The Gaming Den

Review: http://en.wikipedia.org/wiki/Gresham%27s_law

The Paper: http://www.jcr-admin.org/files/pressPDF ... rticle.pdf

The gist: Two researchers with really nothing better to do found out that people value crisp, new-looking paper money more than worn, dirty-looking paper money, even though both bills have the same face value. The remarkable thing about this paper is that the authors don't point out the immediate (to me, anyway) connection to Gresham's law.

It may have something to do with how vending machines throw a fit about accepting battered bills.

Fairly obvious in retrospect, but interesting nonetheless. I wonder if the effect is powerful enough that printing money reduces inflation.

The classic manifestation of Gresham's Law is that if there are two currencies and people value one of them more, they are more likely to save the one they value more and more likely to spend the one they value less. The result is that the more valued currency ends up in sock drawers and out of circulation. Bad money drives out good, and all that.

So if people literally value crisp new dollar bills more than old funky dollar bills, one would presume that newly printed dollar bills would be less likely to be spent. Lower spending means less demand, lower GDP, and lower inflation.

I don't suppose we'll ever get Glenn Beck to be reality aware enough to worry publicly whether the government printing money is deflationary...

-Username17

In hindsight, this may be exactly why Sacagawea dollar coins were considered a failure; people valued them so highly they didn't spend them.

Ancient History wrote:In hindsight, this may be exactly why Sacagawea dollar coins were considered a failure; people valued them so highly they didn't spend them.

That, and the push at Walmart to hand them out was stupid. I mean, the idea was a good one, but cashiers weren't handing them out as change. They were handing them out on demand - which is retarded. The same thing happened at banks.

If Americans are going to switch from $1 bills to $1 coins, then there needs to be a concerted effort to collect the bills and distribute the coins in their place. That didn't happen.

The only place I know of (around here) that actually handed them out as change - like it or not - was the WA State Ferry system. They also hand out $2 as change, too.

One of the vending machines at work gives out the Presidential dollar coins sometimes.

Why would we want to use $1 coins instead of $1 bills? I mean, I'd be in favor of replacing all bills with coins just because coins look cooler, but I imagine there's a better reason than that if the government is actually investing resources in it.

Chamomile wrote:Why would we want to use $1 coins instead of $1 bills? I mean, I'd be in favor of replacing all bills with coins just because coins look cooler, but I imagine there's a better reason than that if the government is actually investing resources in it.

Coins work better in vending machines. If you have a lot of vending machine goods and services that cost a dollar or more (whether it be cans of soda or washing machine loads), then having a dollar coin is totally awesome. That's why almost every country has coins in the $1-2 range. In the Czech Republic there is a 20 Korun piece that is worth about a buck, and a 50 Korun piece that is worth about $2.50. Canada has a $1 and $2 coin (the Loonie and the Twonie). There's a one and two Euro coin as well as a one and two Pound coin. And so on.

Coins that have purchasing power approximately equal to the costs of things you would want to buy from machines are just better than scripts of paper. On the flip side, having coins for big denominations is basically stupid. Coins are easier to lose and heavier.

-Username17

That, and it's routine for coins to stay in circulation for a couple decades whereas dollar bills struggle to survive a couple of years because they're circulated so heavily but are less durable.

Coins will never accidentally rip or burn up or get soggy/washed up . .
Germany has 1 cent, 2 cent, 5 cent, 10 cent, 20 cent, 50 cent, 1 euro and 2 euro pieces . .
Back when we still had D-MARK(Deutsche Mark), we had 1 penny, 2 penny, 5 penny, 10 penny, 20 penny, 50 penny, 1 Mark, 2 Mark and 5 Mark. And on occassion special 10 Mark Coins as well, which was usually a 10 DM bill.
Now the € to DM exchange is very roughly about 1:2, so for every 2 DM you got more or less 1 €, when the change happened . . now the smallest bill we have is a 5€ bill(roughly equal to the old 10DM Bill) and the biggest COIN we have is the 2€ coin(roughly equal to 4 DM but meant to replace the 5DM coin).
The real kicker?
You generally can't get the 5€ bill from ATMs. No, really, smallest they will usually give out is the 10€ bill . . so they basically did away with the 5DM coin and the 10DM bill/coin and went straight from 4DM to 20DM . . because the 10€ Bill is roughly equal to the 20DM Bill from back then . .

