Wednesday, June 30, 2010
Why
5 pound cash machine
Why is there such a fuss about 5 pound notes coming out of cash machines? And then, suspiciously, I thought when you pay with 10 pounds you must get all the change in coins. And some people have a preference for paying with a note, so the coin demands must be considerable without the nice paper-ness of fivers. But at the same time the coins aren't made of any valuable metal at all, just the cost of minting. Then I thought oops, the cost of minting the smaller denominations must have exceeded their value...or perhaps even the 7grams of copper and 2.5 of zinc in each pound are starting to get a bit excessive. 2 dollars a kg for copper, so about 2 cents. I suppose it must mount up. Bit deflationary introducing smaller paper denominations...
Posted by stillthinking @ 07:35 PM (4231 views)
14 thoughts on “Why”
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stillthinking says:
I thought a little bit more about this.
First, introducing notes instead of coins is due to inflation, I can remember one pound notes and I’m not all that old. So going the other way must be a sign of …. deflation…
Also, if there are about 60 million of us in the UK, and we hold about call it 10 pounds in change (and zinc is roughly the same cost as copper) then making some wild assumptions, or basically we hold 40 grams per person (and ignoring minting costs but not counting shop floats) valued at 2 dollars per kg which would be 40×60,000,000/1000 = (and dividing again for 1000kg per tonne) =2400 tonnes.
So if we use paper fivers and save, say, 25% of our change use (modest I think), then thats about 600 tonnes of copper the mint has which it doesn’t need to use. Or 600,000×2 dollars. About a billion dollars. Hardly worth doing in the face of our other debts.
Anyway, disappointed by that, but still, reintroducing lower denomination paper notes is not a sign of inflation…
timmy t says:
stillthinking… can I suggest you get a hobby…
ReCaptcha stocks sacred
iguana says:
An interesting thread.
Now how many of your coins were genuine? (I mean of HMG origin)
If, for example, an eastern mafia type group, decided to flood our streets with fake pound coins, would this be a good earner for the treasury? Could they then refine the fakes and make a ‘mint’ out of recovered copper tin and zinc?
I must tell boy george and see if he knows any foreign metal magnates who could shift the volume of base metal involved!
north schiff
hpwatcher says:
Because of inflation, five quid buys you absolutely s*d all these days.
inbreda says:
“I can remember one pound notes ”
LOL – we’ve still got ’em!!
mark wadsworth says:
ST, your original post leaves me puzzled but I think you nail it with the second one – it’s a sign of either deflation or all round belt tightening or both.
Crunchy says:
Solution? A cashless society. There all done and dusted stillthinking. Isn’t life going too be wonderful.
Inflation? Old fashioned.
We now have what we want to take us into the digital future mate and every transaction you make will not cost you much.
Happy shopping
Mastercard.
“optimal gifts”
stillthinking says:
This is my hobby.
Pond321 says:
Sorry guys, whilst the conspiracy theories are no doubt fun to mull over, there is a very rational explanation for the five pound bank machine. The BoE announced over a year ago it was going to flood the market with fivers. Why? Because all of the existing five pound notes in circulation were getting extremely tatty and starting to fall to bits. And as bank machines were no longer issuing them, no new notes were getting in to circulation. Banks like larger denomination notes as they cost less to handle. So they had to be specifically asked to issue more fivers via their machines. Which is what is happening now.
little professor says:
This is nothing to do with macroeconomics, deflation, or zinc commodity prices. Customers have been clamouring for £5 cash machine options for years. Many people these days live hand-to-mouth, and the difference between a £5 and a £10 withdrawal could mean the difference between remaining within your overdraft or getting stuck with a £30 overdraft fee. Also, when you are on a night out, you don’t want to be carrying more cash than you have to.
simon68 says:
INFLATION IN UK
Taking the Japan experience, same as Britain no Japanese believe the government austerity measures and they know the government plan to trash the Yen. So, Japanese citizens help the Japan government to trash the Yen by discarding Yen denominated assets, dump Japan properties, bonds, equities and buy gold or remit money overseas.
This however helps the Japan with trade surplus and balance of payment since it is the second largest exporting country in the world.
But, it does not work in Britain since it is running trade deficits for many years. It imports more foreign goods than its exports which deteriorates it balance of payment, and stoke up inflation.
paranoia blue says:
I can rememder “ten bob” notes
Crunchy says:
8. little professor
Good point but do you really think that banks are that thoughtful.
greenmind says:
Recaptcha: “variance appeared”