A member of the US Congress has introduced a bill to eliminate the penny from the coinage. But why do we need a law? Merchants have found a way to deal with the declining value of money with these penny trays at stores. The more fundamental problem is how government control of money and coinage has meant steady declines in its purchasing power. We must deal with this or face a future of “government a dollar, take a dollar” trays at stores. FULL ARTICLE
Source link: http://blog.mises.org/5375/give-a-penny-take-a-penny/
Give a Penny, Take a Penny
Previous post: How Environmentalism Raises Profits at the Expense of Wages
Next post: New Working Paper on Hazlitt and Keynes
{ 41 comments }
It appears that the penny must still have value since some are willing to steal them from the mercant’s trays.
Check the price of “golden” dollar coins at:
http://catalog.usmint.gov/webapp/wcs/stores/servlet/CategoryDisplay?langId=-1&storeId=10001&catalogId=10001&identifier=3000
Re: the phoney Indian, phoney Golden, phoney dollar coins (as mentioned above) are selling for more than penny, — true.
But several things are wrong with this picture. Shoshone women are pretty. This Indian is not pretty. Her name certainly is not pretty, either.
And there is no gold in the coin. It isn’t even gold plated.
So why would anyone pay such a super high premium to a United State mint for this uncollectible, uncirculatable, phoney coin?
They wouldn’t, would they? Unless they bought them at the post office for 100 cents,
Here are some interesting facts and conclusions I was able to put together. As we all know, modern coins face values are no longer tied to the metallic content, however, with the rise in prices on base metals, the nickel almost looks like a business opportunity with a face value less than that of the value of its metallic content:
(all figures based on market prices on 7/17/06, which is when I calculated this)
Data from
http://www.usmint.gov/about_the_mint/index.cfm?action=coin_specifications
The penny weighs 2.5 grams.
It is 97.5% Zinc, 2.5% copper.
So by weight the penny is:
2.4375 grams of zinc.
.0625 grams of copper.
The current price for zinc is $1.5362/lb (now for the stupid metric customary conversions)
http://www.kitcometals.com/charts/zinc.html
The current price for copper is $3.6315/lb
http://www.kitcometals.com/charts/copper.html
1 pound = 453.59237 grams
Therefore a penney has 2.4375/453.59237ths of a pound of zinc and
.0625/453.59237 of a pound of copper which at today’s prices are worth approximately:
For the zinc, .0083 dollars or .83 cents and
For the copper 0.0005 dollars or .05 cents.
This yields a metallic value of:
.87 cents in a penny.
However, currency debasement may soon change that.
But right now it is still worth more than the metallic content.
At today’s prices, the metallic content of a nickel are worht more than 5c!!!
Therefore trading dollars for the equivalent face value in nickels could be a money maker!
Data from
http://www.usmint.gov/about_the_mint/index.cfm?action=coin_specifications
The nickel weighs 5 grams.
It is 25% Nickel, 75% copper.
So by weight the penny is:
1.25 grams of nickel.
3.75 grams of copper.
The current price for nickel is $13.1088/lb
http://www.kitcometals.com/charts/nickel.html
The current price for copper is $3.6315/lb
http://www.kitcometals.com/charts/copper.html
1 pound = 453.59237 grams
Therefore a nickel has 1.25/453.59237ths of a pound of nickel and
3.75/453.59237 of a pound of copper which at today’s prices are worth approximately:
For the nickel, .0362 dollars or 3.62 cents and
For the copper .030 dollars or 3 cents.
This yields a metallic value of:
6.62 cents in a nickel!
Therefore a 20 nickels ($1 of face value) would be worth $1.324 or a profit of .32
Multiply that out….
Nice profit!
I’ve thought for a long time that central banks ought to replace their gold-and-silver-pretend coinages with brightly colored plastic coins, just to be honest with us about the true value of fiat money.
There used to be a British two pound gold coin. The ersatz ‘gold-and-silver’ copy these days, mostly made of zinc, is very nearly down to 1% of the original value, due to British government inflationary theft over 120 years (details here).
This two pound coin should go to under 1% of its original gold value, in less than five years. Thank you Mr Keynes.
I read your article with interest. Here in South Africa, we face a similar issue, with our 1 and 2 cent coins ( steel coated with a copper alloy)already costing more to mint than their exchange value! Drill a hole through a 1 cent coin, and you have a cheaper washer than you can buy at the hardware store. They are fast fading from the scene in any event, although I dont think there is any legislative activity around the issue as yet – simply a matter of increasing irrelevance.
