The Penny Debate

[thedeadpoint]

I'm here reading my econ book so I can do my homework. Don't ask why I'm reading chapter one after 6 weeks of the class has passed by. But I found the penny debate in there. Here's what the book says:

 

At many cash registers—for example, the one in our college cafeteria—there is a little basket full of pennies. People are encouraged to use the basket to round their purchases up or down: if it costs $5.02, you give the cashier $5 and take two pennies from the basket; if it costs $4.99, you pay $5 and the cashier throws in a penny. It makes everyone’s life a bit easier. Of course, it would be easier still if we just abolished the penny, a step that some economists have urged.

But then why do we have pennies in the first place? If it’s too small a sum to worry about, why calculate prices that exactly?

The answer is that a penny wasn’t always such a negligible sum: the purchasing power of a penny has been greatly reduced by inflation. Forty years ago, a penny had more purchasing power than a nickel does today.

Why does this matter? Well, remember the saying: "A penny saved is a penny earned." But there are other ways to earn money, so you must decide whether saving a penny is a productive use of your time. Could you earn more by devoting that time to other uses?

Forty years ago, the average wage was about $2 an hour. A penny was equivalent to 18 seconds’ worth of work—it was worth saving a penny if doing so took less than 18 seconds. But wages have risen along with overall prices, so that the average worker is now paid more than $17 per hour. A penny is therefore equivalent to just over 2 seconds of work—and so it’s not worth the opportunity cost of the time it takes to worry about a penny more or less.

In short, the rising opportunity cost of time in terms of money has turned a penny from a useful coin into a nuisance.

- that's from the macroeconomics e-book by Paul Krugman and Robin Wells

 

 

I never really thought about it in terms of the boldface fact. I usually say "keep the change" but sometimes I feel like a fool and wait for those pennies back (Hey, I'm a college student AND a numismatist!)

[Mark Stilson]

Personally I don't think that part of the debate makes much sense unless you can say every time you "save" that penny it has cost you something else. As in "productive" time for this instance. If your time is that restricted and 2 seconds could be making you more then it would to "save" a penny, your probably under too much stress anyways. If fractions aren't worth the trouble, why do companies sell a gallon of gas for $2.989 ? They even split the cent up.

[corkykile]

Ohmigosh! Does that mean we are wasting our time searching the pennies?

Guess I better find some other more productive hobby.

 

Yeh, right.

Not even.

 

Corky

[Delta]

Here is my problem with the argument.

 

If you are being paid by the hour then chances are you can find some time within the working day to pick it up anyway.

 

If you are not currently working, then picking it up will gain you an extra penny anyway.

 

So really, it is always worth picking up money. Especially if it turns out to be a rare valuable penny!

[hiho]

I just heard on the news that a penny now costs two cents to produce.

[Kristofer]

That's the flaw with calculating opportunity costs... it assumes you could be working instead of doing what you're doing. But when you're at a register opportunity cost can't be calculated unless you took a break from your work to go there. But let's say you've done a full days work. If you see a penny on the ground on your way out, your opportunity cost isn't a factor any longer because you're done working. Opportunity cost should only be calculated when you could be working. For salaried employees it doesn't matter unless you consider its affect on the time you're devoting to earn a bonus, and it doesn't matter for hourly employees because they work a set number of hours so anything outside of that cannot be calculated as opportunity cost. The only people that this would affect are entrepreneurs, Doctors, and anyone else who can be making money at just about anytime.

[Kristofer]

Let us not forget how important the collection of pennies to credit card companies are. 1 penny isn't a lot but hundreds, thousands, hundred-thousands, and millions of pennies with compounding interest on top of it is powerful. Right now, the most beneficial way for most people to save money is to cut living expenses.

 

@hiho: I believe, correct me if I'm wrong, it cost the United States 1.4 cents to make the current penny. They will soon be switching over to copper coated steel. w00t! I'm going to make a barbeque out of those pennies!

