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Comment by cesarb | Hacker News Reader

> In the west, we take fungibility for granted. [...] The fact that a dollar is worth the same in Los Angeles as it is in New York, or Vancouver as it is in Halifax, is worth celebrating.

I've experienced the opposite here in Brazil: someone who had leftover US dollar banknotes from a trip to Disney in the 90s decided to exchange them back to the Brazilian currency. Since they were old banknotes, the bank would only exchange them at a heavy discount (I don't recall how much, but it was at least 10%); if they were new banknotes, there would be no discount. So here we have the opposite of the situation in this article: new US dollar banknotes are worth more than old USD banknotes (this is not an isolated case, a quick web search shows that often old US dollar bank notes aren't even accepted for exchange).

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This is currently happening in Venezuela. It is a fascinating economic topic (for the economists here, a good idea for a paper). The historical, low-trust,cut-throat, highly-volatile economic environment in the country , compounded with the absence of an official backing local institution for the US dollar plus the common people ignorance of the value abroad of the dollar is producing the following funny(?) or curious conditions:

- Most big and small businesses will accept the dollar (this was not very common before Maduro) but only in crisp,immaculate bills of 20 USD or above.

- The people you usually give small tips (think the kid who bags your shopping in some supermarkets ) actually get offended if you give them 1-2 bucks.This in a country were the average monthly "salary" is around 10 bucks.

- Some business may take your low denomination bills but with a big fee (10%-20%).

- Prices of goods and services in dollars are absurd. Say, a haircut maybe is 10 cents, but now a plumber wants to charge you 150 bucks just for a "consultation" visit. A dermatologist instead may charge you $30 the consult in a private place and a cardio-toraxic surgeon in a public hospital has a 20 USD/month salary.

- People are importing things like 12 oz Nutella jars and selling them at 20-30 USD, because it has become a luxurious item of conspicuous consumption, as if it were Beluga caviar.

I am pretty sure there is more, but it is getting too depressing (no pun intended)

Thank you for sharing these insights. Definitely a fascinating read!

Are there any resources to read about this more? This is crazy!

The best resource for a foreigner it would be to follow normal Venezuelans in Twitter (Twitter is huge in the country! I would even dare to say it is more influential than in the US, , that is another interesting topic for another day). There is a r/Vzla in reddit, but you will get there a very specific slice of the population (young,English-speaking, pro-US, etc).

The thing is everything is changing daily. For example, gas costs oficially less than 1 cent per liter, people usually left more in tips to the guy at the pump than the payment for a full SUV tank. But now, due to the huge crisis and sanctions gas is scarce(can you imagine?) so naturally there are lots of trouble at the gas stations and the government is sending the national guard (a branch of the military) to control the situation. The result? Those guys are charging undercover now up to 2 USD per liter!!, quasi-European prices. So a guy like that can get 2-3 desperate people, "earn" 100 USD in one afternoon and then spend them all in 1 jar of Nutella and 1 hour of "massage". Crazy, crazy all around.

And add the fact no one cared about gas milage. Most cars guzzle!

Wow. It never occurred to me that economic "fairness/lucidity" isn't taken for granted. Thank you for sharing!

This all reminds me of the last days of the USSR.

When outside the US, that's a common phenomenon, simply because newer bills are harder to counterfeit. There's more risk with old currency, so they're discounted (or rejected entirely) for risk.

Ideally, travel to the US (or give to a friend who's traveling to do it for you) to exchange in the US -- whether as currency exchange, or just for newer bills -- and you'll get full value. In the US, there are strict rules that a non-counterfeit bill will be accepted (e.g. by a bank) no matter its age or damage, I believe as long as it is 51% intact and is legible with serial number (can't remember the exact rules, but it's to that effect).

> simply because newer bills are harder to counterfeit. There's more risk with old currency, so they're discounted (or rejected entirely) for risk.

Alternatively, they might be just as easy to counterfeit, but by virtue of being newer, less counterfeiting has actually happened.

Don’t know why this is downvoted, it’s a perfectly legitimate point.