I havent seen the give ‘n take trays emerge here yet. The concept seems rather odd to me, because it suggests the retailers using them over there in the US are too bureaucratic and inflexible to adapt their bookkeeping systems, policies and marketing to the increasing irrelevance of these coins, so their staff and customers are left to devise their own messy work-arounds to the practicalities – Those trays are an indictment against the store’s senior management!).
Our largest retail chain ( Pick ‘n Pay, a smaller sort of South African equivalent to Walmart), no longer makes change with 1s and 2s at all, nws the legal tender status of these coins for small transactions. But they have adapted their tills to round off the trolleyload total price to a 5 or 0 digit – But, they ONLY ROUND DOWNWARDS, not up – so R5.94 becomes R5,90. The cost to the retailer is miniscule given average shopper trolleyloads measured in the hundreds of rands, but the kudos in the eyes of their clients is clearly worth it.
On a related point, the SA five Rand coin still carries enough value to make counterfeiting the ( all-steel with a nickel coating) coin worthwhile to those with the equipment to work and coat ordinary soft steel – even if the copies are easily identifiable to those who are observant enough. SO the mint had to enhance the R5 coin and it is latest incarnation is now literally bimetallic (tragic pun intended!) – a brassy-coloured alloy in the centre, surrounded by nickel-coated steel. Within days of its first issue, it had acquired a lovely nickname: the fried egg.
[quote: "...A member of the US Congress has introduced a bill to eliminate the penny from the coinage. But why do we need a law? ..."]
A change in law is required because the “Legal Tender” law mandates that merchants still accept the “Penny” for payment… no matter how trivial or inefficient it is.
Due to currency debasement, today’s dime is equivalent to a year 1950 penny.
Of course, there was no ‘tenth-penny coin’ in 1950 — and American commerce did quite well without one.
Why do need a ‘tenth-penny’ coin today ??
IMO the Federal “Penny” is still produced & legally-required because the Potomac Establishment doe not wish to publicly highlight their currency-debasement by directly removing a quite familiar but worthless coin from citizen pockets.
Back when the only legal money was gold and silver the working class people didn’t have much (any?) gold or silver.
Maybe one of you out there can tell us how much gold and silver per capata was in circulation in 1800 and in 1935.
David,
Does not this: “no longer makes change with 1s and 2s at all, nws the legal tender status of these coins for small transactions. But they have adapted their tills to round off the trolleyload total price to a 5 or 0 digit – But, they ONLY ROUND DOWNWARDS, not up – so R5.94 becomes R5,90. The cost to the retailer is miniscule given average shopper trolleyloads measured in the hundreds of rands, but the kudos in the eyes of their clients is clearly worth it.”– subvert your previous exclamation of: “Those trays are an indictment against the store’s senior management!).”
The principle and principals(store owners), are the same in both instances, no?
Crashpanic’s comments made wonder how you goldbugs square the cost of minting into your desire for gold and silver based money. Pretend that in your wildest dreams the government or some other entity began to mint gold dollars with one dollar’s worth of gold in them. What are those coins worth when you factor in the capital and labor involved.
What if it costs only a penny to mint a one dollar gold coin? Is the dollar valued at $1.01 or do you use 99 cents worth of gold and then call it a dollar? Eventually the coins wear out and they have to be retired, assayed, and reminted, how do you factor that in? That can be up to twenty times as expensive as minting the coin in the first place. What happens to the value of the coins when the cost of capital and labor for minting changes? Who is it going to pay; the mintor or mintee?
Not so:
Snopes article.
In fact, the government itself has been known to refuse pennies from monkeywrenchers:
Accepting utilities payments in pennies.
No, you would make gold and or silver with the weight of the gold depicted. My annual salary would be 100 oz of gold. I would buy a used car for 20 oz of gold, although I negotiated the seller down to 19.65 oz. I pay for a can of coke with my 1/10 oz silver piece. Gas prices just went up from 0.300 oz Ag to .330 oz Ag
The minters of the silver and gold coins would eventually shake out so that the best quality cheapest coins would be produced. No US gov needed. There would also be a business for electronic payment which would not go away.
As discussed on this website the banks would actually charge to hold your money. Unless you were willing to allow them to hold it for a designated time period then it might be free or they would pay interest. This would allow others to borrow the same gold/silver. WOW, banking without the government – is it even possible?
