3 ms·
The issues with physical currency are almost entirely self-inflicted. Governments should retire the smallest denominations and introduce larger coins/bills. In
by david2ndaccount 3y ago
The issues with physical currency are almost entirely self-inflicted. Governments should retire the smallest denominations and introduce larger coins/bills. In the US, all of the coins are worth so little that the only practical coin is the rare half-dollar. Retire all of those worthless coins, require transactions be rounded to the nearest half-dollar or dollar, and issues with physical currency for the user will go away.
Now of course, the government won’t do this as they want physical currency to be inconvenient so they can track you and deny you access to your own money when they find it convenient. We’re in an era of growing authoritarianism. Hopefully we survive this one.
- alexwhb 3y agoThis is a really good point. And one of the reasons I hardly ever use cash is having to deal with so much annoying change. If you eliminate most change… cash becomes not a big deal
- CSMastermind 3y agoI would argue the root cause of this phenomenon is inflation and the first step we should take is to make the dollar a stable unit of measure not to consciously allow its value to fall.
- kuchenbecker 3y agoDeflation is worse than inflation, and it's hard to hit a single number, so central banks aim for low, stable inflation. 1-2% inflation isn't very perceptible vs 0 but avoids deflation.
- tastyfreeze 3y agoPlease explain why deflation is worse.
- kuchenbecker 3y agoCash becomes an appreciating asset. It leads people to hoard cash rather than invest in stocks and bonds, and delay purchases stagnating the economy. Japan mid 1990s to mid 2010s is a real-world example: https://en.m.wikipedia.org/wiki/Lost_Decades https://en.m.wikipedia.org/wiki/Lost_Decades In the worst cases, deflation causes demand to drop causing a recession, which further depresses demand. https://en.m.wikipedia.org/wiki/Deflation https://en.m.wikipedia.org/wiki/Deflation
- tastyfreeze 3y agoSo people would save more?Savings is how the wealth of a nation is built. Capital breeds investment. The more people with capital the better. The only reason that people invest in the stock market is to maintain wealth. What would you do if you could count on your dollars buying 2% more next year? Would you shove all your dollars in a mattress and forgo buying food so you could save a few more? Or would you keep buying everything you do now and worry a little less about investing to maintain value? Less dollars in the stockmarket enriching others and more dollars in savings building personal wealth is what deflation brings. The only people this is a problem for are stockbrokers.
- kuchenbecker 3y agoEconomies are built on the movement of money not the sum of money. It's truly positive sum where the act of spending money allows someone else to spend money. Highly suggest picking up some econ primers, as its almost universally agreed even mild deflation is destructive.
- tastyfreeze 3y agoEconomy is the movement of money. That is not a measure of wealth. There can be a lot of money moving around with nearly everybody living pay check to paycheck. People are better off if they can build wealth. It is more stable for society to make it easy to build wealth. It would take a lot of evidence to convince me that deflation is worse in the long run for human flourishing than inflation. I don't care about the economy as conceived by bankers and economists. If ever more people are flourishing the economy is working. If a few are getting exorbitantly wealthy, at the expense of everybody else, by being close to the flow of new money, the economy is not working. We have been at inflation so long there is no painless way out.
- tastyfreeze 3y agoYou know what? That sounds like a great idea. A single dollar doesn't buy much these days. Maybe we should add a zero to all the bills too.