How Long Until People Don't Use Coins Anymore?

@tdziemia




I love it. For transactions with plastic (credit, debit etc.) the actual value is charged so a bill of $1.97 will hit your credit card for $1.97, however if you handed over a $2 coin, you would get a nickel in change.

One of the problems with pennies is that due to their low denomination, they will often end up filling your pocket then the penny jar then, depending on your diligence, rotting out or returned to a bank when the value is 2-3lbs (yes weight not value) Do you think there is a market for Coinmaster machines without pennies?

I fully supported the withdrawal of the Canadian 1 cent coin. I also supported the withdrawal of the $1 note and $2 note when they were replaced with coins in 1987 and 1996 respectively... just like the UK pound in 1984.

The challenge as I see it is that we pay the government to provide us with cash. When a penny costs the government more than 1 cent to mint, transport, recover and ultimately melt then all we are doing is paying tax for nostalgia. This is why the one cent coin in Canada evolved from 95% copper @25.4mm (5.4g copper) in 1876 to 3.1g of copper @ 19.05mm in 1920 to 3.2g of copper in 1942 to 2.7g in 1980 to 2.5g in 1982 to copper plated zinc in 1997 and joined by a multi-ply steel alloy in 1999. All to manage the overall cost of the penny. When it was retired in 2012, it was costing 1.6 cents to produce each penny and the move was estimated to save $11 million dollars per year. Note this reduction in government spending had no impact on commerce. Free money for the government means a longer delay before the inevitable next tax increase. With the much higher mintages of pennies in the US, the savings would be commensurately higher. 1999 was the last year that Canada minted over a billion cent coins with many of the final years sitting at the half billion leve... in the US you mint around 8 billion per year I think.

As earlier posters have noted... The only purpose of the penny/cent in commerce is to make change as there is nothing of value that can be purchased with a single penny. This is down to inflation. I am not that old but remember taking a penny down to the candy store as a kid and getting a handful of gum or chews. Not these days.

It was the same arithmetic that led to the demise of the $1 and $2 bills in Canada. The lifetime cost of a coin is much lower than a paper bill and with the frequency of use of the $1 and $2 ( a Canadian $1 only lasted about a year whereas there are still plenty of original 1987 loon coin dollars in circulation, 32 years after issue).

Personally, I would like to see the $5 bill be retired in favour of a $5 coin and then, maybe it is time for the nickel to exit - stage left.

I would look forward to a world where, when travelling abroad, I just go to an ATM to get a "cash card" in the local currency ... no notes, no coins (and hopefully no foreign exchange fee, but that's probably not going to happen).

I was very happy when ATMs made "travellers checks" obsolete.

Would be nice.

Aside from Canada, two pf the most expensive countries in the world. No ill effects?......




We see nothing, I won't get into it to much but money is backed by a military. It's been true for human existence, Zimbabwe and what happens there is 100 percent irrelevant. So is basically every other country.

There are very clear drivers of economies and economic strengths. I'll leave it at that and back out of this

I used Zimbabwe as an example not to compare it to the U.S. on its influence on the global economy or trade. Zimbabwe was an example where you can be dealing with very large quantities of money but representing very little real value. The time and effort to exchange physical currency is a cost in real terms that is true no matter what country you are in. Fractions of a usd, whole yens, or billions of zimbabwe dollars are just nominal amounts which don't matter on their own and issue is whether it is worth the real costs to deal with the real value of money. Either the real terms must be all converted into nominal terms or nominal terms are all converted to real terms to make a comparison.

Let's suppose the value of a person's time can be approximated by an hourly wage. The wage is $3.60/hr at time 1 and due to inflation it is $360/hr at a future time 2. Assume that it takes a cashier 1 second to count grab anywhere between 1-4 cents out of register and give to the customer. The total cost in real terms to make that exchange is 2 seconds: one second lost by the cashier and customer each. This is similar to the idea of man hours. If we convert it to the nominal terms of money, the value of 2 seconds is 0.2 cents at time 1 and 20 cents at time 2. At time 1, it still makes sense to incur a cost of 0.2 cents to exchange a cent whereas at time 2, both parties would be better off not doing anything rather than incur a cost of 20 cents to exchange one cent. If we are doing the analysis in yen or zimbabwe dollars, then we can multiply all the nominal amounts by 100 or a trillion respectively and the result will be the same. I do get that not everyone values their time the same but the value of anyone's time is always to going to be above 0. The amount of time it takes to exchange at least 1 cent can decrease but will always be above 0. So the costs to exchange 1 cent will always be above 0 and the question is at what point do costs to exchange exceed what is being exchanged. This simple analysis doesn't account for others in line or the additional time it takes to grab 4 cents vs 1 cent which would need to accounted for in a more comprehensive analysis. As tdziemia said, when customers are waving off getting cents in change that is a sign we are more like time 2 instead of time 1.