This brings about fractional banking and if that is designated as fraud or not. An interesting debat that even Austrians disagree on. My thought is that its not fraud as long as the risks are disclosed. For example 100oz of physical gold vs a note with a claim on 100oz of gold. The bank would disclose the amount of gold on hand and those taking the notes would weight their value. Similar to how the bond market works. A triple AAA rated GE bond sells for par while a B- rated Ford bond sells for 80% par. In the end the market would clear the “bad money”, ie the seller of a lemon vehicle might be motivated to accept near default money.
An interesting debate, that
On fractional reserve banking. I suppose it a banker said “I have X amount of gold in my vaults, but I am issuing five times more notes than I have gold to cover” it would NOT be fraud.
But did they ever do that?
How many notes (or whatever) were produced was left vague, how much gold (or whatever other commodity the notes were supposed to represent) was left vague as well.
In the much praised Scottish “free banking” system a customer could get into real trouble if he asked for gold when presenting a bank note (delaying tactics, pointing to the courts friendly attitude to the banks and so on) – and whenever these “independent” banks ran into trouble they would run to the Bank of England to bail them out.
By the way WHY would a bank issue more notes (or drafts or whatever) than it had commodity in the vaults?
A basic principle of economics is that loans must be financed by savings – real savings.
If I want to spend more than my income (say buying a factory) some other people else must spend less than their income (and then lend the money to me – either directly or via a financial institution).
“Credit expansion” (via notes, drafts or whatever) is a way of some people borrowing without people saving (to the full amount) – it is shell game and leads to the boom-bust cycle.
Bank paper may be useful (for example one is going on a long trip and does not want to carry a lot of gold coins), but there is no basic reason why banks should issue notes at all (even if they have the gold in the vaults).
Why should not a money lender (which is what an honest bank is) simply take coin from depositers and then lend it out to borrowers.
As soon as the coin is lent out the bank (and therefore the depositors) do not have the coin anymore – till the borrower pays the bank back.
The bank would make its money by being a better money lender that a private individual would be – i.e. from the difference in the interest in offered to depositors and the interest in charged to borrowers (after all that is what is supposed to happen now).
For people who want to keep their money safe a safe deposit holder (a different business from money lending) would be an alternative.
Although some financial institutions might choose to offer both services – but the customer would have to be clearly told which service he was getting.
For people who just wanted safe deposit services (the money not lent out to anyone) would have to accept that the bank would charge them for protecting their money in the vault.
Some banks (the Bank of Hamburg and the Bank of Amsterdam spring to mind)lasted for centuries without playing fractional reserve games (even state institutions are not always crooks).
On coins.
Of course it is the fixing of exchange rates (between gold and silver coins or between coins and notes) that is the cause of the trouble.
Even in the early 20th century Chinese merchants simply worked out the purity of a coin (volume it displaced in relation to the weight – “I have found it” style, although no one went running down the street naked) and then valued the coin by its weight of either gold or silver. In fact (with common coins) they already knew the purity of a coin (and therefore did not have to test it).
They, rightly, did not care what the coin was “supposed” to be worth according to the laws of some far off government.
One of the little known stories of American “imperialism” is the efforts of various American governments to demand that Latin American governments accept rigged exchange rates.
I put the word “imperialism” in quotes because a Latin American government could always say “no” (without any invasion) – even Cuba (liberated from Spain in 1898) said “no”. So much for Cuban governments before Castro being “puppets of the U.S.”.
Normally the best thing to do with an American “economic expert” (whether it was the “money doctor” in early 20th century Latin America, or the people who helped Chang into hyper inflation in China, or the people who advised the Shah on the “White Revolution” in Iran) is to tell them to go home.
Well the main reason eliminating the penny from the currency would be a problem is because the sales tax (especially the ones that are 8% or 7.75%) on small purchases (i owe you 2.02 so you round down! not up!). I doubt anyone would use pennys at all if they did not have to deal with the sales tax. I don’t mind dropping the penny if we have to constantly deal with inflation. I say, get rid of the all sales taxes and consumption taxes, and the penny issue will take care of itself, maybe those not-so-nickel nickels too. Thats my 2 cents!
I would warn anyone against such things as trying to make money on the metal content of coins – remember the government can simply change the content (and there is the cost of melting the coins down and seperating out the metal that is valuable).
Even making money on metal itself is highly risky.