[Dockwalliper]

I grab my detector and I'm on my way out the door to burn several gallons of gas to detect a site where I will probably find less than $2 in loose change when the phone rings...its work...They want me to come in and work a 4 hour OT shift...about $33 an hour.

 

What do i do?

What would you do?

[Kristofer]

I grab my detector and I'm on my way out the door to burn several gallons of gas to detect a site where I will probably find less than $2 in loose change when the phone rings...its work...They want me to come in and work a 4 hour OT shift...about $33 an hour.

 

What do i do?

What would you do?

Cough a couple times, say sorry and GRAB THAT DETECTOR!! You could always ride a bike... that would really kill your opportunity cost!

[jlueke]

The way I look at cost is to look at the half cent. It was thought not worth making in 1857. That's six cents in today's money. So we should definitely can the cent, and perhaps the nickel as well.

[SmokeMonkey]

whats amusing is nickels are worth 6 cents in metal. 6 cents per 5 cents. technically...they're losing money making those too but noone ever complains about the nickel.

 

quit picking on the penny. i never thought i'd see the day that people would hate money and yet here we are bashing on the penny like the red headed stepchild.

[just carl]

1. Everyone complains that the government spends more to make some of our coins than they are worth. SO WHAT? Since when did the government ever worry about how much something costs.

2. If the cost of producing a pennie goes to $1,000 each, again, SO WHAT? The government will just raise our taxes to cover that.

3. As noted many gas pumps state something like $2.987/gallon. We should then be debating the return of the MILL. That was at one time a fraction of a cent. 10 mills to a penny. Most were called tax tokens

4. Since all organizations post prices such as $0.99, $2.99 and even for a car $15,937.99 Therefore, I suggest our monitary system be changed so that all currency is in the amount of $0.99, $1.99, etc.

5. We are all threading on a dangerous topic here by saying PENNIES. There are many Numismatic NUTS that will insist we do not have PENNIES in the USA, we have CENTS. I guess that makes CENTS to them. (of course those people never answer when someone says "you mean we should change that somg from PENNIES from Heaven to CENTS from Heaven?

6. Many organizations pay a salary. This salary is based on you making lets say $30,000 a year. So how do they pay you? They simply divide that amount by the average amount of hours you work per year, usually 2080, and each payday you get a check for that amount. Of course this never works out in your favor since if the amount is not in exact cents, they keep the balance. OH, hey what about Leap year? AHHH, you now work a day for them free.

7. Naturally all such discussions end with the cost of a cent. I've said this before. Lets see you start a buisness making pennies and only have them cost .02 each. By the time you pay for all the expenses of a buisness such as electric, gas, phones, water, land taxes, building maintenance, employees salaries and associalted benefits, guess what. That Penny now cost $100 each.

[SMS]

Here's what the book says:

 

Forty years ago, the average wage was about $2 an hour. A penny was equivalent to 18 seconds’ worth of work—it was worth saving a penny if doing so took less than 18 seconds. But wages have risen along with overall prices, so that the average worker is now paid more than $17 per hour. A penny is therefore equivalent to just over 2 seconds of work—and so it’s not worth the opportunity cost of the time it takes to worry about a penny more or less.

In short, the rising opportunity cost of time in terms of money has turned a penny from a useful coin into a nuisance.

- that's from the macroeconomics e-book by Paul Krugman and Robin Wells

 

I chose this particular section of Mr. Krugman's book to point out something that is so blatant, yet so well concealed, that it is sickening. This is the same kind of underhandedness of statistics that deceptive fools like this utilize to propagate an agenda before Congressional Committees for their own advancement. The key here is the use of the word *average*. "The *average* worker is now paid more than $17 per hour." These words are utter nonsense and if Mr. Krugman truly did intend it to be translated that the "average wage" in our country (USA) was near $17/hour, then this is a FLAT OUT LIE!

 

An economist must also be a mathematician to a certain extent, just as any analyst and auditor. An understanding of the raw numbers and the varied ways of analyzing and interpreting such numbers are crucial to the expressing of the ideas behind them. However, the "average Joe" is not necessarily schooled in such matters as statistical analysis.

