My five cents’ worth on these redundant little coins

Mahhrat says:

10:01am | 17/09/12

Could’ve gone the day without you coining that pun, Danny.

Ally says:

08:31am | 17/09/12

Me too!

Seriously, does anyone let their 5 cent pieces accumulate in their pockets/wallet to the point where it becomes an irritant to carry them around? Just chuck them in a jar each night when you get home, along with some of your other shrapnel and then take it to the bank when it’s full.

I’ve been doing this with all my silver each night for the past couple of months and have currently got about $75 to add to my savings account. Not a huge amount of money in the scheme of things, but better put in savings than frittered away.

Greg says:

10:23am | 17/09/12

I do the same thing every year but with gold as well, by the time Christmas comes around all your presents are paid for out of the coins.

You don;‘t even need to count them any more just take them to the machine in most newer banks.

Al says:

09:07am | 17/09/12

One of the ways to avoid the rounding (and giving them those extra 1c and 2c and eventualy 5c) is to pay using a debit (not credit) card. In that case you are charged the actual price. It would be illegal for them to round for an electronic funds transfer.

Steve says:

10:20am | 17/09/12

“past history”

Not to be confused with the other kind…

colin says:

11:45am | 17/09/12

@Steve 10:20am | 17/09/12

““past history”...Not to be confused with the other kind…”

LOL

On the subject of money; just like people who say “ATM machine”

iMitchy says:

01:28pm | 17/09/12

Studies have shown that the rounding becomes redundant because sometimes you round up and sometimes you round down. You could of course use a card to avoid rounding up and use cash to take advantage of rounding down but it’s probably not worth your time at less than 5 cents per transaction.

What’s interesting is the reason that retailers originally started using prices like 99c instead of $1. I’d always thought it was a phycological trick to make products look cheaper but in fact the original intent was to force the cashier to record the sale by having to open the till to retrieve the customers change, instead of slyly pocketing a payment which exactly matched the price of the items. This has since become redundant itself.

On the 5c piece issue, I agree that we should ditch them but I also think that it should be replaced by a gold $5 coin, about the same size as a 20c piece. Just a thought.

iMitchy says:

01:35pm | 17/09/12

Then take an overseas holiday….

You can’t really force the exchange rate to double so it wouldn’t work. Then there’s the problem of price perception - at first lots of people will spend up big as everything looks like a bargain, then due to supply and demand factors as well as a seller’s perception that they are selling their products for half of their worth, hyper-inflation would kick in, real wages would decrease and the exchange rate would plummet.

Recipe for disaster.

bael says:

11:30am | 17/09/12

Not going to happen any time soon due to alot of our economy stills runs on the ‘flexibilty’ of cash.

Inky says:

11:59am | 17/09/12

Eh, depends on your definition of “soon”, I suppose. There are already plenty of purchases made via eftpos, debit or credit card every day, lets face it, most purchases over about $100 are more liekly to go onto a card than anything else. With the introduction of “tap and go” payment devices for microtransactions, we have the technology. It’s simply not used by many smaller businesses, although there’s no shortage of complaining the moment somewhere lacks eftpos facilities.

I would say it’s only a matter of time, and if the country moved to push towards this we could be beginning to phase out physical currency in around 10 years or so (i.e. no longer produing new coins and notes). But we won’t, because Australia never leads the pack in anything and there are still far too many people who would be terrified of the idea of a purely electronic currency.

Shane From Melbourne says:

01:51pm | 17/09/12

If Cash was removed from the economy all the Tradies would go broke from having to pay GST and tax on their income…....

iMitchy says:

01:55pm | 17/09/12

Economically speaking, it can’t be done. The currency needs to be backed by a physical representation. The next best thing is what we currently have - the physical money just sits in a safe in the bank and we make our electronic payment without ever having to handle the money.

It’s pretty much the same way the US did it pre ‘71. Their money was backed by gold and the cash represented a portion of gold. Now, the data that is linked to your debit card (ie your balance) is backed by physical money and the transfer of that data (electronic payment) represents a transfer of the physical cash.

But without the physical money existing, what worth can you give the numbers on the ATM screen? Money is after all only a perception, “money” only exists in your mind as a value that you place on goods and services. If electronic bank balances aren’t a representation of a controlled, limited, tangible product (cash) then what are they?