I didn't downvote it, but I assume because it is factually incorrect. Newer anti-counterfeiting technologies have made newer bills harder to counterfeit.

I didn't read that as the point the commenter was making. I understood it as: if a certain percentage of bills listed as being made in X year are counterfeit, then it is rational to prefer more recent bills, as the potential counterfeit pool is smaller. I suppose this would also hold for preferring only bills from a specific year, but 'recentness' is easier to grok.

The US has worked to prevent this. I remember as a kid in the middle east (a time/place where everything was in cash) seeing commercials from the US that said, in effect: "We are printing new 100$ bills. The old ones will be good _forever_. Don't fall for scams selling new bills for old."

Even at the time I thought those commercials came from a good place. Being a world currency sometimes going the extra mile to protect not just its value or exchange rate, but the reputation of its physical manifestation.

Were those commercials aired by the US in Arabic / Farsi / whatever local language, for the benefit of the local populace? Or were they in English, aimed at Americans?

Well, I remember them being in english but I didn't watch much TV that wasn't in english so I have no idea whether they were mirrored there too.

Compare that to England where a note or coin can be discontinued with just 6 months notice.

Sure, they say you can still convert the old notes to new, but only in small quantities, and only with ID and proof of where the notes came from.

Back when the sterling actually meant something this could never happen. The world’s reserve currency must never be questionable. But WW2 broke England’s back, although they were only called on it by Soros much later.

Thank you for a fantastic anecdote!

When I went to Kenya a few years back, shops would have a chart showing what percentage they'd give for what year the US dollar was issued. Older bills were worth something like 75-80% of the newest ones.

I guess it had something to do with circulating counterfeits. US currency looks abysmally easy to copy compared to Canadian or European bills.

It could just be my perception, and is definitely a generalisation if not, but the US seems to dislike changing old things. Old rules and institutions etc.

That's true for some things, but not for others. I think good heuristic is the more something interacts with government rules and regulations, the slower it changes.

"Greenbacks" are also part of the national identity. I've seen very few proposed redesigns of the dollar that don't look abysmal. The only one I'd want to both put in my wallet and represent the United States in the hands of people worldwide is the set from Andrey Avgust.

Yeah, but it's also the place where most new things and trends come from.

Less now than in decades past, but still to a large degree.

That’s why the mint is adding one color at a time over decades. The $10s aren’t really green anymore.

We're a 300-year-old country going through major growing pains.

Nothing about modern America is that old at all, a hundred years ago we may have still had the same form of government, but our ways of life were completely different and our government played a much different role in our lives. All of this is new, like within the last century.

There’s also the possibility that although other regimes were counterfeiting the greenback through the Cold War, Americans weren’t affected (due to the high demand for the greenback) and couldn’t do much about state actors like DPRK anyway. Modern USD notes are far more difficult to copy. Without bulk-counterfeiting or debasement by the Fed, Americans would have the same problems as the Swiss did when the Swiss Franc briefly became a safe haven reserve in the 2010 era.

And as sandworm alludes to down thread, Americans (USG) extended full faith and credit to all notes, whether old new or counterfeit, so that faith in the dollar would never come into doubt.

The US does not extend credit to counterfeit notes...

I'm guessing this is because older bills have fewer security features and so are more likely to be counterfeited (ironically, especially so if they're in good condition from having been kept in a drawer for most of that time).

I guess it's partly this; partly also the issue is that various USD emissions can vary visually a lot - it's probably also easier for the FX workers to just learn the most recent form and not dozens of them? AFAIK the 2012+ dollars are "travel-safe".

Same for EUR. The 2002 emission is entirely different visually than the 2013 one. [1] On my trip to Central Asia last year I had a mix and the old ones were not accepted in the bank.

On top of all that, it's generally best to have flawless banknotes. Ones worn out, with marks etc. are either not accepted, or accepted with a discount in some places.

[1] https://en.wikipedia.org/wiki/Euro_banknotes

This is actually very common. Most of the Caribbean countries happily accept dollars, but even a slight tear on the bill will cause them to ask for a non-torn one, or else not accept it. They also will not take ones that are visibly worn.

When I asked why, they always say their banks will not accept them.

