Obama Wants Cheaper Pennies & Nickles / State Gold Rush (CNN Money)

[No1butPaul]

OBAMA WANTS CHEAPER PENNIES AND NICKLES (CNN) http://money.cnn.com/2012/02/15/news/economy/pennies_nickels/index.htm?iid=GM
(Yep, just like the Roman Empire debased it's currency before it collapsed ... further into the abyss.)

On a brighter note:

STATES SEEK CURRENCIES MADE OF SILVER AND GOLD (CNN) http://money.cnn.com/2012/02/03/pf/states_currencies/index.htm?iid=EAL
Discusses "State Gold Rush" and growing movement by states to introduce currencies made of silver and gold and mention of "Tea Party "father" Ron Paul is sponsoring the "Free Competition in Currency Act," which would allow states to introduce their own currencies."

[Orwell]

The practical thing is simply to get rid of pennies and nickles. They no longer serve a purpose and have become too expensive to produce.

[nedomedo]

The practical thing is simply to get rid of pennies and nickles. They no longer serve a purpose and have become too expensive to produce.

Except that nickles now are worth 5.6 cents because of the price of metals they use in them.

[MozoVote]

Just chop a zero off the currency. Then pennies will be useful for something.

When I was a kid, a candy bar was 15¢. Now they are usually 90¢ to $1.15 at gas stations. We have almost succeeded in debasing the currency to 1/10 of what it was in my lifetime, and I'm only in my mid 40s. :rolleyes:

[RickyJ]

There is no reason to get rid of pennies and nickles as they are now, just raise their value to double or triple their face value and presto, they are useful as a currency again.

[No1butPaul]

The practical thing is simply to get rid of pennies and nickles. They no longer serve a purpose and have become too expensive to produce.

Disagree - true, the weaker the dollar, the more expensive pennies & nickels are to produce; however, the praticle thing is to have a stronger dollar! I would prefer not to live in a cashless society provided by credit.

[djruden]

You can't just 'raise the value' of a penny. Maybe you haven't noticed but the goverment has only worked to devalue the currency. Not only have they devalued our coins by using cheaper metals in them like switching the penny from Copper to Zinc but also thru inflation of the money supply.

Debase the currency -> wipe out the middle class.

It's pretty sad when it happens in front of people's faces and nobody knows better anymore.

[MozoVote]

Not long ago, I asked my parents what kinds of prices they could remember paying for things in the 1960s. When they met in college, prior to getting married.

My dad was renting studio apartment, for $40 a month. My mother said she could buy chicken for 15¢ a pound. Gas was 25¢ a gallon.

We're not talking ancient history here... yet those kinds of prices sound unfathomable already.

[No1butPaul]

You can't just 'raise the value' of a penny. Maybe you haven't noticed but the goverment has only worked to devalue the currency. Not only have they devalued our coins by using cheaper metals in them like switching the penny from Copper to Zinc but also thru inflation of the money supply.

Debase the currency -> wipe out the middle class.

It's pretty sad when it happens in front of people's faces and nobody knows better anymore.

Dr. Paul knows

Gresham’s Law at Work: Pennies and Nickels Are Disappearing
Written by Bob Adelmann Tuesday, 13 December 2011 14:22

When Kyle Bass defended his decision on BBC Radio Hard Talk on November 17th to purchase 20 million nickels, he was just putting Gresham’s Law into operation. Bass, the founder and principal of the hedge fund Hayman Advisors, did the math and discovered that he could purchase 6.8 cents worth of copper in each nickel for just 5 cents. Nickels are 75 percent copper while pennies (minted between 1909 and 1982) are 95 percent copper and the recent spike in copper’s price simply made it too good a deal for Bass to pass up.

This is Gresham’s Law in action. The standard definition is that “bad money drives out good.” Simply put, when coins of lesser value are forced to be accepted alongside coins of greater value, the more highly valued coins will be hoarded. In other words, Gresham’s Law reflects the price-fixing disruption always inherent in legal tender laws. A better definition of Gresham’s Law might be “When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation.”

