samedi, février 19, 2005
who needs pennies
A few years ago I was making a cross-Canada drive from Calgary to the Maritimes with two of my brothers. It was around mid-May, I think, but when we got to Manitoba we got hit with a nasty blizzard, with blowing wet snow, slippery roads and low visibility. We had set out from Brandon early in the morning, but only made it to Winnipeg before deciding the conditions were too dangerous to be driving in. So we checked into a hotel for the day/night and tried to figure out how to entertain ourselves for the day.
I put in a phone call to Tone-L, who had spent a lot of time in Winnipeg over the years through his job and he suggested that we visit the Royal Canadian Mint. We agreed that it sounded interesting, so headed out, took a tour and got ourselves all educated about the making of coinage. It was interesting to learn that the Canadian Mint actually makes money for numerous countries and is internationally respected for its very high quality standards.
When we were there Keri was sharing his thoughts about the penny, suggesting that the penny should be done away with. We even asked our tour guide about the cost of making pennies (surely it wasn't economically viable to be wasting money to make money). She told us, though, that it costs less than a cent to make each penny. Who knew, eh?
I thought of this because I'm doing research for my Political Analysis class today and just stumbled across an article about this exact issue. The abstract:
We show there is a strong economic case for removing the one-cent coin from circulation in Canada. Using data from the Royal Canadian Mint, we show that seigniorage on the coin is negative. When the user cost associated with the inconvenience of the penny is added, the case for eliminating it is even more compelling. Simulations using price data from Tim Horton's show that rounding prices to the nearest nickel will not be inflationary. We conclude that Canada should follow Australia, New Zealand, the Netherlands, France, and Spain by removing the lowest denomination coin from circulation.
And later we went to a mall. | ¶ 10:27 a.m.
I put in a phone call to Tone-L, who had spent a lot of time in Winnipeg over the years through his job and he suggested that we visit the Royal Canadian Mint. We agreed that it sounded interesting, so headed out, took a tour and got ourselves all educated about the making of coinage. It was interesting to learn that the Canadian Mint actually makes money for numerous countries and is internationally respected for its very high quality standards.
When we were there Keri was sharing his thoughts about the penny, suggesting that the penny should be done away with. We even asked our tour guide about the cost of making pennies (surely it wasn't economically viable to be wasting money to make money). She told us, though, that it costs less than a cent to make each penny. Who knew, eh?
I thought of this because I'm doing research for my Political Analysis class today and just stumbled across an article about this exact issue. The abstract:
We show there is a strong economic case for removing the one-cent coin from circulation in Canada. Using data from the Royal Canadian Mint, we show that seigniorage on the coin is negative. When the user cost associated with the inconvenience of the penny is added, the case for eliminating it is even more compelling. Simulations using price data from Tim Horton's show that rounding prices to the nearest nickel will not be inflationary. We conclude that Canada should follow Australia, New Zealand, the Netherlands, France, and Spain by removing the lowest denomination coin from circulation.
And later we went to a mall. | ¶ 10:27 a.m.