Understandable no?

Americans can always go to the secret service to exchange torn notes. Non-American's can't.

How often have you ever heard of an American going to the secret service to exchange a torn note?

Just send them to a US Bank and the secret service finds you.

The whole situation with governments and banks imposing these restrictions in currencies is kinda nuts. IMO we should just use a worldwide crypto as currency that actually works [like monero] and doesn’t care about imaginary lines on a map drawn by governments.

Even better, in many countries in Africa a single $100USD bill is worth more than 5 $20 bills.

They much prefer the big ones, the cleaner and newer the better.

In the US, that's generally prohibited (though I'm not sure whether it's technically illegal or just discouraged). Are the banks worried about being able to exchange older bills?

When exchanging money at a currency exchange kiosk in Koa Lanta Thailand they denied a few of my $20 due to almost unnoticeable rips, the kind that go no further than the outside border.

They were quite particular on the "quality" of the bills, with another older bill being in too worse of condition for them to purchase.

Many countries are particular about currency being pristine. I remember in Austria it used to be forbidden even to fold their currency (old currency; not Euros). Had to be kept in a wallet; the wallet had to be large enough to hold the larger bills (different bills had different sizes!)

https://www.istockphoto.com/photo/austria-and-old-banknotes-...

Yup different bill sizes is a very simple security feature to prevent bleaching a bill and printing a higher denomination on it. This works because the higher the value the bigger the bill and forging the paper itself is hard.

Seems like it would also be a nice feature for the visually impaired.

On modern colour notes one conventional way to help the visually impaired is to make the note have a distinctive colour theme. Most countries do this, and I believe the latest US notes finally have at least subtle coloured elements.

[Gets out British "paper" money that hasn't been touched since the lockdown started months ago because who pays cash now?]

As well as being different sizes, my £10 notes are orange, while the £20 is purple. The tenners have this big orange splodge that's actually a book with the initials JA (Jane Austen) and the twenty has a purple splodge whose meaning might be obvious to me if I liked art enough (relating to Turner, a famous British painter).

Comparing sizes is hard to do quickly, whereas you can see instantly if the money you're trying to pay with or receiving in change is the wrong colour.

"whereas you can see instantly if the money you're trying to pay with or receiving in change is the wrong colour."

Now try that when you're blind.

The new polymer notes do include considerations for the vision-impaired.

Check out the "tactile feature" section on the various banknotes at https://www.bankofengland.co.uk/banknotes/current-banknotes

While we don't use tactile features in Australia, similar consultation went into the design of our banknotes: https://www.rba.gov.au/publications/bulletin/2015/mar/1.html

In australia the new bills do have tactile dots to distinguish them for people living with blindness. About halfway along the bottom of the new 5 you can feel it.

The vast majority of visually impaired people are not literally blind and that's really important when designing for the general population. If you force everybody whose sight has deteriorated to the point where they can't read text to resort to feeling note sizes you're missing a vast middle ground of people who'd have been served by just choosing a different colour for each denomination.

Isn't the rule in the US that any bill that's more than 50% there can be exchanged for a new one? Obviously it has to be that way to avoid people ripping their money in two.

Acceptable damage is just 33% actually.

Same here, when paying with USD in San Jose C.R. I had a food stand reject the first few $20s I tried because they were not in good enough condition. Interesting to see this in action.

...how much does a meal from a food stand in Costa Rica cost?? A $20 seems like spectacular overkill.

Costa Rica is not a "cheap" country by any means. Even in a "soda", which is about as cheap as you can get, a meal will be on the order of $7 per person. What the OP is probably saying is that he tried to pay with a $20 bill and would have got change, but the person wouldn't take it, not that the meal was $20.

When I go I hardly ever exchange money, I just use USD and credit cards with no foreign transaction fees (AMEX mostly). I get change in colones and will use that as I can (entrance to beach, small transactions, etc.), but in general everybody takes USD. You just need to be aware of the fact that you'll probably get a bit screwed over in the exchange rate at smaller shops/individuals. It's helpful to know what the rate is and negotiate a bit. Most true restaurants/shops will use whatever the bank rate is that day because it'll be in a POS system, but the farther out you go from the big cities the more likely you'll hit mom and pop stores that randomly choose some rate. If paying by credit card, always make sure they do it in local currency.

