Its not about bussinesses though. Its banks. They can’t adjust withdrawals the way businesses do prices. The two dollar bill is not a good example because its not the bottom tier currency. Its not a common currency, heck I did not even realize they did not make them anymore but I can totally believe it. Thing is a bank can give someone two singles in the case of withdrawing two dollars. When the half penny was removed by congress you could not ask for anything less than a penny anymore. This is not the case with the fed just not producing the penny. So if I want to withdraw four cents in cash what does the bank do? I meant to mention this before but the lifespan of coinage means nothing if folks are hoarding it which is what is happening with the announcement the fed will just no longer produce it. Law requires the coinage be made as demand dictates and the executive is just saying there is no demand. This is actually increasing demand and banks will have to ask for pennies and likely the fed will just have to start making them again when the supply gets low. Its funny but this action by trump will actually cost the fed because they will end up having to make more pennies that will go into hoards that are worth less than the cost to make.
I hear what you’re saying, but I don’t know that I foresee this as more than a niche issue.
Obviously this is just a gut feeling backed by no data, so it’s worth the paper it’s printed on. But how many pennies were banks giving to non-business customers? I have to believe that it was super negligible.
The vast majority of pennies were issued to businesses to make change. If businesses stop giving out pennies, how many pennies will the banks be asked to hand out?
Time will tell for sure, but my gut is that the amount of people hoarding pennies will be wildly offset by businesses getting rid of them.
And, in your “what if I asked for only 4¢ from the bank” example. The easy solution is that they just give you a nickel and write the penny off as a loss. The penny is just so low value that it wouldn’t add up to an appreciable loss. Again, that’s gut, but the average bank brick-and-mortar does on the order of hundreds or thousands of transactions per day. If they lost 4¢/transaction, that’s only on the order of tens of dollars per day. They lose more to that in miscounts I would imagine.
So they so do not lose money like that in miscounts I guarantee. It would be a massive amount. I don’t know what will happen for sure but without congressional action im sure the banks will petition the fed for more pennies and if the executive still insists there is no demand it will just be another ingnore the law kind of thing.
Fair. We’ll have to see how it plays out. My gut is that the demand probably won’t be there, but we’ll just have to see.
But to be clear, we’re talking about a brick and mortar bank losing between $10-40 a day. Compared to the overall quantity of money moving through it, that feels like it should be negligible. That’s, like, one to two tellers leaving an hour early.
But yeah, the way this should be done is through an act of Congress. Agreed on that. This should really be an easy piece of bipartisan legislation, and the fact that Congress is so broken as to be unable to pass it is a huge indictment in its own right.
well each branch losing some small amount per day every day year over year. things like this are very significant for businesses. walmart drove businesses into over seas manufacturing to save a few cents on multi dollar items.
People overstate that problem. They say “businesses” as if all businesses are the same.
Bank of America has 3600 branches in the US. At $20/day, that’s $72k/day, or $26mil a year.
Bank of America has $3.5 trillion dollars in assets. If they’re making 1% interest on that (they’re making far more than that, I promise), they’re making $35 billion dollars a year. So that $26mil makes up less than a tenth of a percent of their total revenue.
Compare that to the Walmart example. First, at Walmart people aren’t just buying one thing. If my cart has 50 items in it, that’s a few cents per item. So we’re really talking fifty cents to a dollar per transaction. Second, Walmart has around 40 million customers per day. (About half of the total number of people who even have a Bank of America account, and we know that not even half of account holders are going to a brick and mortar every day.)
So, a savings of 1¢ per item is a difference of, conservatively (assuming an average cart size of 10 items), $4mil per day, or around $1.5 billion per year. Contrast with the around $26 million from Bank of America.
They just aren’t comparable examples. At its core, the scale issue that you’re outlining only matters if you’re getting it on a huge number of relevant things it applies to. There just aren’t that many actual cash transactions handled by BoA compared to its overall income numbers. Walmart has a huge number of individual items it sells vs it’s overall income.
