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I don't think they're buying them back, just re-circulating the currency in larger denominations.
by JacobAldridge 13y ago
I don't think they're buying them back, just re-circulating the currency in larger denominations.
- rahimnathwani 13y agoRe-circulating the currency in larger denominations is the same as buying them back. In order for them to take 100 pennies out of circulation, they must compensate the owner with a dollar bill/coin (i.e. a larger denomination) or a dollar of bank credit.
- deleted 13y ago[deleted]
- eli 13y agoIt's a funny sort of "buying" when you can print money. Be careful not to confuse the value of a coin with value of the metal the physical token contains.
- rahimnathwani 13y agoAh... I think your point is similar to paulgb's: "So if the metal in 100 pennies is worth more than the metal in a loonie they make a profit." Is that what you mean?
- eli 13y agoI think so... but the profit is a lucky bonus that happens because the coins we decided we don't want any more happen to have some intrinsic value. They would need to take the pennies back even if it was at a "loss" in terms of manufacturing cost vs recycled value.
- vacri 13y agoNo net currency value has taken place. Party A gives $1 in the form of 100 1c coins, Party B gives $1 in the form of 1 $1 coin. It's the same as when you give change to a stranger on the street - exchange two fives for a ten, and you're no better or worse off financially. You haven't bought anything, just exchanged for a more convenient set of tokens.
- rahimnathwani 13y agoYes, but it's what happens next that's interesting: party B melts the 100 1c coins, and sells the metal for scrap, receiving about 10c.