Governments may buy or sell vast amounts of metal and thus change the price over night.
Sometimes they do this out of pure spite – such as when the Hunt brothers of Texas looked like making a lot of money by buying up silver.
The government did not like the Hunt brothers – so it sold a lot of silver at a key time (in order to hit them).
By all means buy gold and/or silver (although remember you may well need the firepower to protect such things), but do not expect to make money by speculating in them.
After all one man (President Putin of Russia) could (if he felt like it) hit any metal market at a key time (just to bankrupt a few investors – remember government people act on whims).
Russia has vast ammounts of almost any metal – and Mr Putin has proved that he quite willing to steal private property.
Such things as gold or silver (or other metals) are most likely good long term investments – but they are not for short term speculation.
Translation – do not borrow money in order to invest in the metals market (the bottom can be knocked out of such markets, in the short term, by government dumping).
On Bank Notes.
Lets say I run a bank and hold deposits that almost never get withdrawn. Assume I am not fraudulent and state, I own 1000 oz of gold and have loaned 2000 oz of gold in the form of notes. The holder of the notes can cash them in for gold if available. If over time, I am consistently able to cash the notes, they become equivalent to gold. If there is a run on my bank I can go to another gold lender and pay his fee for a short term loan. This all sounds familiar to today’s banks. However, the real flaw was in not allowing banks to fail and learning the lesson of sound money.
Anyone who accepts my note instead of gold itself is entering into a non coerced contract. With full disclosure there is no fraud. As long as risky banks are allowed to fail, the strong banks survive and life goes on. Austrian econ doesn’t relieve the system of the boom bust cycle, just those casued by money supply growth.
Also, I think you misjudge the convenience of paper/electronic money. While it doesn’t have intrinsic value, it does represent everything money is supposed to be. So we sacrifice intrinsic value for security of loss/theft as well as easier division, carrying weight, etc.
An easier solution (as is usual in EU/VAT) countries would be to include the tax in the advertized price. The common US system (where a merchant announces a price without the tax) is little more than an advertising scam.
How is not including the tax a “scam” and is the proposed solution a new law of some sort? The last thing we need is to make any tax less visible in the eyes of those forced to pay them.
Ed,
“Lets say I run a bank and hold deposits that almost never get withdrawn. Assume I am not fraudulent and state, I own 1000 oz of gold and have loaned 2000 oz of gold in the form of notes.”
You have to back up a bit. You run a bank and you propose to hold a depositor’s gold for him, and you tell him that although he is going to maintain title of ownership (a right to exclusive control) to his gold in your vault, you are going to loan out new duplicate titles of ownership (rights to exclusive control) to this same gold in your vault. You will tell him that others who own these new duplicate titles will be able to redeem the gold, and if they do so, this depositor will not be able to do so, because although there are duplicate titles to his property, there is obviously only one true property. To avoid defrauding your potential depositor, you tell him that under the situation where he tries to redeem and cannot redeem, because a borrower has already done so ahead of him, the bank will at that point either:
a) be bankrupt and go into receivership and the deposit may be lost for good
b) execute a suspension of redemption clause on his actual non-title to ownership of his gold until loans can be collected.
If you offer option (a) above, you will not find many depositors to do business with. They are not interested in exchanging property for lottery tickets to the same property.
If you offer option (b) above, you will be offering essentially to borrow his gold, transferring title to the gold from the lender, to the bank, in exchange for his title to the gold in some distant future time; he lends you his gold. You will then essentially offer him a line of credit to the extent of the amount he loaned you, subject to suspension on no notice as the needs of the bank requires. You may find lenders for this arrangement, but this will NOT be fractional reserve banking. Also, you will not attract depositors who wish to maintain title to their gold; that is: those who wish to truly deposit money in your vaults.
Therefore, FR banking under condition (a) above, will not get off the ground due to lack of interest by depositors. And under condition (b), above, you are proposing a pretty simple and non-fraudulent loan banking arrangement, but it is not deposit banking and it is not FR banking.
The only way to successfully implement true FR banking is to do it fraudulently. You must provide the elusion of title to the depositor’s gold to remaining in the hands of the depositor, while at the same time, you must lend out new duplicate and counterfeit titles to this same gold to borrowers. All holders of such fraudulent titles to gold money must remain under the impression that they are exclusive holders of titles, or a run on your bank will ensue. Therefore, for all practical intents and purposes, FR banking is necessarily fraudulent.