Prior to 1965 dimes and quarters were made of 90 percent silver and 10 percent nickel but with the Coinage Act of 1965 the silver content was removed and replaced with 75 percent copper and 25 percent nickel. Almost immediately the high intrinsic value dimes and quarters began to be hoarded as Gresham’s Law kicked in. Today a pre-1965 silver dime is worth about $2.40 in inflated Federal Reserve Notes.

Dr. Gary North defines Gresham’s Law more carefully by noting that the law only works when there is government intervention. In a free market, with consumers making individual decisions free of government mandates, good money will drive out bad money. As he explains:

In an economy with a government-legislated fixed price between two currency units, the artificially overvalued currency drives out of circulation the artificially undervalued currency.

North engages in a make-believe narrative to prove his point. From the earliest days of the American republic, the government tried to impose bimetallism onto the free market, mandating that gold was worth 15 times as much as silver. When gold was discovered in California in 1848, the flood of new gold onto the market changed the ratio, but the law didn’t. Here is North:

Let us say that you were there. You get a bright idea. You go to the bank with two ounces of gold. You demand 30 ounces of silver. Then you take your 30 ounces of silver and buy three ounces of gold. Where? Across the border in Canada or Mexico. (OK, it was a long ride on horseback. Maybe there were banking trading ships just off San Francisco.) You then take your three ounces of gold to the bank and demand 45 ounces of silver. You repeat the procedure until the bank has no more silver to sell at the price of 15 to one.

Of course, you would do this with ten times as much gold. Your competitors, currency speculators, would buy a thousand times as much gold.

The gold remains in circulation while the silver disappears. This is Gresham’s Law in action. And this is the law that Bass is following by purchasing twenty million nickels: he knows the nickels are undervalued and he is just doing his part in removing them from the market.

When Rep. Ron Paul (R-Texas) first introduced his “Free Competition in Currency Act” in December, 2009, he noted that gold and silver were the result of the free market making its choice about what commodities would best serve as money: “Gold and silver are difficult to counterfeit, a property which ensures they will always be accepted in commerce.”It is precisely for this reason that gold and silver are anathema to governments. A supply of gold and silver that is limited in supply by nature cannot be inflated, and thus serves as a check on the growth of government. Without the ability to inflate the currency, governments find themselves constrained in their actions, unable to carry on wars of aggression or to appease their overtaxed citizens with bread and circuses.

Consequently, the first step in his bill is to eliminate the legal tender laws that mandate the price-fixing concerning what citizens may use for money. Paul explained:

An emperor, a king, or a dictator might mint coins with half an ounce of gold and force merchants, under pain of death, to accept them as though they contained one ounce of gold. Each ounce of the king's gold could now be minted into two coins instead of one, so the king now had twice as much "money" to spend on building castles and raising armies. As these legally overvalued coins circulated, the coins containing the full ounce of gold would be pulled out of circulation and hoarded. We saw this same phenomenon happen in the mid-1960s when the US government began to mint subsidiary coinage out of copper and nickel rather than silver. The copper and nickel coins were legally overvalued, the silver coins undervalued in relation, and silver coins vanished from circulation…In the absence of legal tender laws, Gresham’s Law no longer holds. If people are free to reject debased currency, and instead demand sound money, sound money will gradually return to use in society. Merchants would be free to reject the king’s coin and accept only coins containing full metal weight.

Rejecting the king’s coin, his paper money, his phony Federal Reserve notes, would certainly mark the beginning of the bright day of freedom. Until then, Bass and others will no doubt continue to take advantage of Gresham’s Law until nickels and pennies disappear altogether.

[jay_dub]

You can't just 'raise the value' of a penny. Maybe you haven't noticed but the goverment has only worked to devalue the currency. Not only have they devalued our coins by using cheaper metals in them like switching the penny from Copper to Zinc but also thru inflation of the money supply.

Debase the currency -> wipe out the middle class.

