vaults.

I think it'd be cool to have a coin that has a hole in it, or maybe an inner coin of a different metal/color. I'm sure that would present some problems, so maybe they should use that for a larger denomination that won't get used as much. We should issue coin versions of all bills in circulation. Imagine how much the government would make in seigniorage!

I just wonder if it would be easier to successfully counterfeit coins or if they can include security features. If not, then maybe large values won't be acceptable at stores and could only be exchanged at banks.

I've never seen a Sacagawea Dollar.

[Gillianren]

Appeal to Authority?

You know how the appeal to legitimate authority isn't a fallacy? Having experience with the manufacture of cash registers is legitimate authority in this discussion.

I think it'd be cool to have a coin that has a hole in it, or maybe an inner coin of a different metal/color. I'm sure that would present some problems, so maybe they should use that for a larger denomination that won't get used as much.

Like $2?

[HenrikOlsen]

One optimal point for a coin is where the metal is worth less than the denomination, but it actually costs more to make it that it's worth.
That'll keep them in circulation while making forging self-defeating.

And no, there's nothing strange about a society where a coin costs more to make for the treasury than it's worth, the societal gain of its existence is in the transactions it's involved in rather than in its intrinsic value through existing. Every time its used it adds a little bit to the value of the society.

[Trebuchet]

We're talking about the differences between US quarters and an imaginary US dollar coin.

Except the US dollar coin is NOT imaginary, several versions are at least officially in circulation, including SBA, Sacajawea, and the new presidential dollars. The US quarter has a mass of 5.67g and a diameter of 24.26mm. The Sacajawea dollar has a mass of 8.1g and a diameter of 26.5mm; the SBA and presidential dollars are the same. The Loonie has a mass of 7.0g (changing this year to 6.27g) and a diameter of 26.5mm, so it's the same diameter but a little lighter than the US ones.

[publius]

We should issue coin versions of all bills in circulation. Imagine how much the government would make in seigniorage!

Doing that to any significant extent would take monetary policy out of the control of the Fed, actually. Coin is direct Treasury currency, created by Treasury and spent (directly or indirectly) by Treasury into circulation. There's no easy means to take it out. FRNs and the electronic digi-dollars are controlled by the Fed. As it stands now, total Treasury currency outstanding (which is mostly coin, but also includes the few US Notes and others still in circulation) stands at $44.4B.

Compare that to a total monetary base (M0) of $2.65T (of which over $1.5T is electronic, QEed into existence), and a total of $1.05T physical FRNs in circulation. The value of coinage is just 5% of the physical FRNs and only 1.7% of the total M0. Any significant change in that balance would be a serious monetary change. Note that replacing dollar bills with coin wouldn't be much, as there's only about $10B in $1 FRNs out there by value, even though they comprise 1/3 of the total volume of bills outstanding. And further note this means that the majority of the monetary base exists not as coin or paper, but as bits in the Fed's computers.

Seigniorage in the moden central bank scheme comes from the "profit" the cental bank makes which goes directly to the sovereign, the Treasury in our case, and with all of Helicopter's QEing, that has pushed $80B the last couple of years, about 3 times typical profits pre-Crisis and pre-printing frenzy. That is far greater than any coinage seigniorage.

Of course in reality, that notion of profit exists only when you separate the Fed from the federal government. THe brunt of the Fed's profit come from interest on the Ts it has monetized, so the profit it returns is just returning the interest on those monetized Ts, which would be readily apparent if you merged the Fed's balance sheet with Uncle and considered them one entity. Of course, with Helicopter still having close to a trillion of MBSes on his balance sheet, some of the profit comes from private sector interest, but you can still consider it just cancelled interest on monetized federal govt. debt.

And that reminds me that the expenses for printing money (roughly 9 cents per bill) are put on the Fed's balance sheet, not Uncle's. Thus printing expenses don't show up as a federal expense, and only subtract from the "profit" returned to Treasury. So that expense is really hidden in the interest expense category, although now, the interest from the MBSes is more than enough to cover that printing expense by a long shot.

[baskerbosse]

There is one problem with getting rid of the penny;
-What would you put in the the penny-pinchers?

:-)

Peter

[SeanF]

The Loonie has a mass of 7.0g (changing this year to 6.27g)...

They're changing the mass of the coin? Won't that mess up the vending machines, or do they validate the coins through other means?

EDIT: I did some checking, and apparently vending machines identify coins based on diameter and magnetic signature. So as long as those don't change, the vending machines will still recognize the coins.

In fact, the Sacajawea dollar and the SBA dollar, despite appearing very different visually, actually have the same diameter and metal composition, so vending machines that were configured to accept the SBA will accept the Sacajaweas without modification.

[NEOWatcher]

We're talking about the differences between US quarters and an imaginary US dollar coin.

Trebuchet was correct. (thank you)

Except the US dollar coin is NOT imaginary, several versions are at least officially in circulation, including SBA, Sacajawea, and the new presidential dollars. The US quarter has a mass of 5.67g and a diameter of 24.26mm. The Sacajawea dollar has a mass of 8.1g and a diameter of 26.5mm; the SBA and presidential dollars are the same. The Loonie has a mass of 7.0g (changing this year to 6.27g) and a diameter of 26.5mm, so it's the same diameter but a little lighter than the US ones.

