

Argentina's coin crisis - alex_c
http://www.slate.com/id/2205635/

======
toffer
I've been in Buenos Aires for about 2 months now, and it's still hard for me
to believe how ridiculous this situation is. Two examples from my daily life:

1) I take the bus every day, which only accepts coins. So, everyday I have to
figure out how to get more coins. One strategy I tried was to forgo the
convenient subway card and actually stand on line to pay for a single fare
card every time I happened to take the subway. A huge pain, but in exchange
for a 2 peso bill, I would get a subway ticket and a precious $1.10 in coins.

Only the ticket clerk at the subway stop I most often frequent stopped selling
me single tickets. I would show my 2 peso bill and ask for 1 ticket, and he
would say "No monedas" and wave me through the gate for free. Every day, the
same thing would happen. Same clerk. Same 2 peso bill. No coins, and he would
wave me through for free. This went on for 2 weeks.

You would think that I'd be pretty happy about this, but actually, it
infuriated me. I really want the coins instead! Sure, I get a free ride, but
now I've got to go buy a bottle of water and tangle with a kiosk owner to try
and get change.

2) Paying cash at the supermarket can be glacial. They keep very few coins in
the cash registers, so every time they run out of coins, the checkout clerk
has to call for a manager, who has to go to the safe to get more coins, who
then exchanges 2 pesos worth of coins for a 2 peso bill. Yes, that's
right...they restock the coins in the register the equivalent of 60 US cents
at a time!

~~~
tc
What's really interesting about these coin shortages is that they are exactly
what we should expect as governments have created monopolies over the
manufacture of coinage. Central planning always leads to the systematic
misallocation of resources, causing these nasty supply surprises which the
government then proceeds to blame on other actors.

An unappreciated miracle of our world is how rare shortages are among truly
free-market goods.

For a deeper background, read:

 _Get Government Out of Coin Manufacture_

<http://news.ycombinator.com/item?id=386392>

 _Private Coinage_

<http://news.ycombinator.com/item?id=386409>

~~~
mechanical_fish
Here's a book I tried to read once: _The Big Problem of Small Change_.

From <http://press.princeton.edu/titles/7306.html> :

 _"The Big Problem of Small Change" offers the first credible and analytically
sound explanation of how a problem that dogged monetary authorities for
hundreds of years was finally solved. Two leading economists, Thomas Sargent
and François Velde, examine the evolution of Western European economies
through the lens of one of the classic problems of monetary history--the
recurring scarcity and depreciation of small change. Through penetrating and
clearly worded analysis, they tell the story of how monetary technologies,
doctrines, and practices evolved from 1300 to 1850; of how the "standard
formula" was devised to address an age-old dilemma without causing inflation._

 _One big problem had long plagued commodity money (that is, money literally
worth its weight in gold): governments were hard-pressed to provide a steady
supply of small change because of its high costs of production. The ensuing
shortages hampered trade and, paradoxically, resulted in inflation and
depreciation of small change. After centuries of technological progress that
limited counterfeiting, in the nineteenth century governments replaced the
small change in use until then with fiat money (money not literally equal to
the value claimed for it)--ensuring a secure flow of small change. But this
was not all. By solving this problem, suggest Sargent and Velde, modern
European states laid the intellectual and practical basis for the diverse
forms of money that make the world go round today._

Alas, I couldn't follow their math. (Maybe I should try again, taking more
time.) But their historical examples were quite extensive.

~~~
Tichy
Voted up for coining the phrase "a book I tried to read once" ;-)

------
sdurkin
I don't understand why the government can't mint more coins and exchange them
with the banks for notes.

~~~
compay
It costs a lot of money to make coins. With inflation appearing to always be
just around the corner, the government if afraid of investing tons of money to
mint coins that could some become worth significantly less than the metal
they're made of.

~~~
jyothi
That is true. May be the govt should print notes for minor denominations too.
They are the government they can legally launch a new currency note, can't
they ?

The govt seems to be losing a lot more money with the shortage, like people
forced to give free rides on subway.

~~~
Zaak
Bills cost more than coins because they don't last as long.

~~~
tibix
Argentina's peso has been around for only 20 years. Before that, no currency
lasted more than 30 years in most of the last century.

------
elai
This feels like something out of the onion.

~~~
tibix
It's for real. I'm Argentinian and watching the onion is pretty much the same
as watching a news channel. I opt to laugh, but I should be crying. No country
is as little serious as Argentina... to name a few examples:

-VAT it's at 21% -The government lies about the inflation index (they say it's 8%, the real number is 25%)... a total theft. -Farmers have to pay a 30% tax on net incomes... and after that, a 35% tax on profit... -The president is a woman (joking)

~~~
thomasmallen
You could argue that the president never left office in 07...

------
mattmaroon
This makes no sense to me. Why would people value a coin above face value, no
matter how few there are? Isn't there significant arbitrage opportunity there
then?

~~~
maw
How significant would said arbitrage be, though? In terms of percentages of
individual purchases, sure, but if there's a way to scale it up it isn't
obvious to me.

In Mexico, the same problem exists, although by the sound of things it isn't
nearly as acute as in Argentina. In general, established and professionally
run businesses have change; small and informal ones do not. (I think this
stems from security concerns: large and well-run businesses have private
security and insurance; small ones do not.)

After a while you learn the strategy of making certain purchases at certain
places and where those places are. (This can sometimes leave you in a minor
bind when you're outside your regular stomping grounds.) You learn the optimal
amounts of money to withdraw from different banks' ATMs.

So, having small change buys you not just goods and services — all money does
that. It also buys you a bit of time and saves you from aggravation. It really
sucks to wait 5 minutes to get change back from a small purchase, as the
cashier leaves the store to ask all the neighboring stores if they have
change.

Finally, the same phenomenon exists in stable and well-developed countries
too, albeit writ small: just ask someone who lives in a small apartment
without a washing machine whether he tends to hoard quarters.

~~~
davidw
In Italy, it's pretty common, even at a busy line in a busy supermarket
downtown in a big, busy city, for the cashier to stop and ask if you have
exact change, or something close. And then wait while you fish around in your
wallet and count it out. Not nearly so bad as what's described in the article,
but annoying just the same.

------
gibsonf1
Hmm, seems like a 1 peso bill would solve the problem more or less.

~~~
alecco
The 2 peso bills are so worn out you can barely recognize them.

------
ojbyrne
So someone explain Canada to me, where they got rid of $1 and $2 bills, and
visitors regularly complain about how they end up with pockets full of those
coins.

~~~
alecco
Same in Britain. And everybody gives you funny looks when you pay with a
fistful of coins. Sigh.

