When will $1 be the smallest denomination?

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Ciber
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When will $1 be the smallest denomination?

Postby Ciber » Wed Aug 14, 2013 12:05 am UTC

Given that inflation follows current trends, in what year will $1 be the smallest denomination worth carrying? So all smaller coins and such will have been discontinued in that same manner as the half penny.

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Re: When will $1 be the smallest denomination?

Postby flownt » Wed Aug 14, 2013 12:35 am UTC

I have no clue what the current lowest denomination is, but basically the question is l*(1+a)^t=1, with l beeing the current lowest denomination and a the average inflation. t=-log(l)/log(1+a)

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Re: When will $1 be the smallest denomination?

Postby elasto » Wed Aug 14, 2013 1:48 am UTC

Plugging in 1c and 3% inflation gives 155 years. Doubt paper currency will still be in use by then ^^

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Re: When will $1 be the smallest denomination?

Postby skeptical scientist » Wed Aug 14, 2013 1:51 am UTC

Pennies are currently not worth carrying, but they're still around (possibly because of the political power of Illinois?). Just sayin', inflation is not the only thing that determines whether a unit of currency is discontinued.
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Re: When will $1 be the smallest denomination?

Postby LaserGuy » Wed Aug 14, 2013 4:50 pm UTC

FWIW, Canada eliminated its pennies primarily as a cost-saving measure. Once the manufacturing cost of the penny exceeded its value by a factor of about 3, the government decided to pull the plug on them. They probably should have gotten rid of the nickel at the same time, since it costs 10 cents or so to make a nickel at the moment.

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Re: When will $1 be the smallest denomination?

Postby Schrollini » Wed Aug 14, 2013 10:54 pm UTC

In the past 100 years, the CPI has gone up by a factor of 23. In that time, the smallest minted coin has gone from the penny to ... the penny. So I think it's fair to say there's little correlation between inflation and the smallest denomination.

For what it's worth, they still mint 1 peso coins here in Chile, which are worth about US$0.002 each. They're minuscule aluminum coins, I presume because anything else would have material worth greater than a peso. On the plus side, they make great, cheap souvenirs to hand out.
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Re: When will $1 be the smallest denomination?

Postby PM 2Ring » Thu Aug 15, 2013 10:23 am UTC

In Australia, our bronze one and two cent coins were withdrawn from circulation over 20 years ago. Our smallest coin is now the five cent piece (which features the image of an echidna on the reverse side). Prices are still quantised to the cent; if you pay cash for stuff the total is rounded to the nearest 5c multiple.

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Re: When will $1 be the smallest denomination?

Postby Copper Bezel » Fri Aug 16, 2013 10:56 am UTC

PM 2Ring wrote:Prices are still quantised to the cent;

Oh dear. Do they do that awful $19.99 thing there, too, to avoid the psychology of round numbers? I was under the understanding that that was mostly a US thing.
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Re: When will $1 be the smallest denomination?

Postby alessandro95 » Fri Aug 16, 2013 11:22 am UTC

Copper Bezel wrote:
PM 2Ring wrote:Prices are still quantised to the cent;

Oh dear. Do they do that awful $19.99 thing there, too, to avoid the psychology of round numbers? I was under the understanding that that was mostly a US thing.


Such prices are common here in Italy too, especially on mobile phones, computers, consoles and.similar stuffs.


In china, where I lived for a while there are 0.10元 worth banknotes, which is about 0.0125€, but I'm not sure if those banknotes are still printed (but they aren't common at all, also because most prices are rounded to the whole yuan or the half), there also coins with the same value which are more common but in any case I think they cost much more than their value
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Re: When will $1 be the smallest denomination?

Postby teenidle » Fri Aug 16, 2013 11:57 am UTC

Copper Bezel wrote: I was under the understanding that that was mostly a US thing.

Wait, what?

I am now very curious about where they don't do that.

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Re: When will $1 be the smallest denomination?