 

First of all, understand that there is quite a difference between what is properly termed as an *average* and what is termed as a *median* in mathematics. I want to focus on the median here. A median is the middle point of the statistics in relation to the number of entities being averaged or considered. Thus, if you have 101 wage entries, the median wage is in which exactly half of the wages are below and half are above.

 

According to the Bureau of Labor Statistics (a division of the Department of Labor), the *median* wage for the fourth quarter of 2007 was $17.50, NOT THE AVERAGE! Why would this make any difference? Because of point of view. Knowing that the median is $17.50, you know that half of Americans make less than $17.50/hour, while half make more than $17.50/hour. By how much, a median will not tell you. Yet, it is important to understand that half make less and WILL be impacted by any form of monetary reform, most likely in a negative manner.

 

The true *average* in the USA is MUCH MUCH higher! If $17.50 were truly an *average*, then for every minimum wage worker out there, there would be someone working for roughly $30/hour. And for every person that worked more than minimum wage, there would another who worked for LESS than $30/hour by as much as the opposite statistic worked over minimum wage. That means that the consideration of income here caps at 40 hours at $30/hour.

 

This is an incorrect view of the stated "average" here. Taking the example from the book, it becomes quite obvious that for the minimum wage worker (the poor) has to work 12 seconds to make as much as the *average* worker during his 2 seconds of work. But, let's look at this even further.

 

The *minimum wage* example I gave assumes a 40 hour week for *everybody*! Well, we know this not to be true. In fact, there are a number of people who work significantly less than 40 hours a week, as well as those who work more than 40 hours. Since median hours worked per week are not disclosed, we can only make postulation of the matter.

 

So, what happens if there is a significant number involved in our statistics that only work 20 hours weekly to obtain our $17.50 median? That means that the high end of the analysis increases. That means that two people working minimum wage at 20 hours a week, offset only *one* person at $30/hour full-time (40 hours/wk). That right there very well could/does tip the scales heavily against the poor with the removal of the cent from commerce. Why? Because the derogatory effect is no longer 50/50 in this case. It could very well increase to as much as 75/25 or even worse!

 

As much as three times as many people could possibly be negatively impacted by the removal of the cent as those who benefit from it. And to those 75%+ people, "a penny saved" very well *IS* "a penny earned"! The book propagates a false idea that equal amounts of people will benefit from the removal of the cent, when in all actuality, the whole concept is MUCH MORE in depth and has many more indicators involved to get the truer picture of the situation. That is one of the reasons I say Mr. Krugman is a fool.

 

Being an economist, one would think that he above all other people should know that you could *never* simplify this matter with so few words. Only a charlatan would try to pull such a stunt. And especially from an collegiate level economics text book...that is just completely unjustifiable. If your professor accepts this kind of garbage as being suitable to profess to you, then the collegiate standards have fallen way below what even I had thought them to have gone.

 

Keep in your studies, but do not just take what someone says as a fact, or even as viable, no matter how many credentials they may have. Always use logic and review every side of the argument in your studies. The world is a rather large place, with more opinions than there are people out there. Good luck and speak your mind!

[Kristofer]

I chose this particular section of Mr. Krugman's book to point out something that is so blatant, yet so well concealed, that it is sickening. This is the same kind of underhandedness of statistics that deceptive fools like this utilize to propagate an agenda before Congressional Committees for their own advancement. The key here is the use of the word *average*. "The *average* worker is now paid more than $17 per hour." These words are utter nonsense and if Mr. Krugman truly did intend it to be translated that the "average wage" in our country (USA) was near $17/hour, then this is a FLAT OUT LIE!

 

An economist must also be a mathematician to a certain extent, just as any analyst and auditor. An understanding of the raw numbers and the varied ways of analyzing and interpreting such numbers are crucial to the expressing of the ideas behind them. However, the "average Joe" is not necessarily schooled in such matters as statistical analysis.