And prices did not really reflect this change, like, at all . .
Most stores and shops just changed the currency sign from DM to € and called it a day in the beginning -.-

Part of the way the US botched implementing the $1 coin is that there was no big initiative to set up vending machines to take said coins.

Stahlseele wrote:Coins will never accidentally rip or burn up or get soggy/washed up . .

Funny thing. If you drop a coin in boiling water and leave it there for a while, there the engraving will peel off and you'll be left with worthless metal slugs. The bill, on the other hand, will be soggy and hot, but other wise usable.

wait . . what?
how will engraving peel off?
i thought engraving is made with pressure by putting pressure on the bit of metal to make it a coin?

We have 5c, 10c, 20c, 50c, $1 and $2 coins over here. The $1-2 ones are awesome for the reason Frank said: vending machines. Indeed, Americans who visit admit they like the $2 coins because they're small, you can have a bunch in your wallet and they're good for vending machines. They generally couldn't be fucked collecting the change (some machines have a can cost $1, others will charge you $1.30 or something just to be a pain in the ass), and to be honest I don't blame them.

We used to have 1c and 2c coins, but they were phased out when I was a kid. I'd like to say Australia, as one, said "Fuck these, they're totally pointless", but I imagine that's not the case.

Modern coins in the US tend to be coated metal slugs - making them out of pure metals is both pointless and needlessly expensive; there's more than a penny worth of copper or a nickel's worth of nickel in pennies and nickels.

How often does one accidentally boil their clothes?

I do it all the time. The smell of burnt cloth kinda grows on you after awhile.

hyzmarca wrote:

Stahlseele wrote:Coins will never accidentally rip or burn up or get soggy/washed up . .

Funny thing. If you drop a coin in boiling water and leave it there for a while, there the engraving will peel off and you'll be left with worthless metal slugs. The bill, on the other hand, will be soggy and hot, but other wise usable.

I'd like a source on this, please, so I can try it to verify.

Maj wrote:

hyzmarca wrote:

Stahlseele wrote:Coins will never accidentally rip or burn up or get soggy/washed up . .

Funny thing. If you drop a coin in boiling water and leave it there for a while, there the engraving will peel off and you'll be left with worthless metal slugs. The bill, on the other hand, will be soggy and hot, but other wise usable.

I'd like a source on this, please, so I can try it to verify.

Personal experience. At one point I had a bunch of coins that were covered in transparent sticky gunk, apparently they'd been left in the same bag as some candy that melted. My grandmother decided to boil them to clean the gunk off. We ended up with a bunch of worthless metal slugs.

A quick internet search suggests that pouring boiling water onto coins is safe because there's a limit to the amount of heat they can absorb that way, but that isn't what she did. She dropped them directly into a pot, where they sat on the bottom and could receive heat directly from the stove and left them there was twenty or thirty minutes.

When we took them out the coating peeled right off.

I've never tried boiling a bill that way. It's possible that the ink would run.

I used to boil coins all the time. This was mostly for fun, but I would also take the metal slugs that used to be quarters and do all sorts of fun stuff with 'em.

Two of those things stand out in my memory. The first was putting a string on the slugs, and then putting them into arcade machines, then pull them back out again to get free games. This sometimes worked, sometimes didn't, and I often got caught. Great times.

The other was to take the slugs and put them in a homemade air cannon, and then blast them at passing cars. I would then score myself on what I hit. One point for hitting the door. Two for hitting a window. Three for breaking the window. Four for hitting the driver. Five for hitting and blowing out a tire.

This is one of the most entertaining things on the planet. However, the local law enforcement apparently didn't think so. Buzz kills.

hyzmarca wrote:

Maj wrote:

hyzmarca wrote:
Funny thing. If you drop a coin in boiling water and leave it there for a while, there the engraving will peel off and you'll be left with worthless metal slugs. The bill, on the other hand, will be soggy and hot, but other wise usable.

I'd like a source on this, please, so I can try it to verify.

Personal experience. At one point I had a bunch of coins that were covered in transparent sticky gunk, apparently they'd been left in the same bag as some candy that melted. My grandmother decided to boil them to clean the gunk off. We ended up with a bunch of worthless metal slugs.