Postby P13808 » Fri Aug 16, 2013 1:46 pm UTC

Imaginably when the value of $0.01 becomes insignificant on almost every level. The issue isn't the penny as much as bookkeeping. Because of electronic banking, the discontinuation of the one-cent piece in most places is likely to occur in the mildly near future, like Australia has. When having less than a whole dollar will require vast inflation considering we still have products going out to the tenth of a cent.

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Re: When will $1 be the smallest denomination?

Postby skeptical scientist » Fri Aug 16, 2013 2:59 pm UTC

P13808 wrote:We still have products going out to the tenth of a cent.

You mean gas? The 10th of a cent thing is the same sort of window-dressing as the .99 thing, although I suppose it tells you that the gas companies think that extra 1c per gallon is significant. I'm not sure why gas stations do that when nobody else does; they certainly are not the only business that sells everything for under $5/unit. Maybe they have particularly small profit margins, so that the extra .25% of gross receipts is a significant increase in net?
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Re: When will $1 be the smallest denomination?

Postby PM 2Ring » Fri Aug 16, 2013 3:27 pm UTC

Copper Bezel wrote:
PM 2Ring wrote:Prices are still quantised to the cent;

Oh dear. Do they do that awful $19.99 thing there, too, to avoid the psychology of round numbers? I was under the understanding that that was mostly a US thing.

Sure, although for larger prices they sometimes round to 5c, eg $499.95.

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Re: When will $1 be the smallest denomination?

Postby vbkid » Fri Aug 16, 2013 6:59 pm UTC

PM 2Ring wrote:
Copper Bezel wrote:
PM 2Ring wrote:Prices are still quantised to the cent;

Oh dear. Do they do that awful $19.99 thing there, too, to avoid the psychology of round numbers? I was under the understanding that that was mostly a US thing.

Sure, although for larger prices they sometimes round to 5c, eg $499.95.

$499.99 actually sounded more common to me. Google returns 3.7 million 499.99 hits, and only 700k 499.95 hits.

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Re: When will $1 be the smallest denomination?

Postby PM 2Ring » Sun Aug 18, 2013 4:27 am UTC

vbkid wrote:$499.99 actually sounded more common to me. Google returns 3.7 million 499.99 hits, and only 700k 499.95 hits.

I think that might depend on the exact search string; also Google tailors its results to your location.
My results:
Australia "$499.99" => About 472,000 results
Australia "$499.95" => About 3,020,000 results

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Re: When will $1 be the smallest denomination?

Postby Thesh » Sun Aug 18, 2013 9:15 am UTC

skeptical scientist wrote:
P13808 wrote:We still have products going out to the tenth of a cent.

You mean gas? The 10th of a cent thing is the same sort of window-dressing as the .99 thing, although I suppose it tells you that the gas companies think that extra 1c per gallon is significant. I'm not sure why gas stations do that when nobody else does; they certainly are not the only business that sells everything for under $5/unit. Maybe they have particularly small profit margins, so that the extra .25% of gross receipts is a significant increase in net?


Utilities use fractions of a cent as well. For example, I pay $0.82273 per Therm of natural gas (whatever a Therm is), and the state adds a regulatory fee of $0.00068 per therm.
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Re: When will $1 be the smallest denomination?

Postby PM 2Ring » Sun Aug 18, 2013 3:47 pm UTC

http://en.wikipedia.org/wiki/Therm
Natural Gas is usually measured by volume in the United States and is stated in cubic feet. A cubic foot of gas is the amount of gas needed to fill a volume of one cubic foot under set conditions of pressure and temperature. To measure larger amounts of natural gas, a "therm" is used to denote 100 cubic feet
[...]
One British therm (symbol thm) is a non-SI unit of heat energy equal to 100,000 British thermal units (BTU). It is approximately the energy equivalent of burning 100 cubic feet (often referred to as 1 CCF) of natural gas.


The British thermal unit (BTU or Btu) is a traditional unit of energy equal to about 1055 joules. It is the amount of energy needed to cool or heat one pound of water by one degree Fahrenheit. In scientific contexts the BTU has largely been replaced by the SI unit of energy, the joule.

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Re: When will $1 be the smallest denomination?

