h a l f b a k e r yRenovating the wheel
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It is expensive for governments to print and mint money. I read that it costs the United State’s mint more than a cent to mint a penny, making the cost of minting money a loosing proposition. One of the reasons is the resources it uses to print and mint. Old money is destroyed and new money is created.
Moreover,
as inflation increases the prices for everything, transportation, gas, food, housing, clothing etc. we need to carry more and more coins and bills to pay for these wants and needs. For example, instead of three coins or bills as before to get on a bus or trolley, we need five coins or bills for the same ride. Instead of 1 bill for a gallon of gas, we need five bills, etc.
While the cost of printing bills should be relatively the same for any denomination, it seems to me that as prices of everything increases according to ever-existent inflation, the need for more expensive currency makes printing and mining money more expensive for the government as well, increasing taxes to pay for more and more coins and bills.
What is proposed here is a redesign for money, particularly the value portions of bills and coins. As inflation occurs and higher value money is needed as a useful medium of exchange for commerce, currency could be recalled by the government from various banks, and instead of destroying the coins and bills, it is simply washed then reprinted and restamped with higher values. Thus, a one dollar bill becomes a ten dollar bill, the five dollar bill becomes a fifty dollar bill and so forth. Likewise, the penny becomes a ten cent piece, the nickel becomes a fifty cent piece and the quarter becomes a two and a half dollar coin.
With this process, we can put inflation out of our list of things to worry about. As inflation occurs, workers will be paid with the higher valued coins and bills but we would
we could still carry the same amount of coins and bills to pay for the ever increasing costs of things we want and use. We could still use three coins or bills for the bus or trolley ride, only the number on the coins will change to match the number called price to get the ride, or pay for the bread or pay for gas, etc.
el dueno
For [Texticle]
http://www.telegrap...inst-inflation.html
Saw in the news today. [theleopard, Jul 31 2008]
[link]
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Cool what a great idea, it should only take counterfeiters 3 maybe 4 days to figure out how to reprint the bills for their own purposes. |
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Also your understanding of inflation is rather limited. Inflation has nothing to do with coins or bills, it has to do with the VALUE of the unit of those bills. Issuing higher denominations does not eliminate the inflation it just makes it less cumbersome. A 1 million dollar cup of coffee is still a million dollars weather you use a 1 million dollar bill or 1 million 1 dollar bills. |
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If anything this proposition would exacerbate inflation issues much the same way as governments printing additional bills, each new bill works to devalue all the others and as such inflation is fed not starved. |
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This idea is flawed at a fundamental level. |
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I heard that Uganda (or similar) once lopped something like six (or similar) zeros off its currency denominations in order to 'control' inflation. |
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Well, you can't [m-f-d] on bad economics.......(unless you try to [Morgan-for-Democracy] in Zimbabwe. Possibly [Mark-For-Deflation] |
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Large denominations of US currency were available from the start but Nixon stopped their circulation. At the time the bills were mostly being used by banks and organised crime. Since the banks were adopting electronic transfers, the large notes were discontinued to hinder organised crime. |
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BTW, I wonder how much it would cost to get a couple of the new Zimbabwe notes? It'd be kinda fun to be a trillionaire. |
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According to yesterday's Bloomberg rate, 1 GBP = 6,169,339.38 ZWD |
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However, I imagine the 'street-rate' is liable to be much, much higher. |
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My issue with the idea is the thought that it's easier, and cheaper to collect, launder(!), successfully iron and then reprint millions of banknotes than it is to start from scratch. |
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And like what jhom said, inflation isn't problematic because it costs so much to keep printing higher and higher denomination notes - inflation is problematic because the cash you have saved in the bank loses value - whatever credit interest rate you earn, if it's less than the current rate of inflation, you are losing money by keeping it in the bank. |
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Inflation and interest rates need to go hand in hand - so the higher the inflation, the higher are interest rates tend to be in order to try to keep up. (This is because of a loophole where if you borrow money in a country with high inflation, if there isn't a correspondingly high interest rate, when the time comes to pay it back, the actual value of the loan is liable to be worthless - a sneaky tax dodge used by city traders during the mega-inflation of the Turkish Lira was to get their bonuses paid through loans in TRL, which being loans, weren't taxable. These loans were immediately converted to GBP and spent on Porsches, champagne, caviar and fine Bolivian cocaine. Meanwhile, the TRL plummets and by the end of the year, when they converted their GBP back to TRL to pay off their loans, the cost was next to nothing - it's the closest thing to free money there is) |
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So, to stop people outside of the economy from leeching off it like this (which further drives problems in the monetary supply) you need to raise interest rates, which means killing the economy because nobody will dare borrow any money, especially in the long-term, because they'll get slaughtered by massive interest rates. |
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So, inflation is bad, m'kay? |
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In order to sort the notes you'd need converted versions of the cash counters that central banks already use that sort and grade notes. Then you'd have to find a way of processing the individual notes for the reprinting. When notes are manufactured they are printed en masse as it makes them easier to handle and cheaper to print. The re-marking would need features like micro-printing and detectable inks to make counterfeiting harder. |
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When I worked for DeLaRue Systems in their currency counter bit, the big machines cost about £200,000 and £15,000-£20,000 to set them up.
The time scales involved in gathering in the notes, reprinting them and re-distributing them could put a serious dent in a county's money supply. |
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Why not print the bills with several zeroes at the end of each number, and trim off a zero as required? |
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The average lifespan of notes is measured in months, coins are a good bit longer, but not as long as you might think (5 years comes to mind). Unless you start printing on plastic bills will not survive multiple cycles. Printing on coins will wear off, making them need to be replaced faster and re-minting is not real possible. |
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Some paper denominations have strips inside that will show its value when held up to the light. |
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I'm all for [normzone]'s idea!! hehe |
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// Why not print the bills with several zeroes at the end of each number, and trim off a zero as required?// |
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Perhaps I missed a joke here(imagine that me missing a joke) but I thought the point here was to ADD zeros, not take them away. |
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When you multiply the number on the currency, don't you multiply all your problems by the same factor? Wouldn't the ratios between everything be the same? You've still got the same amount of buying power and real money in the economic system. It would be the same as printing more money, right? |
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//rcarty: Inflation is good because it can curb consumption// |
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Actually, one of the effects of inflation is to drive consumption. If money is going to depreciate each day that's a pretty strong motivation to spend it as quickly as possible. |
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Incidentally, it's interesting to note that even in conditions of hyper-inflation, money doesn't lose money quite instantly. A 3700% annual inflation rate is "only" 1% per day; a 137,000% annual rate would "only" be 2%/day. |
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the good dueno will simply prevent inflation from getting any traction with this simple measure. It would be even simpler to just state, by fiat, that 2 dollars now equals 1 dollar in a sort of 1 for 2 stock split, keep the old bills and adjust prices accordingly. |
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//Increase value of *my* coins and bills// |
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I fixed your idea title just a bit ;) |
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