 

First of all, understand that there is quite a difference between what is properly termed as an *average* and what is termed as a *median* in mathematics. I want to focus on the median here. A median is the middle point of the statistics in relation to the number of entities being averaged or considered. Thus, if you have 101 wage entries, the median wage is in which exactly half of the wages are below and half are above.

 

According to the Bureau of Labor Statistics (a division of the Department of Labor), the *median* wage for the fourth quarter of 2007 was $17.50, NOT THE AVERAGE! Why would this make any difference? Because of point of view. Knowing that the median is $17.50, you know that half of Americans make less than $17.50/hour, while half make more than $17.50/hour. By how much, a median will not tell you. Yet, it is important to understand that half make less and WILL be impacted by any form of monetary reform, most likely in a negative manner.

 

The true *average* in the USA is MUCH MUCH higher! If $17.50 were truly an *average*, then for every minimum wage worker out there, there would be someone working for roughly $30/hour. And for every person that worked more than minimum wage, there would another who worked for LESS than $30/hour by as much as the opposite statistic worked over minimum wage. That means that the consideration of income here caps at 40 hours at $30/hour.

 

This is an incorrect view of the stated "average" here. Taking the example from the book, it becomes quite obvious that for the minimum wage worker (the poor) has to work 12 seconds to make as much as the *average* worker during his 2 seconds of work. But, let's look at this even further.

 

The *minimum wage* example I gave assumes a 40 hour week for *everybody*! Well, we know this not to be true. In fact, there are a number of people who work significantly less than 40 hours a week, as well as those who work more than 40 hours. Since median hours worked per week are not disclosed, we can only make postulation of the matter.

 

So, what happens if there is a significant number involved in our statistics that only work 20 hours weekly to obtain our $17.50 median? That means that the high end of the analysis increases. That means that two people working minimum wage at 20 hours a week, offset only *one* person at $30/hour full-time (40 hours/wk). That right there very well could/does tip the scales heavily against the poor with the removal of the cent from commerce. Why? Because the derogatory effect is no longer 50/50 in this case. It could very well increase to as much as 75/25 or even worse!

 

As much as three times as many people could possibly be negatively impacted by the removal of the cent as those who benefit from it. And to those 75%+ people, "a penny saved" very well *IS* "a penny earned"! The book propagates a false idea that equal amounts of people will benefit from the removal of the cent, when in all actuality, the whole concept is MUCH MORE in depth and has many more indicators involved to get the truer picture of the situation. That is one of the reasons I say Mr. Krugman is a fool.

 

Being an economist, one would think that he above all other people should know that you could *never* simplify this matter with so few words. Only a charlatan would try to pull such a stunt. And especially from an collegiate level economics text book...that is just completely unjustifiable. If your professor accepts this kind of garbage as being suitable to profess to you, then the collegiate standards have fallen way below what even I had thought them to have gone.

 

Keep in your studies, but do not just take what someone says as a fact, or even as viable, no matter how many credentials they may have. Always use logic and review every side of the argument in your studies. The world is a rather large place, with more opinions than there are people out there. Good luck and speak your mind!

 

He was probably paid to propogate a rumor for a hidden agenda. The government and all major corporations know that if you get enough people saying something is true, the general public will accept it as truth:

 

[rittenhouse]

Hmm, interesting. A couple of comments:

 

1. It appears that several folks are mistaking a money of account with a circulating denomination. The two are not the same. A good example is the mil or mille. A mil is the lowest money of account in the United States, but is not a circulating denomination. The Coinage Act of 1792 established the mil as "the thousandth part of a dollar". It is generally used for financial transactions such as taxes, stocks, bonds, although it is also used in pricing oil and gas products such as gasoline (2.999 - the last 9 is mils). The use in pricing is a subjective marketing tool. People tend to mentally drop the 9 tenths so the price to them is 2.99 when it's actually darn near 3 dollars. Same holds for pricing an item at 299.99 - sounds cheaper than 300.