Postby folkhero » Sun Aug 18, 2013 4:15 pm UTC

skeptical scientist wrote:Pennies are currently not worth carrying, but they're still around (possibly because of the political power of Illinois?). Just sayin', inflation is not the only thing that determines whether a unit of currency is discontinued.

Don't forget the political power of copper and zinc producing states.

I'm not sure about eliminating the nickel without getting rid of the dime at the same time. It seems too confusing to have the smallest denomination a price could go up being 5 cents but not having an actual 5 cent piece. Say something costs $X.45, I have X dollars and some coins. If I have a quarter and two dimes I can pay the exact amount, if I have just have two quarters then I've overpaid by 5 cents and can't get change, if I have X+1 dollars and no coins then I have to get back 1 quarter and a bunch of dimes as change.
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Re: When will $1 be the smallest denomination?

Postby Diadem » Sun Aug 18, 2013 9:07 pm UTC

folkhero wrote:I'm not sure about eliminating the nickel without getting rid of the dime at the same time. It seems too confusing to have the smallest denomination a price could go up being 5 cents but not having an actual 5 cent piece. Say something costs $X.45, I have X dollars and some coins. If I have a quarter and two dimes I can pay the exact amount, if I have just have two quarters then I've overpaid by 5 cents and can't get change, if I have X+1 dollars and no coins then I have to get back 1 quarter and a bunch of dimes as change.

You could also get rid of the quarter instead, or replace it with a 20 cent coin, so that you have 10, 20 and 50 cent coins. You could then drop the 2nd decimal on currency figures entirely.
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Re: When will $1 be the smallest denomination?

Postby billy joule » Sun Aug 18, 2013 9:45 pm UTC

Diadem wrote:You could also get rid of the quarter instead, or replace it with a 20 cent coin, so that you have 10, 20 and 50 cent coins. You could then drop the 2nd decimal on currency figures entirely.

Here In New Zealand, the 5c piece was dropped in 2006. prices are still to two decimal places, if paying in cash, Swedish rounding is used, if by electronic methods, you pay the exact amount.

I recall a story about an american millionaire who has 'invested' millions in nickels (ie he has millions of dollars in nickels..) in the hope that the melt value will exceed the face value when they're taken out of circulation... presumably it's legal to destroy formerly-legal tender :|

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Re: When will $1 be the smallest denomination?

Postby Thesh » Sun Aug 18, 2013 9:48 pm UTC

billy joule wrote:I recall a story about an american millionaire who has 'invested' millions in nickels (ie he has millions of dollars in nickels..) in the hope that the melt value will exceed the face value when they're taken out of circulation... presumably it's legal to destroy formerly-legal tender :|


Unless the melt value already exceeds the face value, I don't see how that's possibly a good investment when you can just buy the raw materials for cheaper.
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Re: When will $1 be the smallest denomination?

Postby folkhero » Mon Aug 19, 2013 2:51 am UTC

Diadem wrote:You could also get rid of the quarter instead, or replace it with a 20 cent coin, so that you have 10, 20 and 50 cent coins. You could then drop the 2nd decimal on currency figures entirely.

True, but it seems like that would be quite a bit more work since you would have to introduce a new coin in addition to getting rid of coins. Also, as an American, the quarter seems like the most functional coin in terms of being common in circulation but still valuable enough that I'm happy to have a dresser covered in them. It's the only coin I would actually mind getting rid of.
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Re: When will $1 be the smallest denomination?

Postby skeptical scientist » Mon Aug 19, 2013 3:31 am UTC

folkhero wrote:As an American, the quarter seems like the most functional coin in terms of being common in circulation but still valuable enough that I'm happy to have a dresser covered in them. It's the only coin I would actually mind getting rid of.

Also, there are a lot of machines out there which only accept quarters.
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Re: When will $1 be the smallest denomination?

Postby gmalivuk » Wed Aug 21, 2013 7:52 pm UTC

Copper Bezel wrote:
PM 2Ring wrote:Prices are still quantised to the cent;

Oh dear. Do they do that awful $19.99 thing there, too, to avoid the psychology of round numbers? I was under the understanding that that was mostly a US thing.
Because Americans have different numerical psychology that other nationalities, or what?