It's pretty sad when it happens in front of people's faces and nobody knows better anymore.

I'm 55 and remember candy bars being a nickel. Sodas were a dime. The newspaper was .35 a week.

My first job paid 1.25 an hour. We rented our first house after getting married (in 1976) for $125 a month.

Pennies and nickels are worth more than their face value in metal content because inflation (devaluation of money) WILL find a way to express itself and the commodities market is one primary place.

[idiom]

Just round all transactions to the nearest $0.1.

Its really easy to phase out lower denominations. Just think in a few years we will be talking about phasing out $1 and $2 coins/bills because they can't buy anything.

[eduardo89]

Just the administrative cost of minting 4.3 billion pennies costs almost a half-cent per coin by itself, leaving precious little room to make a penny for less than a cent, no matter the raw material used.


Wow.

[jay_dub]

The melt value of pennies made before 1982 is almost 2 1/2 cents each.

$0.0248669 is the melt value for the 1909-1982 copper cent on February 17, 2012.

http://www.coinflation.com/coins/1909-1982-Lincoln-Cent-Penny-Value.html

[rpwasright]

I'm 55 and remember candy bars being a nickel. Sodas were a dime. The newspaper was .35 a week.

My first job paid 1.25 an hour. We rented our first house after getting married (in 1976) for $125 a month.

Pennies and nickels are worth more than their face value in metal content because inflation (devaluation of money) WILL find a way to express itself and the commodities market is one primary place.

Wow that means you only had to work less then a day and a half per month to pay your rent. I have to work a week and a half to pay my mortgage. How big a house was this and what kind of job did you have? I have always been curious (as I am only 25) how much real wages have fallen since Nixon took us off gold.

[Highstreet]

Wow that means you only had to work less then a day and a half per month to pay your rent. I have to work a week and a half to pay my mortgage. How big a house was this and what kind of job did you have? I have always been curious (as I am only 25) how much real wages have fallen since Nixon took us off gold.

Try 12 or 13 - 8hr days.

[Elwar]

Just use .002 Bitcoins in the place of pennies.

[jay_dub]

Wow that means you only had to work less then a day and a half per month to pay your rent. I have to work a week and a half to pay my mortgage. How big a house was this and what kind of job did you have? I have always been curious (as I am only 25) how much real wages have fallen since Nixon took us off gold.

My first job was not the job I had when I got married. In 1976, the minimum wage rose from $1.60 to 2.30 an hour. I was working at a newspaper then and made somewhere over $3.00 an hour then. So it took over a week to pay my rent, but that wasn't really a good job. I was just driving a van then. My wife had a job at McDonalds. We weren't well off then but didn't struggle, either. We went out, took vacations, etc.. So 2 crappy jobs would get you lower middle class back then.

What's really killed us is inflation on food and energy. During Carter's term, the inflation rate began to be calculated without using food and energy as apart of the equation. Since that time, we've has an 'official' inflation rate and a 'real' inflation rate. That is screwing the seniors that depend on Social security because the COLAs are tied to the inflation rate. All Americans have been losing ground with this,but seniors are especially hard hit.

Reformulating the inflation index has been a way for the government to hide the devaluation of our currency. Right now, the 'official' inflation rate is 2% while the 'real' rate is around 9%.

BTW, one of the Fed's goals is to keep inflation at around 2%. They have failed at this so have resorted to altering the equation to make it seem otherwise. Instead of admitting it's raining, they would have us believe we're pissing on ourselves. :rolleyes:

[kpitcher]

Awhile ago I visited New Zealand. They had already phased out pennies, and were also phasing out nickles. The cash registers would give you the exact amount, and then round the total to the nearest dime.

[Svenskar_för_Ron_Paul]

Done the same thing in Sweden. 70s, the 5 öre was phased out, in the 90s 10 öre was phased out. 2 years ago, the 50 öre was phased out. Wonder when they will remove the ''en krona''

10 enkronor= En (one) Tiokrona.

You need seven kronor for one $.