Monday, January 28, 2013

Future generations might not miss the penny

Canada is more innovative than USA with their currency. They are phasing out pennies. USA currency is so caught up in inertia that change is hard. Canada has already done away with 1 dollar bills. They use coins instead of 1 dollar bills. They also have a 2 dollar coin. They use the Looney and the Tooney.

We may have to do things like retiring our penny and use higher numbers on our money due to inflation. It's kind of like "add another zero, for instance." Things like Quantitative Easing when the Federal Reserve puts lots of new money into the economy can lead to inflation. Most likely, new money needs to be created to provide funding for the huge federal debt. Inflation appears to be really low these days, but certain sectors, like house values and healthcare costs often inflate ahead of the rest of the economy.

As for across the board inflation, future generations wouldn't really see the difference since they would be using the higher numbers from start on their money. Inflation does ravage the savings of current generations. That is a problem.

As we struggle with our huge national debt, maybe we shouldn't feel guilty about the debt stealing from future generations if we inflate our way out of the debt. We are stealing from current generations, however. Its current folks who have savings in money that's being devalued.

Life goes on and we adjust. At least Canada wouldn't be stuck with piles of almost worthless pennies around.

Canada phasing out penny.

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