Nothing.

Inky says:

02:49pm | 17/09/12

“If electronic bank balances aren’t a representation of a controlled, limited, tangible product (cash) then what are they? “

And tell me, what exactly is the tangible value of a $20 note? Is it worth $20 in materials? Or is it merely a representation of a value, much like a number on a screen? What i’m talking about won’t break economics, it’s not a new concept or system, it’s merely changing an existing system.

iMitchy says:

04:49pm | 17/09/12

But Inky, how can you moniter and limit the creation of the data? The rate at which cash is printed has macroeconomical effects. Thus the rate at which the monetary data is created would have those same effects but it would be almost impossible to control.

Then consider how foreign exchange with countries that use tangible cash would be affected.

Inky says:

06:45pm | 17/09/12

“But Inky, how can you moniter and limit the creation of the data? The rate at which cash is printed has macroeconomical effects. Thus the rate at which the monetary data is created would have those same effects but it would be almost impossible to control.”

If electronic funds could not be controlled, and the creation of data could easily counterfeit currency, why do we have eftpos?

The note about other countries, however, is a genuine point but there are certainly possible workarounds. Given that most people overseas tend to prefer using their existing debit/credit cards already, it’s not as if the system is alien. For those who want to exchange physical currency for credit, I doubt it’d be hard to set up something akin to a prepaid credit card with a value loaded onto it equal to the currency being exchanged.

As I said, it’s not an alien concept, but we’ll not be the first to adopt it because people are so wrapped up in what they’re used to that they can’t see how little it would change things.

Brian says:

09:43am | 17/09/12

And shortly before the GFC, were in fact worth a little over six.

SimpleSimon says:

09:43am | 17/09/12

Yeah, I’ve made the same comment about the penny in the US - it actually costs more than 1c to mint one. But it’s really a flawed argument. The fact that each coin gets used numerous times means the cumulative value of the coin is actually much greater than the 1c/5c. For example, if a 5c coin gets used only 20 times before someone eats it, it has contributed $1 worth of value to the economy. But yeah, it’s a fun fact.

Inky says:

10:13am | 17/09/12

@Simplesimon

Eh, it’s not even the cost of minting being mentioned here, most of today’s currency isn’t worth their weight, so to speak, it’s resource backed currency. It’s an interesting note that this particular coin, due to it’s size, actually has an inherant value of around the same to it’s applied value.

Willie Mac says:

10:06am | 17/09/12

Amazing, there are actually people silly enough to call for devaluation, with all the pain that entails, merely to save a small little coin. People really must do their own cost-benefit analysis before they propose ideas like this.

Richard says:

11:08am | 17/09/12

DO you two know what the word “devalue” means? I give you a hint: it means to REDUCE the value of money. What you guys are talking about is the opposite, you’re proposing to INCREASE the value of money (i.e. in relation to the goods and services that money buys).

Inky says:

10:33am | 17/09/12

I’m not really sure why we should be introducing new coins. As mentioned above, we should continue to shift to a currencyless economy as time progresses.

Inky says:

12:03pm | 17/09/12

Wow…  you managed to take a rant about the evils of the rich, usually associated with the right, and blame it on the left.

Well done, you are certainly something special.

Richard says:

12:12pm | 17/09/12

But that’s what I mean, Inky… where ARE the left on this issue? Why AREN’T the left condemning Bernanke’s inflation, which in my opinion will only make the rich richer and the poor poorer? The left aren’t opposing it, in fact the only people opposing it are the tea-party style libertarian right. In light of this, how can we come to any other conclusion that its actually the right who are opposing the evils of the rich, and its the left who are supporting the rich to get richer at the expense of the poor getting poorer?

SimpleSimon says:

12:07pm | 17/09/12

FYI - you have as much (if not more) chance of being skimmed at an ATM than you do using your card in a store.

andrew says:

01:41pm | 17/09/12

yes but i’m only taking that risk once a week, not 5 times a day….....

also at least banks have video surveillance, and i’d like to think they have at least the odd glance at the ATM outside the branch. ATM’s in bars, servos etc seem a far bigger risk.