ME Hoffer said:
Does not this: “no longer makes change with 1s and 2s at all, nws the legal tender status of these coins for small transactions. But they have adapted their tills to round off the trolleyload total price to a 5 or 0 digit – But, they ONLY ROUND DOWNWARDS, (snip).”– subvert your previous exclamation of: “Those trays are an indictment against the store’s senior management!).”
The principle and principals(store owners), are the same in both instances, no? ‘
You are right – I expressed myself poorly, and ‘indictment’ is probably too strong a word.
The ‘principals’ are different as I was comparing one type of business that uses the small change trays , to another that has deliberately dispensed with the need to bother with them. The principles, granted, are still the same. Let me attempt to make the small point clearer.
The use of the ‘give and take’ tray on a narrow view is a fine example of co-operative innovation that emerged among till operators and customers to get around an increasingly microscopic precision in the store’s accounting system requirements. I was (indirectly I suppose) questioning the need for store management to retain that level of administrative detail that generates the need for the trays in the first place, when they could easily just issue a policy directive to tell their staff to round down ( and perhaps adapt their accounting software) and thereby dispense with the need to mess about with moving little bits of metal from a tray into the till and back again during the course of a working day, when the transactional relevance of this activity has all but disappeared.
In other words, the emergence of the trays carries a faint echo of the innumerable wasteful and pointless activities citizens are compelled to pursue in order to comply with, or circumvent, the obstacles placed before them by mindless governmental bureaucratic rules. And in my view, that sort of adherence to ‘form over substance’ has no place in any business venture.
David
tis,,tis….that Bill has little to do with pennies, except to create a stir like this….HR5818 main purpose is contained in Sec 8 of the Bill
SEC. 8. TRANSFER OF THE UNITED STATES MINT AND BUREAU OF ENGRAVING AND PRINTING TO THE FEDERAL RESERVE BOARD
Finally, Good Point, Jim.
The magic the MSM weaves~
Paul,
Great points. I would only hestitae to pretend to know what all customers would and would not be willing to do with their deposits. Even after the Great Depression people still used banks, though they were much more wary. Today, a depositor wouldn’t even read the fine print. Imagine one bank holds 100% but charges a fee for deposits (as would probably be necessary) and another bank provides all kinds of free services (checks, ATMS, computer access etc etc.) but tells the customer (Lets even assume full friendly disclosure) that the 100% of deposits may not be available at every single moment. I think this type of business would be viable. Given enough incentives, I would consider the risk of losing my deposits worth it. I’m sure an insurance company (take away FDIC of course) would cover me for a proper fee.
You make a great point to differentiate between a person making a loan to a bank vs a deposit. Very easy for the layman, such as myself, to overlook; but a vital difference – thanks for clarifying.
The argument for eliminating the penny is reasonable. Another solution would be to revalue American “money” by administratively declaring that all electronic money balances in federal accounts be divided by ten thus a $10 million balance would become a $1 million balance. Call them ndollars. Ndollars would be worth ten times the old dollar. Gresham’s Law teaches that each person, business, and international money trader would instinctively revalue their “dollars.” After a month or so people would drop the “n” to save bandwidth.
If this was done, I ask you all, what would be the psychological effect on economic activity? For example, say a person with $100 in his pocket was willing to buy a nonessential for $10. If he had $10 in his pocket would he be as willing to purchase the same item for $1? Would people shop wiser if they had smaller numbers to work with?
Ed,
“Great points. I would only hestitae to pretend to know what all customers would and would not be willing to do with their deposits.”
Thanks. This is where praxeology comes in so handy. Presume all customers are self-interested because they indisputably are; this is why they act. Second we must ask what money is, and for what purpose people hold it. People hold money balances for a specific purpose: it is due to an uncertain future and the perceived need to at an unknown moment, be instantaneously able to spend this cash on present and consumable goods. Loans converted to suspendable lines of credit, while not fraudulent if disclosed as such, do not fulfill this necessity and they are categorically different to plain cash holdings; they introduce uncertainty in availability that cash balances do not posses. Therefore, those wishing to deposit cash with a bank and maintain this as a cash balance, i.e. wish to maintain title to their money, necessarily will not be interested in lending the money in exchange for an uncertain line of credit. This is indisputable.
“Even after the Great Depression people still used banks, though they were much more wary. Today, a depositor wouldn’t even read the fine print.”
