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Comment by ggreer | Hacker News Reader

It could be that they measured a stack of bills sitting on a table, then did the math to make a metal frame to contain $1,000,000. But they didn't account for stacks compressing under the weight of higher stacks, and it wouldn't look as nice if the top part of the cube was empty.

Still, it does seem like it would be cheaper to rebuild the case than to add $500k to it. Maybe it's easy for the Fed to acquire more cash as long as it's guaranteed not to be spent.

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It's the cost of paper not the dollar value. Also only the outermost bills need be real the rest could just be paper, or voided bills or whatever. But accounting can cover it. It's not gold or pennies where the currency costs what it is worth to make

Coins don’t cost what they are worth to make.

Pennies do. (More, actually.)

Pennies and nickels cost more to make than they are worth.

People are quick to state this as if it's a slam dunk case for 'we shouldn't make them any more', but I don't understand the thinking there. An individual coin can be used many many times to facilitate many many transactions before it eventually falls out of circulation through loss or damage. The amount you should spend on making coins of a given denomination has nothing to do with what the total face value of those coins is, but needs to be traded off against the value to the economy of having those coins in circulation. If spending more money on producing higher quality coins enables them to remain in circulation twice as long, it might be worthwhile even if the cost exceeds the face value.

It's a different story if the material value of the metal in the coin exceeds its face value - at that point it makes sense to go to a bank, change money into pennies, then scrap them and sell the copper. That would be bad.

But the reason pennies are a bad deal isn't because of their manufacturing cost, it's because their handling costs exceed the value of incorporating them in a transaction. Should a store go to the trouble of keeping pennies available, counting them, storing them, transferring them to the bank? Or should they round up change to the nearest five cents and take a 4c hit on each transaction where you'd have been able to use pennies? If your average transaction value is over a hundred dollars or so, like most supermarkets, and you only handle cash on one sale in 50 say, if handling pennies in your cash-management operation takes more than a few thousandths of one percent of your budget, it's costing you too much.

Stores are going to round amounts in their favor, not customers’. So they will make more money once the penny falls out of circulation.

> It's a different story if the material value of the metal in the coin exceeds its face value - at that point it makes sense to go to a bank, change money into pennies, then scrap them and sell the copper. That would be bad.

Well, that is highly illegal and not very profitable vs the amount of risk. You'd be better off doing almost any other crime.

In my countries a decade or so ago we had a copper coin for roughly 1c. People started hoarding and defacing the coins then selling it as copper scraps. It was so rampant that I think it would have been infeasible to punish eveyrone. So the Govt just discountinued it.

It's only true for the smaller denominations, 1c and 5c for USD.

Other than that, coins are cheaper than bills on the long run, because they last longer. It would be cheaper for the US government to stop making $1 bills and have people use the $1 coins, but I guess old habits die hard.

I guess that's why we have €1 and €2 coins (1 EUR ≈ 1.18 USD).

Well that, and Germans need the 1 Euro coin to unlock their shopping trolley.

(Or at least they used to; when I visited back recently many supermarkets had free trolleys! Can you imagine my shock?)

Unlocking trolleys with a coin is normal in Britain too. I'd never considered that this might be unusual.

Is this not a thing in other countries? How do they get people to return their trolleys to the bays?

It's not a thing in the US, I think.

And did Britain have this before the invasion of Aldi and Lidl?

Yeah, we've had it for at least 30 years, probably longer

It's not a thing in most US cities. Since there's no incentive for individual people to return their trolleys it ends up being someone's job to collect the carts.

> How do they get people to return their trolleys to the bays?

There is no external force compelling US shoppers to do so. This has led to the (in)famous "shopping cart theory" [0], first posited like this:

The shopping cart is the ultimate litmus test as to whether a person is capable of self-governing.