It's even more annoying in countries without pennies, because they still get away with the psychological advantage of having $9.99 look less than $10, while not actually charging you any less for it. With gas it's fairly common to buy 10 or more gallons at once, so most of the time there's at least a $0.01 difference. But when it's something you're unlikely to buy multiple units of, the technique is even more dishonest.
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Re: When will $1 be the smallest denomination?

Postby tomtom2357 » Thu Aug 22, 2013 4:54 am UTC

Sometimes in NZ, they charge $99.95, but that is also annoying, because in NZ the lowest denomination is the 10c coin.
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Re: When will $1 be the smallest denomination?

Postby LaserGuy » Fri Aug 23, 2013 6:03 pm UTC

gmalivuk wrote:
Copper Bezel wrote:
PM 2Ring wrote:Prices are still quantised to the cent;

Oh dear. Do they do that awful $19.99 thing there, too, to avoid the psychology of round numbers? I was under the understanding that that was mostly a US thing.


Because Americans have different numerical psychology that other nationalities, or what?


They might... there have been several studies in psychology that have been uprooted by the fact that not everybody thinks the same way as white American college students.

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Re: When will $1 be the smallest denomination?

Postby gmalivuk » Sat Aug 24, 2013 4:32 am UTC

I imagine the college student thing has the most to do with that, followed by being white in a society that privileges whiteness. Being American, I suspect, has next to nothing to do with it in most such studies.
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Re: When will $1 be the smallest denomination?

Postby Diadem » Sat Aug 24, 2013 3:32 pm UTC

gmalivuk wrote:I imagine the college student thing has the most to do with that, followed by being white in a society that privileges whiteness. Being American, I suspect, has next to nothing to do with it in most such studies.

Are you saying there are no cultural differences between Americans and other cultures?
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Re: When will $1 be the smallest denomination?

Postby gmalivuk » Sat Aug 24, 2013 4:25 pm UTC

Not significant differences in the things being studied, for the most part, beyond being a member of a privileged ethnicity going to college.
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Re: When will $1 be the smallest denomination?

Postby Diadem » Sat Aug 24, 2013 9:09 pm UTC

gmalivuk wrote:Not significant differences in the things being studied, for the most part, beyond being a member of a privileged ethnicity going to college.

You'd be surprised

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Re: When will $1 be the smallest denomination?

Postby gmalivuk » Sat Aug 24, 2013 9:47 pm UTC

Hm, interesting.

I guess I'm not surprised that the 4.99 trick wouldn't work among, for example, people in a society that doesn't use money, but there's still nothing there to suggest that people who do deal daily with money economies would have different psychological reactions to various prices.
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Re: When will $1 be the smallest denomination?

Postby DavCrav » Sun Aug 25, 2013 12:45 am UTC

This is just a general question gmalivuk, but your photo looks like one of the following three things are happening: 1) You are dancing. 2) You are mid fist pump. 3) You are attempting (badly) a boxing stance. I was just interested as to which.

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Re: When will $1 be the smallest denomination?

Postby gmalivuk » Sun Aug 25, 2013 3:23 am UTC

It is a fake boxing stance. It was a Halloween party, and for some reason I (as Chester A. Arthur) and a friend (as Hanners from Questionable Content) decided that we needed to fight. Possibly over the Secret Service, which had an obligation to protect both of us.
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Re: When will $1 be the smallest denomination?

Postby DavCrav » Sun Aug 25, 2013 12:36 pm UTC

gmalivuk wrote:It is a fake boxing stance.


Aha. I still prefer the mid fist pump explanation...

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Re: When will $1 be the smallest denomination?

Postby tomtom2357 » Sun Aug 25, 2013 2:09 pm UTC

I've been wondering about that too.
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Re: When will $1 be the smallest denomination?

Postby WanderingLinguist » Sun Aug 25, 2013 11:33 pm UTC

teenidle wrote:
Copper Bezel wrote: I was under the understanding that that was mostly a US thing.

Wait, what?

I am now very curious about where they don't do that.