Today we have the FDIC, the FED as lender of last resort, bank libel laws, and legal tender laws. People presume they can remain ignorant of fraudulent banking procedures because the government sanctions and is in fact, complicit in these actions and so it will bail us all out in any event at tax-payer expense. There is and has been so much government intervention in banking that we cannot use history to deduce what only praxeology alone can definitively tell us about how people would behave in a free market.
“Imagine one bank holds 100% but charges a fee for deposits (as would probably be necessary) and another bank provides all kinds of free services (checks, ATMS, computer access etc etc.) but tells the customer (Lets even assume full friendly disclosure) that the 100% of deposits may not be available at every single moment. I think this type of business would be viable.”
This “redemption suspension option” approach amounts to option (b): the loan/line-of-credit-plan. It is not fraudulent and it is not FR banking, and it may well be viable, but it will not be attractive to the depositor who wishes to maintain title to his deposit. This plan transfers title of the deposit from the customer to the bank (making it, in fact, a loan to the bank).
“Given enough incentives, I would consider the risk of losing my deposits worth it.”
In option (b), you are only lending your money to a loan bank. It’s hardly risky at all compared to depositing to a real FR bank, which essentially promises that multiple titles in addition to your own title to your deposit will be issued and will be claimed by other customers of this bank. True FR banking really amounts to entering a lottery on recovering your deposit. It depends on fraud for depositors to be willing to participate.
“I’m sure an insurance company (take away FDIC of course) would cover me for a proper fee.”
This is a false and probably prevalent perception and it is fraudulent government institutions such as the FDIC that induces such errors in thinking. There is no free market insurance that would be willing to ensure even apparently sound investments. And they’d be truly nuts to insure a FR deposit, as it makes the bank insolvent by definition.
“You make a great point to differentiate between a person making a loan to a bank vs a deposit. Very easy for the layman, such as myself, to overlook; but a vital difference – thanks for clarifying.”
You’re welcome. Banking is one of my favorite topics. I find that the introduction of the concept of the “redemption suspension option” and the “proper disclosure” concept have both kind of clouded the water of the FR banking debate. The former changes the characteristic of the activity so dramatically, that it is not even deposit banking, let alone FR banking; and the latter makes it so blatantly clear to the depositor that it is highly unfavorable to him that it could never get off the ground in that form.
Viable fractional reserve banking is fraudulent banking.
Fair enough, I suppose I am thinking of the loan to the bank (option b) Option a or true FR banking is as if the bank could loan out the money I put in a depsoit box. If the government got out of the way, I imagine the world of banking would be dominated by the transfer of assets as you mentioned. The on demand deposit would be minimal. Until a wave of bank defaults occured.
Paul,
With this: “There is no free market insurance that would be willing to ensure even apparently sound investments.”
Wouldn’t “credit default swaps” fit the bill?
Hi M E,
I don’t think that’s the kind of insurance Ed was talking about, which is the depositor pays a premium which gets pooled in a risk pool that is determinable. Sort of like house insurance. I’ve really never heard of the idea of individual deposit bank customers participating in fancy derivatives markets to ensure the safety of their deposits, or loans to banks.
And although, i’ve not studied the derivatives markets much, i’d think they arose because insurance companies simply couldn’t provide insurance in the classical sense that we think of them providing.
A couple errors.
Silver is a soft metal. Details wear down very quickly in circulation.
Modern US coins are not faced with silver, as you suggested, the reverse and obverse sides are a mixture of nickel and copper. 1964 was the last year 90% silver coins were made for circulation. The Kennedy halves were 40% silver thru 1970. Those quarters and dimes in your pocket have no silver in them, else folks would be hoarding them, not spending them with silver at $11+/oz.
Paul,
I hear ya, I was just thinking that the “bank” could securitize its pool of loans (CDO, MBS, et al.) and purchase “credit default swaps” as insurance against its investments “going south”, thus leaving the “bank” insolvent and its “depositors” out to dry.
I agree, it’s not quite the same thing.
As well, I agree, the FDIC is a horrid conceit.
To appreciate what a loser they are, imagine somebody gave you all the pennies you wanted free. All you had to do to receive them was count them and wrap them in rolls of fifty by hand. Do you think you could count and wrap an amount equivalent to your current wage rate? If the answer is no, then you lose every time you are involved with a penny.If Ben Franklin were writing today, he would probably have said a penny saved is time wasted.
Just to clarify, the Spanish plural word for a real is reales, as in:
Un real (one real)
Dos reales (two)
Tres reales (three)… et cetera, and not reals.