 

2. While there have been proposals to entirely drop the cent in a retail setting, the great majority of proposals (and the only ones being taken seriously) only extend this to cash transactions. Credit transactions (such as debit and credit cards) would continue to use the cent. Cash transactions would be rounded to the nearest 5 cents. Some feel that this would lead to predatory pricing, but market realities would prevent this - stores that priced to the consumer's advatage would quickly win. Additionally, the use of "plastic" has eclipsed cash in retail transactions and this trend is likely to continue thus further obviating the claimed rounding impact. Lastly, cash rounding is already effectively taking place with the "penny tray".

 

3. I am not aware of any proposals to drop the cent as a money of account so this would not affect paychecks. *IF* some company did drop the cent as an accounting tool to cheat employees they would run afoul of already established state and federal labor laws.

 

4. The cent (as with other circulating denominations) has undergone significant changes over time. The weight was first dropped in 1795 due to rising copper prices. The weight (and composition) was changed again in 1857 and then 1982, again due to rising copper prices. In note that each time the world did not fall into the sun nor did the US economy collapse.

 

5. Other demominations such as the half cent (which no one liked from the start) have been discontinued with no adverse effects.

 

6. The Mint is one of the few money making operations of the gov't - why add to the pain?

 

In sum, we already use monies of account and thus reverting the cent from a circulating denomination to a money of account will have no effect.

 

As to slang for cents and other denoms, I have no objections to the use of penny or nickel or any other term in common speech. You can call them snotballs for all I care (hmm, "snotballs from heaven" - catchy ).

[thedeadpoint]

As to slang for cents and other denoms, I have no objections to the use of penny or nickel or any other term in common speech. You can call them snotballs for all I care (hmm, "snotballs from heaven" - catchy ).

 

Thanks for putting in your two snotballs worth!

[thedeadpoint]

Keep in your studies, but do not just take what someone says as a fact, or even as viable, no matter how many credentials they may have. Always use logic and review every side of the argument in your studies. The world is a rather large place, with more opinions than there are people out there. Good luck and speak your mind!

 

Thanks for taking time to point all of those tidbits out, SMS.

 

Don't worry, if I took this guy's word for the gospel I would take notes in class on the days I went!

[Kristofer]

I stand by my "More Doctors Smoke Camel Cigarettes" comment.

[SMS]

I'll have to answer this because there are a number of unfounded assumptions being made with your layout. I'll start with your conclusion and work up through your statements. First of all:

 

As to slang for cents and other denoms, I have no objections to the use of penny or nickel or any other term in common speech. You can call them snotballs for all I care (hmm, "snotballs from heaven" - catchy ).

 

First of all, I *do* have an objection particularly to the use of the word "penny", but that's not really the discussion here. The penny in particular because it is a known and used denomination of the oppressive government that our forefathers fought to gain their freedom. The decision to utilize the psuedo-Spanish system was toward this effect: to alienate ourselves completely from what was deemed to be an oppressive government. I find it interesting how, as our government becomes more oppressive, it has even begun to use the term "penny" in legislation, rather than the *legal* term of "cent". Again, another discussion for another thread.

 

Second, my dad told me they were "gold", not "snotballs"! Why else would he ask me, "Are you digging for gold there?" whenever I had my finger up my nose?! That's why for years I collected it under the kitchen table. I figured when I grew up, I'd be rich! Then I turned eight and learned better.

 

But seriously, now, unto your analysis.

 

In sum, we already use monies of account and thus reverting the cent from a circulating denomination to a money of account will have no effect.

 

Overall, this conclusion is absolutely true, yet altogether false at the same time. As a foreign exchange player, I utilize pips, not mils. And that is only for exchanges under a mil of a yard. If trading into the mils of a yard, the accounts would be determined even further, as the monies exchanged become greater. In the same since, a small cap business will keep their accounts to the cent, a much larger company that manufactures or retails in great quantity will keep accounts to the mil for their bulk sales/purchases.

 

For the most part, a business will not conduct accounts tendering legal money. They will conduct accounts almost exclusively via draft. A check is a special form of draft that is legal tender for debts. Credit cards are a form of draft that is not legal tender for debts. A debt is an account payable after the receipt of property or services. A contract, however is not a debt. In fact, in accounting, your unpaid/unfulfilled contracts will have their own special journal in the list of accounts. It is under this journal and the inventories journals where mils (and even possibly pips) will be accounted across the board.

