Question for economics gurus

[KrazyHorse]

snoopy, that assumes that people are actually good at arithmetic (which they are not)

Decimal coinage is far preferable to any other type.

[Dinner]

Reaganomics... Control inflation by reducing the money supply.

If you mean "raise interest rates sky high" then Carter was the one who started that and Reagan even kept Carter's Fed Chairmen because all the business people liked what Volker was doing and there would have been a revolt if Reagan replaced him with some yes man. "Reaganomics" was simply cutting taxes for the rich and running a massive deficit to stimulate the economy because Volker's efforts to fight inflation (by raising interest rates) was creating very tough economic times from 1980-1983. Basically Reagan panicked and knew he wouldn't win reelection in 1984 unless the economy started growing again so he just spent government money like water in an effort to create jobs.

Funny how when Reagan does it the wing nuts love it and when Obama does it, for almost the same reason, the wing nuts act like it is a terrible thing. Bush jr tried the same thing but instead of real stimulus he just wasted the money on wars and give aways to the top 1%.

[snoopy369]

snoopy, that assumes that people are actually good at arithmetic (which they are not)

Decimal coinage is far preferable to any other type.

Nobody seriously suggested using the 1-3-11-37 coinage, it's pretty silly obviously. To me the more interesting bit was the uselessness of the dime...

[KrazyHorse]

It makes sense to me. Logaritmically, the dime is closer to both of its neighbours than any other piece of coinage.

[KrazyHorse]

Also, I'm not sure that the study you cite would have considered dropping the penny; I bet they were attempting to allow people to recreate all current prices, and dropping the penny doesn't allow you to do that.

[snoopy369]

Yes, as I said they didn't allow dropping the penny. That is a totally separate issue. I just brought it up because some discussion had arisen related to efficiency, and thought it was an amusing sidebar

[MRT144]

It makes sense to me. Logaritmically, the dime is closer to both of its neighbours than any other piece of coinage.

Math Nerdgasm!

[Whoha]

If you mean "raise interest rates sky high" then Carter was the one who started that and Reagan even kept Carter's Fed Chairmen because all the business people liked what Volcker was doing and there would have been a revolt if Reagan replaced him with some yes man.

If only Carter had appointed him immediately, rather than waiting until 1979. Volcker
However, our problems are not as simple as 20 years of democrats running wild with the printing presses this time, so even Volcker can't save this one, provided that they were actually listening to him.

[KrazyHorse]

at the thought that anything about the current situation is as bad as the late 70s/early 80s

[Whoha]

Considering it only took about 2 years of recession/tightening to get through it, yea, we're in far worse shape now.

[Ben Kenobi]

Reaganomics" was simply cutting taxes for the rich and running a massive deficit to stimulate the economy

Uh, Congress was democrat. Reagan had no control over the budgetary spending approved by congress. That being said, he did cut taxes, which was the best thing he could have done. Cut taxes, raise interest rates, get business moving again.

Funny how when Reagan does it the wing nuts love it and when Obama does it, for almost the same reason, the wing nuts act like it is a terrible thing. Bush jr tried the same thing but instead of real stimulus he just wasted the money on wars and give aways to the top 1%.

Which is why you are still at war, except now you are spending 5x as much? I have to say that's a brilliant way of campaigning. Maybe Obama should try cutting taxes rather than jacking them up. There's a spot for him on the clue train.

[KrazyHorse]

Considering it only took about 2 years of recession/tightening to get through it, yea, we're in far worse shape now.

The early 80s were all one long recession

Hell, the NBER called the recession as starting before GDP even peaked this time around

The GDP gap between pre-recession trend for 1980-1983 and the post-recession trend was significantly bigger than it will be this time around.

[Imran Siddiqui]

Uh, Congress was democrat. Reagan had no control over the budgetary spending approved by congress.

... couldn't that also be said for tax cuts, btw?

[Dauphin]

Freakonomics did (or linked to?) an interesting piece on what would the optimal coinage be in terms of fewest coins needed to make change. The result:

The penny, 3-cent piece, 11-cent piece, 37-cent piece

would be the optimal 4 coin solution, makes every combination from .01-.99 with on average 4.10 coins per transaction.

What's more interesting is that, if you're aiming for efficiency, dropping the dime is the best bet - you end up with nearly as efficient of a solution with .01, .05, .25 as with the dime (.8 coins less efficient than the current setup). Exponential sets or nearly exponential sets (.01, .05, .25, 1, 5, 20 ...) tend towards being the most efficient.

I think eliminating both the penny and the nickel would be best, because then people can just see $150.9 and not think they're being cheated. Seeing $150.95 will remind you that it might be a few cents plus or minus...

The good at arithmetic point already mentioned, did Freakonomics include any comment on the frequency distribution of trailing digits in transactions paid for by cash? e.g. Is .50 more common than .63 or .75 more common that .89?

[Dauphin]

Also the set-up assumes that you will always pay round dollars.

So if something costs $5.27 and you pay exactly, you can do it with one one note and three coins, but on an "efficiency" rating it says you have to use seven coins and is hence less efficient than the 1, 3, 11, 37 system which uses "only" five coins.

Or, say something costs $5.24, the efficiency rating says you need to use four coins to give change. You could instead use just two - pay a note and a quarter and get a penny back.