South Korea, for one. Currency here is in 10, 100 and 500won coins, and 1000, 5000, 10000 and 50000won notes. Conversion is approximately 1000won/US dollar, making 10won about 1c. But almost nobody ever uses 10won coins.

Most goods you'll find in a supermarket or convenience store are priced in multiples of 100won, and restaurants usually price dishes in 500won increments. Tax is almost always included, and where it isn't included, it's almost always 10% on some number of thousands of won. So for example, if a restaurant lists the price of a meal as 5000won, you pay exactly 5000won.

On rare occasions where there's some kind of 20% off sale on something that's not prices in 1000s of won, you'll get 10won coins. Or some shops charge 20won for shopping bags. So about once or twice a year, I end up getting 10won coins for change. But usually I bring my own shopping bags or use a credit card just to avoid the inconvenience of 10won coins, since they're pretty much useless for everything else.

You never see prices like 1999won. Prices like 2100won or 2500 won are common. Occasionally, you'll see 2510won or something, but it's incredibly rare and people get annoyed and seem less likely to purchase rather than more likely, because 10won coins are so annoying.

So, there's one example :)

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Re: When will $1 be the smallest denomination?

Postby Derek » Tue Aug 27, 2013 8:36 pm UTC

My recollection is that in Switzerland prices are typically posted in exact Swiss francs. Instead of seeing 4.99 you would see 5.--.

I suspect the 4.99 trick works in any country that uses a big-endian positional number system, because reading the first digit or two is a natural (but biased) approximation for the whole value. The equivalent trick in other number systems might not work as well.

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Re: When will $1 be the smallest denomination?

Postby gmalivuk » Tue Aug 27, 2013 9:29 pm UTC

And I suspect it furthermore helps when tax isn't included, so you can expect to ultimately end up paying some odd amount regardless of whether the prices is listed as a nice round number. I could definitely see it doing more harm than good to charge prices that will obviously result in more awkward amounts of change than if you charged a nice round number. But in Boston, for example, a restaurant item listed at exactly $6 will end up costing you $6.42 with tax, and $7.32 to $7.62 with tip as well. Those numbers are exactly as annoying to pay as the numbers one cent lower that you get if it's listed as $5.99, with the added benefit to the retailer that $5.99 seems cheaper.

(Of course, the reverse also holds: if a place wants to seem fancier and more high-class, listing it as $6 is a lot better than $5.99, and writing out "Six Dollars" even moreso.)
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Re: When will $1 be the smallest denomination?

Postby Derek » Tue Aug 27, 2013 10:14 pm UTC

gmalivuk wrote:And I suspect it furthermore helps when tax isn't included, so you can expect to ultimately end up paying some odd amount regardless of whether the prices is listed as a nice round number. I could definitely see it doing more harm than good to charge prices that will obviously result in more awkward amounts of change than if you charged a nice round number. But in Boston, for example, a restaurant item listed at exactly $6 will end up costing you $6.42 with tax, and $7.32 to $7.62 with tip as well. Those numbers are exactly as annoying to pay as the numbers one cent lower that you get if it's listed as $5.99, with the added benefit to the retailer that $5.99 seems cheaper.

This is also a good point. Most of Europe has a VAT instead of sales tax, so if you see 5.00 then you will pay exactly 5.00. But in most of the US you're going to either get or pay with change whether it's $5.00 or $4.99. (On the other hand, it always feels great when your bill comes out to an exact dollar amount :P)

There are places in the US with no sales tax though. You could see if exact prices are more common in those places. Although they may be sufficiently few and far between that the culture of $4.99 predominates anyways.

(Of course, the reverse also holds: if a place wants to seem fancier and more high-class, listing it as $6 is a lot better than $5.99, and writing out "Six Dollars" even moreso.)

I have noticed this. I'm not sure I buy your explanation though, I don't see any reason that $25 should seem fancier than $24.99, but this is definitely a trend.

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Re: When will $1 be the smallest denomination?

Postby gmalivuk » Tue Aug 27, 2013 11:39 pm UTC

It seems fancier because it's not trying to seem cheap.
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