Back when the only legal money was gold and silver the working class people didn’t have much (any?) gold or silver.
What do you mean by not having? How can you know this? Gold or silver was not money because it was legal, but because money is whatever two or more people decide it will be, for their voluntary trades. Gold, Silver and other metals can become money because people decide it. In contrast, legal tender becomes “legal” by government mandate, meaning it is imposed by force.
Also, the term “working class” is in itself meaningless, since it implies another class of people that do not work, which is unrealistic to the extreme [i.e. a marxian fantasy]
Maybe one of you out there can tell us how much gold and silver per cap[i]ta was in circulation in 1800 and in 1935.
The question is meaningless, since the only thing that changes with the quantity of gold or silver is the relative price between the metals and other goods. The price of gold or silver serves as a point of reference but that is it.
pb,
“If Ben Franklin were writing today, he would probably have said a penny saved is time wasted.”
or, maybe: “A “dollar” saved, is U$D 1.47 earned.”
To appreciate what a loser they are, imagine somebody gave you all the pennies you wanted free. All you had to do to receive them was count them and wrap them in rolls of fifty by hand. Do you think you could count and wrap an amount equivalent to your current wage rate? If the answer is no, then you lose every time you are involved with a penny. If Ben Franklin were writing today, he would probably have said a penny saved is time wasted.
Sounds like a great job. Sign me up! I can count 50 pennies in way less than one minute, I can wrap the pennies in less than 30 seconds. That’s what? – 40 rolls an hour? Pretend I have no ambition and it’s only 30 rolls an hour. That’s still $15 an hour. Way better than lots of folks are currently earning. Now, if I can do this at home and don’t have to commute, buy a wardrobe, face a boss… I can think of worse jobs.
The nominal value of US copper cents (pre-1982)and nickels have in fact exceeded face value. However, the economics of separating the zinc from copper pennies are daunting.- The only reliable way is to read the dates. This is time consuming. About 35% of cents I’ve sorted are copper. I am doing the sorting in Europe just to avoid transporting the coins back to the USA.
A second point to remember. You will not get anything close to LME prices for coinage metals. If you get even 75%, you should count yourself fortunate. Even getting that may require handling tons and not just a few kilos.
I would advise anyone thinking about it just to cash the coins and spend the money on something better. Being a scrap metal dealer is hard work!
If one values the Current Dollar against and Constant Dollar (CPI 1913=100) or a Gold Dollar (gold price/20.67), todays Dollar is worth a bit less than 0.05 Constant Dollars or 0.0333 Gold Dollars. This approximates where the French Franc, Belgian Franc and Italian Lira were at after 1920. You can see the changes the the coinage systems in the Standard Catalog. Centimes went out of use and there were alterations to other denominations. Sadly, US coinage will follow sooner or later. Cents and probably nickels will go, forced out by the high cost of production. Our “mighty buck” is just a devalued Lira now.
Well when the metallic value in the coins is higher than the nominal value of the coin itself, it means that inflation is exploding. Regrettably for the FED and all the central banks of the world, it is the ultimate indicator that the dishonest statisticians cooking the CPI numbers, can no longer hide the brutal fact! Much much bigger inflation and monetary debasement lies ahead. I see this strange phenomena as the ultimate, the NEC PLUS ULTRA measure of monetary expansion. Expect dramatic monetary debasement of all fiat currencies !
At the market it takes longer to process a check
or card purchase than a cash purchase. The time wasted puts money in a third party pocket. Cash taken in trade is safer than credit. Used to be that stores offered discounts for cash. Maybe someday…
Yes, but the U.S. nickel is made of a mixture of 75% copper and 25% nickel. It then becomes cupronickel which is not easy or cheap to seperate back into copper and nickel again. Cupronickel is not in as great demand a pure nickel or copper is. It has limited industrial uses unlike copper and nickel alone.
Don’t waste your time hoarding nickels for their metal value. The market for cupronickel will be flooded for years if and when they start to melt nickels down for their scrap metal value.
It’s interesting to see just how permeant digital memory has become in our lives. It’s like everytime I turn my head, I see something with a card slot or USB port, haha. I guess it makes sense though, considering how much more afforable memory has become lately…Ahhh, who am I to complain. I can’t make it through a day without using my R4 / R4i!(Posted using NePof for R4i Nintendo DS.)
Comments on this entry are closed.