I got the numbers for the quarter and the Sac dollar from the treasury's web site.

Right, but that doesn't change physics, which is what I was talking about. It just means that the limitation may not make a difference. Different argument.

I'm not sure what you are saying here so I'll skip this.

Appeal to Authority? Okay... Since I have a degree in Poli-Sci and know people who knew Hastert and Obama, et al, you can trust that I know the change to change won't happen on their watch.

Gillian was correct. (thank you)

You know how the appeal to legitimate authority isn't a fallacy? Having experience with the manufacture of cash registers is legitimate authority in this discussion.

Although; I'd like to add, that an appeal to authority is also a blind appeal. Again; I'm stating opinion based on my experience and only giving background for it. I am not saying that this is how it is, just that I've seen it that way.
Oh, and it's not really manufacturing, it's just mating the drawers to the rest of the electronics and displays

Apples and Oranges.

How can that be apples and oranges? We have a dollar bill, Canada had a dollar bill. We have a dollar coin, Canada went to a dollar coin. It's a direct analogy.

Because that would be optional. Now, if we had both dollar coins and paper money in circulation so that it was optional I'd be fine with it, but then registers would have to accommodate an additional coin.

Like I said, I'm not sure how Canada did it, but they didn't seem to have a problem with it. (I think I remember being there during the transition and having both, but I can't even be sure of that)

If you can make a coin that replicates the softness and fold-ability of paper money...

Ok; so you like the bill better. That's fine and an opinion I can respect. But; arguing cash registers seems pointless to me.

I think it'd be cool to have a coin that has a hole in it, or maybe an inner coin of a different metal/color. I'm sure that would present some problems, so maybe they should use that for a larger denomination that won't get used as much.

Apparently you are arguing from a lack of knowledge of the Canadian coin system. I suggest you look up "Canada Two Dollar Coin".

We should issue coin versions of all bills in circulation. Imagine how much the government would make in seigniorage!

That sounds like a sarcastic remark. A dollar coin would cost the government less than a dollar bill over their lifetime. (I don't know if it would work as you go up the scale though)

I've never seen a Sacagawea Dollar.

Again, don't knock it if you don't know it. The Sacagawea Dollar is considerably different than the SBA, and is very noticable to me. Showing you a picture wouldn't really help because a lot of it is in the feel.

[Swift]

Apples and Oranges. Canada also has universal healthcare.

Absolutely do not go there - off topic and very volatile politics.

[Taeolas]

They're changing the mass of the coin? Won't that mess up the vending machines, or do they validate the coins through other means?

EDIT: I did some checking, and apparently vending machines identify coins based on diameter and magnetic signature. So as long as those don't change, the vending machines will still recognize the coins.

In fact, the Sacajawea dollar and the SBA dollar, despite appearing very different visually, actually have the same diameter and metal composition, so vending machines that were configured to accept the SBA will accept the Sacajaweas without modification.

Yeah, since the Loonie's weight is changing, vending machines have to be updated. The only one I've heard complaining about it is Bell Canada, who wants to increase payphone costs to a dollar in part to pay for changing the currency acceptor. Telus has already said they don't see a need to charge more at this time for their pay phones.

[Moose]

Like I said, I'm not sure how Canada did it, but they didn't seem to have a problem with it. (I think I remember being there during the transition and having both, but I can't even be sure of that)

Just some grumbling at first. We got used to it fairly quickly.

The only folks who really had a problem with the twonie were vending machine and cash register makers who'd run out of slots in their products' chassis and had to scramble to accommodate the new coin. And they got over it too.

[NEOWatcher]

The only folks who really had a problem with the twonie were vending machine and cash register makers who'd run out of slots in their products' chassis and had to scramble to accommodate the new coin. And they got over it too.

If you know...Was the cash register issue just with the twonie, or for the loonie too? Was it a lot of vendors or just a few?

Either way, I do apologize to Ari for getting so technical and deep into the subject, but this comment does show it's not really an issue which is really the root of what I was trying to portray. I just got too buried in the subject.

[SeanF]

Yeah, since the Loonie's weight is changing, vending machines have to be updated. The only one I've heard complaining about it is Bell Canada, who wants to increase payphone costs to a dollar in part to pay for changing the currency acceptor. Telus has already said they don't see a need to charge more at this time for their pay phones.

So, wait a second, that contradicts what I found, which was that the weight of the coin wouldn't matter to the vending machines. Or do payphones validate the coins differently than vending machines?

[Moose]

If you know...Was the cash register issue just with the twonie, or for the loonie too? Was it a lot of vendors or just a few?

Vending machines and cash registers of that generation were already rigged to expand by the one coin, apparently. The retrofits were fairly minor and had already been somewhat planned for.

[NEOWatcher]

Vending machines and cash registers of that generation were already rigged to expand by the one coin, apparently. The retrofits were fairly minor and had already been somewhat planned for.

That could be a reason for what my experience has seen too. We are a North American vendor (not just U.S.), so they probably just go with one design for both countries. (BTW. Cash registers, [or as we call it, point of sale] is only a mere fraction of what we do)

I wonder how widespread that is. I would think that many cash machine vendors might have a single design to cover both.