Source: Me, I have a house there and spend a lot of time there every year.

I think it was between $2-6 usd but I literally just landed and was grabbing a bite to eat at a small place at maybe 1-2am.

Once in India I took a taxi to the train station. I paid the driver and went inside to catch my train.

Ten minutes later while waiting in the station, the cab driver found me and made me replace a bill that he claimed I had given him that had a hole in it. He considered it worthless. Relatedly, it seems that stapling money is a pretty common way to organize bills there. I'm not sure how the two facts coincide.

Stapling was indeed how bundles of currency notes were kept together in Indian banks back in the day. It went out of vogue sometime in the late '90s if memory serves.

Edit: removed confusing reference to ATMs.

I doubt it's prohibited, but any bills are equivalent legal tender for legal debts. If old bills became worth less than new bills people who lost lawsuits would start acquiring them at a discount to pay their debt, and they would drive up the price of the old bills until they equaled the price of new bills. (IANAL)

legal tender in the us means all debts public or private, you have to incur the debt to have that protection. shop keepers aren’t forced to sell you a pack of gum for $100 , they can just say no sale.

rules vary wildly by location. your bank or the fed aren’t ever going to play games with the value of a dollar.

This reminds me about the discussion of whether or not it’s legal for businesses to refuse pennies since they’re still “legal tender for all debts”. I believe the general consensus was that it’s legal for a business to refuse some types of currency based on denomination; which makes me think it would be likewise legal to refuse currency based on age.

That of course doesn’t mean it’s a good idea to do so, only that it would be legal.

My understanding, which may well be wrong, is that pennies must be accepted in payment of debts. So, for example, if you eat at a restaurant where you eat first and then pay, a debt is created, and pennies must be accepted. However, in most situations, you pay first, so there is no debt, and the business can insist on whatever payment terms it wants. Incidentally, even in the case where you are paying later, if the payment terms are clear in advance, I suspect the business could insist on the preset terms.

if true, this would lead to some highly unreasonable situations. suppose you go to a fancy restaurant with your family and rack up a $1000 bill. if you pay in pennies, this would be over two tons in coins. does the restaurant really have to say "we do not accept pennies" upfront to not be obligated to accept your payment?

Yes, well, that is my understanding of the issue. In the UK, there are limits on the amount of small change that must be accepted:

https://www.royalmint.com/help/trm-faqs/legal-tender-amounts...

For the U.S., the best I could find is as follows:

https://www.expertlaw.com/library/consumer-protection/it-leg...

This is (probably) consistent with my interpretation, the key issue being whether the restaurant bill is an "existing debt" or a simple transaction. Anyway, the fact that most people aren't assholes means this sort of thing rarely comes up. I also expect the restaurant would refuse to serve you if you showed up with two tons of pennies. :-)

thanks for the link. in the US page, there's actually a section titled "Payment Made in Small Change or Pennies". all the examples involve debts to the government, but it looks like, while the restaurant wouldn't be able to refuse the payment altogether, it might have a legal basis to charge a handling fee for extremely inconvenient denominations. not exactly conclusive, but enough to satisfy my curiosity.

Indeed. It comes up on HN often that the law is not code and is subject to interpretation by judges who are human. If you are being unreasonable for the sake of being unreasonable, it won't matter if you are technically correct; the judge is still going to slam you for it.

> This statute means that all United States money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law which says otherwise.

https://www.federalreserve.gov/faqs/currency_12772.htm

I don't know about the US, but here in Canada, large EUR denominations (like 500 EUR notes) are exchanged at a lower rate than 100 EUR and smaller denominations.

If you can even find someone to take them. My friend had me take them to EU and spend them. FNAC in France had no problem taking them on a large purchase.

The law in France is that the shop has to accept any bill provided that you pay the exact amount.

Price is 534€, you give 500, 20,10, 2, 2 and they have to accept even if they illegally state that thry do not accept 500€ bills. You just say they you are calling the police now and it is over.