 

For a business, legal tender does not account to much. It is more an inconvenience that must be deposited into a banking account, and thus converted to another form of legal draft for use in operations and debts. If the tendering of legal money were replaced altogether, it would be a godsend to companies, because then they would not have to worry about a plethora of problems generated with legal tendered cash. Not so with the individual consumer, especially the poor!

 

Unlike a company, individuals neither keep books of account and use either legal tender money or draft and credit cards. The individual operates via the cent standard today, not the mil standard. Back when the Half Cents circulated, consumers operated on a mil standard (5 mils being the lowest denomination). Removing a denomination of legal tender cash, removes the ability of the consumer/individual to tender that cash. The removal of the cent will most assuredly affect the individual consumer.

 

What we see with the current commercial system we have in our country today, the *businesses* who pour massive amounts into influencing our government, will not be affected by such a change, yet the individual voter, who tenders this cash in day to day transactions, will most assuredly be affected, especially since the bottom line is that *MOST* of these individuals have an effectively *LOW* income to begin with. Effectively, removing the cent has the same effect on the below poverty individuals as removing the dime and lower denominations would have on the lower class, as removing the half and lower would have on the middle class.

 

Everything must be put into perspective, and because this kind of change may not affect one personally at ones own level of income and expenditure, does not mean that it will not affect anybody.

 

Now on to the items named:

 

6. The Mint is one of the few money making operations of the gov't - why add to the pain?

 

I am assuming that you mean the Mint is one of the few producers of coin for the United States. That is correct, they are. Why add to the pain? What pain? The United States pays a number of employees all the way from bookkeeping and clerical work, data entry, quality assurance, machinists, operators, etc. at three different mints as well as administration offices. All for the cent. Granted, not *all* of the employees there are there only because of the cent, but if you take away one of the producers of work hours at three different mints, then you will also take away any reason for the Mint to retain the number of workers they do.

 

The result is simple: more unemployment. I think you can see the wisdom behind this. And that is just the Mint employees. This does not even include the effect in mining operations, trade markets, refiners, etc.

 

5. Other demominations such as the half cent (which no one liked from the start) have been discontinued with no adverse effects.

 

Sounds just like a quote out of hte Red Book. There are two factors you are expounding here: popularity and adverse affect. Popularity, in and of itself, is more subjective than coin grading. And we all know where that subject leads us to. Popularity, especially on an historical issue, should really never be stated as factual, so much as opinion. So, I'll leave that as a non sequitur.

 

Adverse affect *is* a true issue, however. Now, you simply make a statement that there were no adverse affects. I beg to differ on that point. That in and of itself is a debate, so we will simply agree to disagree at this point. However, I will leave you with this bit of food for thought: we really can never know what kind of true economic affect removing the half cent would have really had in the long term because of the secession of the Southern states four years later followed by our civil war.

 

4. The cent (as with other circulating denominations) has undergone significant changes over time. The weight was first dropped in 1795 due to rising copper prices. The weight (and composition) was changed again in 1857 and then 1982, again due to rising copper prices. In note that each time the world did not fall into the sun nor did the US economy collapse.

 

I completely agree that these are historical facts. However, the change in composition in order to keep the cost:value ratio down has nothing to do with completely eliminating the cent from circulation. At no time has the United States eliminated the cent, but simply changed it to account for market changes in the composite metals. This statement neither agrees with nor condemns your position.

 

3. I am not aware of any proposals to drop the cent as a money of account so this would not affect paychecks. *IF* some company did drop the cent as an accounting tool to cheat employees they would run afoul of already established state and federal labor laws.

 

Again, individuals do not run accounts, they utilize *petty cash* and *cash on hand* almost exclusively. You will argue that credit cards will continue to utilize the cent, but you must also realize as well, that there are a major number of poor people who cannot get a credit card (or even a bank account, for that matter) without paying anywhere from $30 to $50 monthly just to have the card, not including the 29.99% - 34.99% in interest. Again, the poorer you are, the more affected you *WILL* be. It has little to nothing to do with wage, rather with consumption and spending.

