The real reason for your proposed dollar coin

[Burnaby49]

A hidden (and grossly inefficient) tax. This article points out why we went to a $1 coin in Canada and why your government is pushing it. I hadn't thought about the "cookie jar" seigniorage profit for the government but it makes sense. We have $1 and $2 coins here and they are very inconvenient. My wallet is often so heavy and bulky that I have to take the coins and use them in smaller batches.

There's talk of us going to the $5 coin next. If they do we'll need shopping carts to carry our small change around.


http://news.nationalpost.com/2012/12/16 ... lar-bills/

[fortinbras]

Frankly, a lot of people don't carry a lot of $1 bills around. They'll carry $5, $10 and $20 bills, even $50 bills, but $1 get bulky real fast. So the description of the problems with a $1 coin are not all that different from what we have now with $1 paper. Presumably, in the future, we'll continue to have $10 and $50 bills in out wallets and when we use them to buy something then we'll get some $1 coins as change. Even now they could give us change in quarters and halves, so I don't see a tremendous difference.

There is already a seigniorage fee associated with the printing of paper money, and considering that $1 paper bills have short lifespans and have to be replaced with new paper bills at fairly short intervals, that fee becomes very considerable even when the amount in circulation remains the same. Since the $1 coin is expected to outlast perhaps ten $1 paper bills, there will be a net saving on that expense.

[Pottapaug1938]

When I am in Canada, my pocket is no more burdened with loonies and toonies than it is with quarters down here. If I walk into Tim Horton's for a box of Timbits, for example, I will simply reach into my pocket and pull out the necessary coins, if I have them.

The reasons why our dollar coins are unpopular down here are 1) we still have a paper alternative, and 2) the dollar is so close in size to the quarter that it's tough to tell, just by touch, if we are touching a dollar coin or a quarter with a worn edge. If our dollar coin was thicker and had a distinctive edge (like the loonie, toonie, 1 Euro and 2 Euro coins), things would be much different. The original small-size coin, in 1977, was to have 11 sides; but the vending machine industry whined like petulant children and proclaimed that such coins would never work (of course, they work just fine in other countries), so the government caved and produced the fiasco known as the Anthony dollar.

[Burnaby49]

There is already a seigniorage fee associated with the printing of paper money, and considering that $1 paper bills have short lifespans and have to be replaced with new paper bills at fairly short intervals, that fee becomes very considerable even when the amount in circulation remains the same. Since the $1 coin is expected to outlast perhaps ten $1 paper bills, there will be a net saving on that expense.

According to the article your anticipated benefit from the longer life from coins isn't that significant. Our dollar bills lasted only about a year but yours have an average life of about five years and cost next to nothing to make. The coin will be, relatively, much more expensive. The GAO calculates that there will be no net savings on production costs between coins and paper and the entire advantage will be in the windfall gain from seigniorage.

[Pottapaug1938]

There is already a seigniorage fee associated with the printing of paper money, and considering that $1 paper bills have short lifespans and have to be replaced with new paper bills at fairly short intervals, that fee becomes very considerable even when the amount in circulation remains the same. Since the $1 coin is expected to outlast perhaps ten $1 paper bills, there will be a net saving on that expense.

According to the article your anticipated benefit from the longer life from coins isn't that significant. Our dollar bills lasted only about a year but yours have an average life of about five years and cost next to nothing to make. The coin will be, relatively, much more expensive. The GAO calculates that there will be no net savings on production costs between coins and paper and the entire advantage will be in the windfall gain from seigniorage.

This is the first time, in many years, that I have ever seen a claim that our dollar bills last much longer than six months -- and that's been the case for many years, going back to at least the 70s and probably further back. I wouldn't be surprised if someone at Crane & Co. fed the figures to the GAO....

[Burnaby49]

And now an example of what I assume is reverse seigniorage. The Canadian government has stopped minting the penny and is now going to try and redeem the outstanding float. However the net value of the metals in the penny after smelting will be less than the price the government will pay to redeem them so, during the transition, the anticipated savings from their elimination will be much less than anticipated. This analysis is however somewhat misleading. The redemption cost is really just a one-time implimentation cost of the changeover. The annual savings are permanent.

http://www.cbc.ca/news/canada/story/201 ... vings.html

[fortinbras]

Very curious about the Canadian phase-out of the penny (the one cent coin). Does this mean that henceforth all prices, fees, etc. will end in some multiple of 5¢? I imagine that for some transactions, rounding upward to the nickel will make it more expensive than previously. Is there any provision for change, refunds, etc., of less than 5¢??