There is a limit of 3000€ you can pay cash. Above must be card or cheque (or wire transfer).

Do you know why? Is it counterfeit risk?

Accept a fake $100, bad day. Accept a fake $500, bad week.

$500 is not much for an exchange office, they make much more a day. Nevertheless a fake can cause you trouble as you can be legally obliged to report it and participate in a lot of paperwork. Even more trouble if you fail to detect it before you give it to somebody else.

The price gap I mentioned are for currency exchange shops. I am not sure if banks have similar policies. But banks' exchange rates are worse than forex shops anyway, so it may be a case of hidden margin.

With that in mind, I think the reason is that people buying Euros are planning to travel to Europe and spend their banknotes. And they probably are buying a couple hundred Euros, not thousands and thousands, just a bit of cash for peace of mind. They wouldn't want to be stuck with such large denominations, because it would be hard to spend them. If anyone is planning to move to Europe or invest in a European company or anything like that, they would use wire transfers, not banknotes. Banknotes are generally just for small amounts used by travellers. Thus, the demand for large banknotes is lower, which causes their price to be lower.

I wouldn't be surprised if forex shops have to send the majority of large EUR banknotes physically to Europe to deposit them into a bank account. That would explain the extra cost.

500 Euro notes got removed from circulation because of money laundering concerns.

That makes sense. Denominations larger than $100 have been eliminated in a lot of currencies because of money laundering. I remember when I received a $1000 bill in Canada in the 90's. Only time I ever saw one.

However, I did notice that some countries still have large denomination bills - Singapore (1000, until recently had $10,000 bills), Switzerland (1000), Brunei (10,000).

In some EU countries which run a currency of their own exchange offices would only accept € coins at a fraction of their actual value, only papers Euros are taken serious.

Stupid question: Is the dollar worth the same? If the buying power is different?

> In the west, we take fungibility for granted. [...] The fact that a dollar is worth the same in Los Angeles as it is in New York, or Vancouver as it is in Halifax, is worth celebrating.

That part isn’t really true, a dollar is worth much more or much less based on where you try and spend it. Purchasing power varies from city to city, state to state and province to province. In some places $1 will buy you 1 apple and in some places it’ll buy you a dozen apples.

In San Francisco you need 3000 dollars for a 1 bedroom apartment each month, in Fargo, ND you might spend $600.

What’s different between here and Yemen is that any two given dollar bills will buy you the same quantity of apples each in any given city.

That has nothing to do with fungibility, markets have always produced different prices in different geographies.

The question is whether you can take your 3000 San Francisco dollars to Fargo and get (3000 / 600) months rent, and the answer is yes.

Indeed, I think I was just quibbling with the phrasing. Nothing to see here.

> In the west, we take fungibility for granted. [...] The fact that a dollar is worth the same in Los Angeles as it is in New York, or Vancouver as it is in Halifax, is worth celebrating.

not sure if that is true.... looks like bread is 50% more expensive in NY city VS Orlando: https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...

That's not what fungibility is. Fungibility is the ability to replace the object (in this case the money itself) with an equivalent object (in this case another bill of the same value) and they can be used interchangeably.

Using the bread example: The baker in NYC doesn't care if you use a $20 bill from 1980 or a brand new one from the bank. Also, the baker in Orlando doesn't care which particular bill you use either, so long as its legal. That is fungibility. Money is designed (in the US at least) to be perfectly fungible, and that is a great feature of it.

thanks for the explanation but I was talking about the other part of the quote: "The fact that a dollar is worth the same in Los Angeles as it is in New York, or Vancouver as it is in Halifax, is worth celebrating." It just isn't.

the dollar is worth the same in orlando. the bread itself is worth more in NYC.

if you can buy less of the same thing with the same dollar, is it really worth the same in different areas? (no)

But if both people buy an item from the same vendor (say, an online store that services both areas), then obviously they would pay the same amount.

The differences in price you are describing are not changes in the value of the dollar but changes in the cost of producing and providing goods.

Google "unit of account"

A dollar is worth one dollar, literally by definition, set by the US government.

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