 

To put it further in perspective of the poor, let's say you make $8,000 annually and your costs of living is $7,800 annually ($650 monthly) with an average transaction cost of $10 (65 transactions a month or 780 annually). That's $31 annually. Now, you wouldn't think anything of it because you are not the demographic stated. In fact, $38 may very well simply be a day's luncheon out with the team. But to someone who is in poverty, that effects a 38 pip tax on their lives. That's the same level of tax in many areas for property owners.

 

The more money you make, you are more likely to spend more money per transaction. Therefore the affect is lessened even more by making less transactions per capita. Someone who is poor and spend thrifty will make more transactions for less money and be affected more by this.

 

2. While there have been proposals to entirely drop the cent in a retail setting, the great majority of proposals (and the only ones being taken seriously) only extend this to cash transactions. Credit transactions (such as debit and credit cards) would continue to use the cent. Cash transactions would be rounded to the nearest 5 cents. Some feel that this would lead to predatory pricing, but market realities would prevent this - stores that priced to the consumer's advantage would quickly win. Additionally, the use of "plastic" has eclipsed cash in retail transactions and this trend is likely to continue thus further obviating the claimed rounding impact. Lastly, cash rounding is already effectively taking place with the "penny tray".

 

Now, maybe you will see more clearly *WHY* the majority of proposals want to drop only the legal tendered cash cent, and not from the books entirely. Business, especially big business, has its way of making sure to look out for number one. And this also comes in with the fact of your statement that "market realities" would prevent predatory pricing. Fact is, there are a number of stores that offer an equivalent or same item, but at different prices. Not everyone will shop at the lowest priced merchant. Some reasons could include distance and time to drive there (remember, there are MORE THAN A LOT of places in the U.S. that have "nothing" within a good 100 or more mile raidus), merchant reputation, experiences with the merchant(s) both good and bad, etc.

 

These are all variants that affect how and where we spend our money. Again, the "use of plastic" is non sequitur. It is based on the assumption of not only available to all, but free to all. Otherwise, you again have effectively damaged the poor. As a final note, the "penny tray" is something that is of free will a choice. Only because of mass peer pressure does such a system work. Take away the freedom behind it, and/or make the people believe they have no choice in the matter, and there will be blood (so to speak).

 

1. It appears that several folks are mistaking a money of account with a circulating denomination. The two are not the same. A good example is the mil or mille. A mil is the lowest money of account in the United States, but is not a circulating denomination. The Coinage Act of 1792 established the mil as "the thousandth part of a dollar". It is generally used for financial transactions such as taxes, stocks, bonds, although it is also used in pricing oil and gas products such as gasoline (2.999 - the last 9 is mils). The use in pricing is a subjective marketing tool. People tend to mentally drop the 9 tenths so the price to them is 2.99 when it's actually darn near 3 dollars. Same holds for pricing an item at 299.99 - sounds cheaper than 300.

 

And so it comes down to the original observation: "It appears that several folks are mistaking a money of account with a circulating denomination." What you have argued, however, is that changes in circulating denomination will not affect the consumer because it does not affect the money of account. I believe it has now been well demonstrated that in fact, changes to circulating denomination has a true affect on those that utilize such means of commerce, while not affecting transactions that utilize money of account. That is all that can be stated as fact in this situation. Yet, I also believe that it has been demonstrated that just because transactions of money of account are not affected by circulating denomination change, that does not change the reality of adverse affects on the users of circulating denominations, namely the consumer.

 

In closing, I would leave you again with the statement that changing the circulating denominations by removal of the cent, will most assuredly affect the poorer majority of our citizenry, while financially strengthening the businesses, a large number of which themselves (corporations) are legally identified as "entities of the State".

[SMS]

And now you all know why I do not post often This is as short as I'll ever get to a post unless it's a giveaway. Then it's:

 

"Me too!"