Monday saw the end begin for the familiar penny.
Merchants are still adjusting: while the instructions to most cashiers is to accept pennies if offered but not to hand them out (rounding the change), most people operating tills still have their habits firmly in place. If the “change required” requires pennies, they’re handing them out (while they still have them).
Reprogramming of registers, though, is coming quickly, to start expressing the “change required” rounded off to the nearest nickel. (.00 to .02 rounds down to .00; .03 to .07 rounds to .05; .08 to .12 rounds to .10; etc.)
For me, it’s a sad day — and yes, I’m like most people in that I grumble when I open my change pouch and find that heavy weight is mostly pennies, and I dump them into a jar to be rolled “sometime”. The demise of the penny shows us just how price inflation has savaged us.
Money is supposed to be a store of value as well as a medium of exchange.
We’re all used to the medium of exchange part. Rather than having to find someone who wants what I offer so that we can barter, money becomes the intermediary, facilitating our trades of goods and services (labour for things).
But money is also supposed to allow me to stretch out the time involved (that’s the store of value part). Isn’t that the essence of saving for retirement, for instance? The money I put aside today will still be worth what it’s worth to me today forty years from now when I finally put it to work for me.
Well, good luck with that.
If you’re in Ottawa, spend a couple of hours at the currency museum, housed in the lobby of the Bank of Canada building. It’s a real eye-opener.
Throughout the nineteenth century in Canada — so from colonial times to Sir Wilfrid Laurier’s premiership of the country — the one cent coin, or penny, was the backbone of our day to day currency needs.
It carried enough value in itself that we actually had a few fractional coins for a while — half pennies. Many individual items of use — milk, bread, flour, etc. — could be purchased for a penny or three.
As the twentieth century unwound into the twenty-first, governments stopped living within their means. Instead, they started running deficits routinely. The resulting debt was reduced by savaging our money, decreasing its value.
As an American friend of mine once noted, “a gallon of gas costs the same today [in 2010] as it did in 1964 — two silver quarters”. It’s been a very long time, indeed, since our coins were made of silver and gold, mostly because even silver coins are now worth far more, thanks to currency debasement, than their face value.
A silver Canadian dime from before 1968 isn’t worth ten cents: it’s worth $2.30.
Despite years of adjusting the metal content of the penny, it had come to the point where each penny cost us 1.6¢ to mint. That’s why there were no 2013 Canadian pennies — and why it’s being withdrawn from circulation.
We really had two choices. We could have kept the penny, if we’d revalued our currency.
France did this in 1960. It lopped two zeroes off the franc: 100 old francs became 1 new franc. Knocking a zero off here would have allowed us to keep this smallest bit of small change (for the minting cost would be back in line with it being a token).
Indeed, a 100:1 reduction would put us back to the 1940s in terms of what a coin bought (that silver dime could again circulate, being worth more than the silver in it).
That’s not what is wanted, though. We want the illusion involved in big numbers.
It doesn’t just hide the erosion in our savings, in our pensions, in our futures. It makes us feel better about ourselves even as our governments rob us blind and pretend we’re in a lower tax environment.
We think we’re doing better, aspiring to “six figure jobs” (aspiring to break $10,000 doesn’t sound anywhere near as rewarding, does it)?
So our desire to con ourselves and our refusal to live within our means as a nation has cost us a friend, and put us all in the world of rounding up and down, constantly.
Already, in Ottawa, planning is underway for the day when it’s the nickel that goes — and when the five dollar bill turns into a coin.
By then, being a millionaire will be mostly meaningless. But we’ll all feel really good about it.
Until, that is, we have to live on the money we’ve saved, and the pension we might have contributed to
But hell — isn’t that just old people being grumpy about how “things aren’t like they used to be?”