A quick internet search suggests that pouring boiling water onto coins is safe because there's a limit to the amount of heat they can absorb that way, but that isn't what she did. She dropped them directly into a pot, where they sat on the bottom and could receive heat directly from the stove and left them there was twenty or thirty minutes.

When we took them out the coating peeled right off.

I've never tried boiling a bill that way. It's possible that the ink would run.

so you smelted coins and the metal melted. interesting, tell me more.. oh wait. that is the point of smelting, plus the pot contains elements in coins and the process to make them is a wafer more often than an alloy.

the pot could have reacted with the coins, as well the "candy", and the fact they were placed onto direct heat, copper being an excellent conductor of heat and electricity, you just melted the coins.

information lacking in this story is which currency and denomination was used, as well where the pot was, the temperature of the stove, what the pot was made of.

cute story, but i have a refillable butane cigarette lighter than can cut ALL US coins in half with the flame it produces, save for a nickle and oddities like steel coins.

also modern coins are made to wear out quicker. 82-ish pennies stopped being made of all copper and a cheaper blend was used to make them.

at last reading on this the cost of coins v paper money was something like this for the US: (would have to research again when i can find my old links to find current)

penny: $0.06
nickle: $0.04
dime: $0.03
quarter: $0.12
half-dollar: $0.23
eisenhower dollar: $0.40

$1 bill: $0.36
$2 bill: $0.36
$5 bill: (the pattern continues)

so bills cost less and "create" more money. one of the long standing reason they wish to remove the penny because every penny minted losses money for the mint. it is probably worse now with semi-precious metals going up in value and decreasing in supply and the more electronic devices that use the same metals as coins.

i know somewhere did, or maybe still does make coins out of aluminum because it is much cheaper and the coins last longer. though i thought AL was more expensive than copper, oh well.

there is also a chance the coins you had were counterfeit, because nobody has a way to tell with coins, in their home, if they are real or not.

i have seen new pennies placed on railroad tracks (with permission of the conductor) and ran over and the engraving however smushed still is present as much as the older solid copper pennies. talk about Lincoln having a long face to begin with, you should see these pennies now!

as to the topic, i had a eisenhower dollar given to me after it was used in a sharpshooting contest, ala old west style, and Walmart cashiers debated on if it was legal currency because it had a bullet wound and the manager had to come educate the dopey bitches that it was a US coin and condition didnt matter, they MUST accept it as payment. (the arguement continued about large amount of coins and pennies and he also educated them that store policy on such as "a jar of pennies" was in place because someone has to count them and it slows down business, so the only accept rolled coins with name, number, and DL# should they come up short, or didnt actually contain coins at all.)

i collect coins, and PREFER circulated ones. the precious metal ones dont decrease in value, but plenty of times people just dont know what they have or that it has a greater value than face.

"dirty" money.. well you cant really launder money, bills, and i mean put in the washing machine. bills that have "candy", dog crap, snot, over bodily fluids etc are unhealthy and nobody wants someone else's ass on there hands.

hell even the stigma surrounding the $2 bill in the US, some people think it is fake and try to not take it as ignorant cashiers, and they are still being printed in smaller quantities than other denominations.

i will find the mass and percentages of US coins something and current cost of metals and give the cost of each US coin for "today" sometime this week, if someone else hasnt found it.

Quarters and nickles. Standard aluminum pot.

It didn't melt so much as the exterior coating peeled off like foil once the coins were removed from the water. The most likely cause is the coating and the base expanding at different rates, causing them to separate.

Isn't "boiling the coating off coins" illegal, being a "defacing/destroying currency" thing?

hyzmarca wrote: I've never tried boiling a bill that way. It's possible that the ink would run.

It's probable. Your notes are made of linen, and while I doubt the ink would just wash out completely, it's highly likely it would run and you'd be left with a soggy smudged note.

Maybe that's why the police were angrier than they shoulda been at me for boiling coins and shooting them at people...

You can make pennies explode with a blow torch (zinc expands faster than the copper). But on low heat in water they should be fine. People boil coins to clean them all the time. I'm guessing you had the heat on way too high and it was allowed to transfer too easily through the metal pot itself.

-Username17