Yeah I still think its not as paltry for the business as you make it out to be. My prediction still is that banks say. Hey. We need pennies at some point (unless congress makes it official)
Its not about bussinesses though. Its banks. They can’t adjust withdrawals the way businesses do prices. The two dollar bill is not a good example because its not the bottom tier currency. Its not a common currency, heck I did not even realize they did not make them anymore but I can totally believe it. Thing is a bank can give someone two singles in the case of withdrawing two dollars. When the half penny was removed by congress you could not ask for anything less than a penny anymore. This is not the case with the fed just not producing the penny. So if I want to withdraw four cents in cash what does the bank do? I meant to mention this before but the lifespan of coinage means nothing if folks are hoarding it which is what is happening with the announcement the fed will just no longer produce it. Law requires the coinage be made as demand dictates and the executive is just saying there is no demand. This is actually increasing demand and banks will have to ask for pennies and likely the fed will just have to start making them again when the supply gets low. Its funny but this action by trump will actually cost the fed because they will end up having to make more pennies that will go into hoards that are worth less than the cost to make.
I hear what you’re saying, but I don’t know that I foresee this as more than a niche issue.
Obviously this is just a gut feeling backed by no data, so it’s worth the paper it’s printed on. But how many pennies were banks giving to non-business customers? I have to believe that it was super negligible.
The vast majority of pennies were issued to businesses to make change. If businesses stop giving out pennies, how many pennies will the banks be asked to hand out?
Time will tell for sure, but my gut is that the amount of people hoarding pennies will be wildly offset by businesses getting rid of them.
And, in your “what if I asked for only 4¢ from the bank” example. The easy solution is that they just give you a nickel and write the penny off as a loss. The penny is just so low value that it wouldn’t add up to an appreciable loss. Again, that’s gut, but the average bank brick-and-mortar does on the order of hundreds or thousands of transactions per day. If they lost 4¢/transaction, that’s only on the order of tens of dollars per day. They lose more to that in miscounts I would imagine.
So they so do not lose money like that in miscounts I guarantee. It would be a massive amount. I don’t know what will happen for sure but without congressional action im sure the banks will petition the fed for more pennies and if the executive still insists there is no demand it will just be another ingnore the law kind of thing.
Fair. We’ll have to see how it plays out. My gut is that the demand probably won’t be there, but we’ll just have to see.
But to be clear, we’re talking about a brick and mortar bank losing between $10-40 a day. Compared to the overall quantity of money moving through it, that feels like it should be negligible. That’s, like, one to two tellers leaving an hour early.
But yeah, the way this should be done is through an act of Congress. Agreed on that. This should really be an easy piece of bipartisan legislation, and the fact that Congress is so broken as to be unable to pass it is a huge indictment in its own right.
well each branch losing some small amount per day every day year over year. things like this are very significant for businesses. walmart drove businesses into over seas manufacturing to save a few cents on multi dollar items.
People overstate that problem. They say “businesses” as if all businesses are the same.
Bank of America has 3600 branches in the US. At $20/day, that’s $72k/day, or $26mil a year.
Bank of America has $3.5 trillion dollars in assets. If they’re making 1% interest on that (they’re making far more than that, I promise), they’re making $35 billion dollars a year. So that $26mil makes up less than a tenth of a percent of their total revenue.
Compare that to the Walmart example. First, at Walmart people aren’t just buying one thing. If my cart has 50 items in it, that’s a few cents per item. So we’re really talking fifty cents to a dollar per transaction. Second, Walmart has around 40 million customers per day. (About half of the total number of people who even have a Bank of America account, and we know that not even half of account holders are going to a brick and mortar every day.)
So, a savings of 1¢ per item is a difference of, conservatively (assuming an average cart size of 10 items), $4mil per day, or around $1.5 billion per year. Contrast with the around $26 million from Bank of America.
They just aren’t comparable examples. At its core, the scale issue that you’re outlining only matters if you’re getting it on a huge number of relevant things it applies to. There just aren’t that many actual cash transactions handled by BoA compared to its overall income numbers. Walmart has a huge number of individual items it sells vs it’s overall income.
Yeah I still think its not as paltry for the business as you make it out to be. My prediction still is that banks say. Hey. We need pennies at some point (unless congress makes it official)