[Burnaby49]

Very curious about the Canadian phase-out of the penny (the one cent coin). Does this mean that henceforth all prices, fees, etc. will end in some multiple of 5¢? I imagine that for some transactions, rounding upward to the nickel will make it more expensive than previously. Is there any provision for change, refunds, etc., of less than 5¢??

Nothing is legislated, it's left to the common sense and ingenuity of the populace. Keep in mind this does not affect prices, fees, etc since the only time penny coins are actually needed is in change for cash transactions. All pricing, accounting records, bank statements, bills, credit, debit, and cheque (Canadian spelling) payments, and the other vast array of non-cash methods of billing/paying will be recorded down to the penny the same as before. If I'm billed $40.93 by the phone company and pay by cheque or if I buy $40.93 of groceries and use a debit card my payment will still be $40.93. It is only an issue if you pay cash, a rarer and rarer event, at least here in Vancouver. Right now it is a non-issue since we still have approximately six billion pennies in the float (about 200 for each person in the country!). When they are eventually out of circulation the recommendation is to round change to the closest nickel. While retailers might be tempted to round in their favour the overall effect on a hypothetical cash purchaser, say me, will be entirely trivial. Maybe a few bucks every year. Well worth it to stop dragging around a wallet full of worthless metal discs.

[Pottapaug1938]

If I recall correctly, Canada will use "Swedish rounding"; and if I recall correctly, it will work like this: totals ending in 1 or 2 will be rounded to 0. Totals ending in 3, 4, 6 and 7 will be rounded up or down to 5. Totals ending in 8 or 9 will be rounded up to 0.

The net effect will amount to chump change, if anything.

[Burnaby49]

If I recall correctly, Canada will use "Swedish rounding"; and if I recall correctly, it will work like this: totals ending in 1 or 2 will be rounded to 0. Totals ending in 3, 4, 6 and 7 will be rounded up or down to 5. Totals ending in 8 or 9 will be rounded up to 0.

The net effect will amount to chump change, if anything.

First I've heard that we have a specific proposed system however I haven't been paying much attention. As you say it will probably amount to nothing in the end. Seems a bit complicated given that the net effect is only to cover how transactions that end in $0.03 are handled. For all I care the retailers can have the tie-breaker and keep the whole penny.

[Pottapaug1938]

Down here, there is widespread wailing and gnashing of teeth when anyone proposes getting rid of pennies. It's viewed as an evil corporate plot to jack up prices and build profits; and people talk about the cent as if its size, weight and design were ordained by George Washington himself and are thus sacred. We also have to deal with hordes of half-wit pundits who warn that we will have to update many old cliches and aphorisms such as "a nickel saved is a nickel earned", or perhaps "a nickel for your thoughts", just as when proposals are made to introduce the metric system down here ("a miss is as good as 1.60934 kilometers").

[Burnaby49]

We've been on metric for decades. Took a bit of a learning curve for we old-timers but overall no problem. To save on packaging costs they didn't change them. Packaged food comes in the same sizes you have in the states but just has a different volume/weight number on the label. As an example we still get butter in pound blocks but its labeled 454 grams.

Driving speeds were surprisingly easy. Our two main speeds were 60 MPH highway and 30 MPH city. Those translated very neatly into 100 KPH (actually 62.14 MPH) highway and 50 KPH city. No doubt there were a lot of hidden costs in manufacturing, shipping, industrial sizes etc but it didn't seem to affect anything that anyone noticed and any transition is long over.

[Mr. Mephistopheles]

There is already a seigniorage fee associated with the printing of paper money, and considering that $1 paper bills have short lifespans and have to be replaced with new paper bills at fairly short intervals, that fee becomes very considerable even when the amount in circulation remains the same. Since the $1 coin is expected to outlast perhaps ten $1 paper bills, there will be a net saving on that expense.

According to the article your anticipated benefit from the longer life from coins isn't that significant. Our dollar bills lasted only about a year but yours have an average life of about five years and cost next to nothing to make. The coin will be, relatively, much more expensive. The GAO calculates that there will be no net savings on production costs between coins and paper and the entire advantage will be in the windfall gain from seigniorage.