Is there data supporting this?

@D0uble3agle
Besides actually being a part of the culture at the time (lived near the border and Canada was second home to me) I am sure that out there somewhere on the internet the figures can actually be found. My friends and I, and those who remember living through it had first hand experience.

The need for keeping a change jar, if not in the car, but at home that started to fill up with these coins was something that became common. The dollar was now the "new quarter" psychologically. Costs went up accordingly and it was easy to see over a shorter amount of time than normal when going to Canada to shop.

The dollar coin debate was something that I wondered about. I wondered, since it was the Canadians who back then told me it was a dumb mistake the US should learn from and not copy, if the US "savings" estimates were an actual reality.

There are multiple posts here on this forum which I took on the arguments for and against the issue one at a time, researched it, did the math, and posted results asking forum people debating the issue to help me find where the logic was in error for what I was finding.

The US governmental report, when downloaded and read, was seen to not take into account the natural rate of inflation over time, which cut the alleged saving, and they did not take in the cost of living increase that would likely come (as discussed above in Canada), and they had no mention whatsoever of the drastic price increases of moving volumes of money around now that 1 million dollars of metal would not only take up a lot more space than 1 million in "paper," but the huge costs increases the PO would have to charge to move those large heavy masses of metal daily throughout the nation by businesses, banks, etc. would also raise costs to consumers.

But hey...the politicians say they are "saving taxpayer dollars!" So it must be good right? In fact somewhere on this forum in these debates was posted a link to a very good article showing how the Presidential dollar idea was mostly a political ploy for brownie points by politicians. It cost the average person while the politicians got to say they were doing a good job.

An idea presented against the coins was that people don;t like "pocket weights" instead of bills in their wallets. I polled the Canadians who verified what I experienced when the Loony was introduced by linking to a Canadian news article put out when the Canadian government announced they would make a new dollar coin and be eliminating two dollar bills.

The Canadian news media introduced the government's decision by starting the article out that by saying Canadians were once again going to have to once again reinforce their pants pockets b/c a two dollar coin was coming and two dollar bills would be eliminated. Basically since prices now were such that a dollar was not buying what it used to, a Twoonie was implemented. It has taken considerably more time for A five dollar coin to be seen as a good idea, but Twoonies don't buy very much nowadays either. Masses of Twoonies in personal change jars attest to this. They get left home b/c the bother of carrying as many as needed to spend (electronic payment also has aided this in the past ten years or so).

BTW A cultural note here: Canadians, unlike US citizens, have always spent and accepted $2.00 as a natural part of life. So to Canadians, the announcement of the Twoonie had pretty much the same impact up there as the announcement of the Loony.

Another idea for implementing US dollar coins and bill elimination was proffered by saying since we already have made the coins, so it would be too big of a waste to melt the unwanted dollars down. But the math (posted/asked for review on this forum) showed the total cost to melt the coins would be a grand total of almost .06 per person. Just one gallon of gas can go up or down this much in a day and the increase goes mostly unnoticed.

BTW - the dollar coins have pretty much all ended up in a government facility in storage and guarded by government employees (more good use of taxpayer money). More governmental waste.

I was pretty new to forums when all this happened. I had no idea I should have bookmarked all the threads containing this information. I can tell you that everything I have mentioned above was posted, is there, and is still open for peer review to have mistakes in the logic pointed out.

What happened after all of the issues were individually researched (results posted), was that some coin only people were still saying it was a good idea to force us into using coins only.

Hence I made a thread called, "Topic > Politics and dollar coins - the question they refuse to answer." At the end of the thread it all basically came down to those arguing against the facts and still wanting coins could give no legitimate reasoning. They were just being what we all are ...human. Sometimes we want what we want just because we want it that way...and hang the facts.

I spent many, many days of researching this topic over quite a period of time. The info is all on this forum in scattered threads. I was new to forums and had no concept of bookmarking it all back then. So if someone wants to see and review it all, then enjoy the research. At least its now all in once place - this forum. And I surely would love to know of verifiable logic/math errors posted in the info.

I have to give more weight to the experience of someone living in Canada full time (for example, like vonigohcr, who posted above) than your experience.

For what it is worth, I was going to marry a Canadian and move there at one point in my life. A big part of my opinion on this matter was formed by that relationship and that with our mutual friends. They all assure me every time we talk (we stay in touch) that the loonie/toonie and losing the cent did not ruin Canada.