Pennies

 

Pennies?

 

So I am wondering about pennies. Don’t know why the two have anything in common--maybe something to do with allowances and the value of money. 

Money is first of all a medium of exchange. It has no other value. And it is not usable for anything else. It has to have some reason for acceptance, which is where we are today. Its cost and its use are disconnected. It isn’t that pennies aren’t valuable it is just they aren’t worth much. Two-hundred seventy nine pennies will get you a short of coffee at Starbucks.

 I’m also reminded about the difference between counterfeit money (fake) and Confederate money (legitimate, valueless).

 Being “legal tender” is what makes a currency acceptable, to pay a debt. I don’t know that I’ve ever heard of anyone getting sued for not accepting cash for a payment. But, nowadays, the vender might be able to say something to the effect they expect a card and not cash. With phone payment “systems” are gaining traction it is not out of the realm to imagine in the near future vendors won’t even want a card.

 But also, practicality and convenience makes “money” money. Back when a penny had more buying power it’s portability helped make it work. The system of one, five, ten, twenty-five, and fifty cent pieces meant change had use. With inflation the penny became weight. Where we are today with pennies has taken many decades to get here. Nickels are next to fall?

 A small business person has to make decisions about the convenience of cards and subsequent transaction costs versus keeping change, counting change, keeping the till right. The old axiom I learned was that if the till was short, that cost the company. If the till was long that cost the customer. The poor shop owner just wants to sell coffee or leather purses, not be a financier. For rounding to the nearest 5-cents will require some people to get shorted and other not-shorted. Is that okay?

 I’m trying to get in the habit of taking along a wad of pennies when I go out. Some of the coffee shops will reduce their price if you pay cash. And if they don’t I think most of them still welcome exact change. It’s a hard thing to juggle.

 If there are 330-million people in the US each hoarded one-dollar worth of pennies is not 330-million pennies but 33-billion pennies out of circulation. Ten bucks is one-thousand pennies. Returning either to a bank is nothing more than a polite citizentry thing to do.

 As a thought piece, imagine how many pennies should be in each till for each shift for each register in your local WalMart. Multiply that by the number of stores in the country and a funny thing begins to show up. We can’t do without pennies.

We have come to a realization--finally-- that physical money has a real cost to it. The penny is too expensive to keep making. The nickel would be next. This is not new. But are we willing to default our handling of money to the credit card system?

 An interesting spread sheet problem: find some number of pennies in circulation (in the hundred of billions) divide by pennies per pound and divide that by 2000 to get how many tons of pennies are in circulation. Check my arithmetic, Double check your data (it seems to vary). I got slightly over 346-thousand tons. The answer is rather staggering, if it is even close.

 What we ought to see one of these days is the neighborhood kids doing a penny-collection drive. A better haul than mowing yards. Way ahead of pocket change for an allowance.

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