This is the first time, in many years, that I have ever seen a claim that our dollar bills last much longer than six months -- and that's been the case for many years, going back to at least the 70s and probably further back. I wouldn't be surprised if someone at Crane & Co. fed the figures to the GAO....

I just looked through the several $1 dollar bills in my wallet and the newest one was printed in 2006 and the oldest in 2003. I do live in a relatively sparsely populated region and that may effect the longevity of dollar notes.

[Pottapaug1938]

There is already a seigniorage fee associated with the printing of paper money, and considering that $1 paper bills have short lifespans and have to be replaced with new paper bills at fairly short intervals, that fee becomes very considerable even when the amount in circulation remains the same. Since the $1 coin is expected to outlast perhaps ten $1 paper bills, there will be a net saving on that expense.

According to the article your anticipated benefit from the longer life from coins isn't that significant. Our dollar bills lasted only about a year but yours have an average life of about five years and cost next to nothing to make. The coin will be, relatively, much more expensive. The GAO calculates that there will be no net savings on production costs between coins and paper and the entire advantage will be in the windfall gain from seigniorage.

This is the first time, in many years, that I have ever seen a claim that our dollar bills last much longer than six months -- and that's been the case for many years, going back to at least the 70s and probably further back. I wouldn't be surprised if someone at Crane & Co. fed the figures to the GAO....

I just looked through the several $1 dollar bills in my wallet and the newest one was printed in 2006 and the oldest in 2003. I do live in a relatively sparsely populated region and that may effect the longevity of dollar notes.

The dates on your bills have nothing to do with the date of printing. Instead, they identify the Series to which the bills belong. Historically, a change in Series date was triggered by major changes in the design, while series letter-suffixes were triggered by a change in signatures. Thus, for example, Series 1935G and 1935 H $1 silver certificates were still being printed in the early 1960s.

The current series is dated 2009. If, next month, Timothy Geithner resigned as Secretary of the Treasury, to be replaced by David Van Pelt (yeah, I know -- frightening to contemplate, but I just wanted to see if you are still paying attention), the new series would be either Series 2009A or Series 2013.

[Burnaby49]

Apparently the Canadian government is expecting a few glitches during our transition to a no-penny world:

http://www.vancouversun.com/Businesses+ ... story.html

[notorial dissent]

There's talk of us going to the $5 coin next. If they do we'll need shopping carts to carry our small change around.

Which is precisely why we still have paper bills, and why it is worth a politician's political life to suggest anything else.

[Burnaby49]

There's talk of us going to the $5 coin next. If they do we'll need shopping carts to carry our small change around.

Which is precisely why we still have paper bills, and why it is worth a politician's political life to suggest anything else.

It's the curse of politicians focusing on trivia while squandering our future. They spend billions (Billions in Canada, we're just bush league, you Americans think in bigger terms so your politicians squander trillions) on pandering to their electorate while they boast about their fiscal prudence by saving totally irrelevant amounts on issues like this. While I am in full agreement with dumping the penny, and nickel if it came to that, the circle-jerk political bragging about how they saved nothing by moving from paper to coin only means more inconvenience for the electorate without any commensurate return like, say, a lower tax rate.

[notorial dissent]

I pretty much agree with most, if not all you have said here. That being said, I don't see it happening here any time soon, as it would be hazardous to their continued employment. I too wish they would find something else less expensive to do with themselves, but it seems to be the nature of politics, and pretty much always has been.

I personally blame air conditioning and probably central heating as it allows them to stay in DC too long.

[Gregg]

The current series is dated 2009. If, next month, Timothy Geithner resigned as Secretary of the Treasury, to be replaced by David Van Pelt (yeah, I know -- frightening to contemplate, but I just wanted to see if you are still paying attention), the new series would be either Series 2009A or Series 2013.

I had a heart attack 4 days ago, don't do that!

[rogfulton]

The current series is dated 2009. If, next month, Timothy Geithner resigned as Secretary of the Treasury, to be replaced by David Van Pelt (yeah, I know -- frightening to contemplate, but I just wanted to see if you are still paying attention), the new series would be either Series 2009A or Series 2013.

According to Wikipedia (see the section Since 1928), the year in a series refers to a major design change and the letter refers to a minor change. A change in Treasurer is considered minor but a change in Secretary has been considered a major one since 1974.

Once Geithner's replacement is sworn in, the new series would be 2013.