To return the shopping cart is an easy, convenient task and one which we all recognize as the correct, appropriate thing to do. To return the shopping cart is objectively right. There are no situations other than dire emergencies in which a person is not able to return their cart. Simultaneously, it is not illegal to abandon your shopping cart. Therefore the shopping cart presents itself as the apex example of whether a person will do what is right without being forced to do it. No one will punish you for not returning the shopping cart, no one will fine you or kill you for not returning the shopping cart, you gain nothing by returning the shopping cart. You must return the shopping cart out of the goodness of your own heart. You must return the shopping cart because it is the right thing to do. Because it is correct.

A person who is unable to do this is no better than an animal, an absolute savage who can only be made to do what is right by threatening them with the law and the force that stands behind it.

The shopping cart is what determines whether a person is a good or bad member of society.

[0] https://en.wikipedia.org/wiki/Shopping_cart_theory

It's funny that Germany (and other countries) solved what's a social problem in the US with a simple piece of technology.

A US quarter will work just fine in those trolleys that take 1/2 euro coins. I hang onto one for just that purpose because I won't accidentally spend it.

There is an excellent recent "The Answer is Transaction Costs" podcast episode (The Price of Pennies: Make or Buy?) outlining a proposal to save money by buying back coins instead of making new ones.

https://taitc.buzzsprout.com/2186249/episodes/17383823-the-p...

What do you mean? The currency in there is spendable isn’t it?

What leads you to believe that?

I haven't been there but the plaque seen in the picture just says:

    Have you ever wondered what one million dollars looks like? You don’t have to wonder anymore because you can see it right in front of you!

That does not say nor in my mind even implicate that these would be valid dollars. It just wants you to be able to "see" what a million would look like. For all we know they printed fake money for it that uses the right paper for thickness and such and the right face value print but is otherwise fake. It would still meet the stated description.

I would hope they at least used real bills they just took out of circulation for whatever reason but there can't be any real expectation.

It's a "stunt" only anyway coz a million in $1 coins would look way different. As would a million in 20s or 100s.

Because that’s the entire appeal of the structure, the fact that it’s filled with a million dollars.

I don't think that's true.

The appeal of the structure is the belief that it's actually a million dollars ;)

But as many things in life, it's probably just a nice facade.

> Maybe it's easy for the Fed to acquire more cash as long as it's guaranteed not to be spent.

The Fed doesn't acquire cash, it creates it. USD banknotes are liabilities of the Fed, but that concept only makes sense when somebody other than itself owns them.

No. We have a double accounting system. For every $1 it creates, it has to create an equivalent liability.

And when something is budgeted for $1 Million, it is $1m nothing more nothing less

Not sure when exactly the Fed accounts for USD printed – i.e. only once distributed to somebody else, or as soon as they're printed and still owned by the Fed – but even in the latter case, asset and liability work out to exactly zero.

So this million USD might or might not have been accounted for, but it definitely does not need to be budgeted for.

I mean, that's a very corporate accounting way of looking at it. But countries are not corporations, or even banks, and the abstraction is so leaky it's pretty much never worth using.

Even for corporations and individuals it works that way. If you write a check to yourself, it represents both an asset and a liability whose effects on your equity exactly cancel out.

Double entry accounting has properties that allow it to track the flow of money, not just its state (current balance), so it useful for countries as well as corporations.

Does the USG not use quad entry?

So, in your mind, when the Federal Reserve prints a dollar bill - what's happening in accounting terms? I don't think your understanding of the way this works is consistent with the concept of money supply.

Not your parent but in my mind, when the Fed prints $1 million to replace old bills they take out of circulation and give then to people to stuff into a cube then in accounting terms basically nothing happens at all.

To be precise, the treasury prints the bills, not the federal reserve. The federal reserve balances what money is in circulation by selling or buying bonds. When they issue a bond, someone buys it, so money is removed from circulation. When they buy a bond, money is injected into circulation.

It’s the other way around. The treasury issues bonds; the Fed buys (or repos) them in exchange for newly issued USD.

Oh whoops, you're right!

I'm not really familiar with accounting in English but is it really a liability in double-entry accounting? Wouldn't generating money basically be income? So if you sell $1000 worth of stuff, you credit the sales account for $1000 and debit your cash/bank account for $1000, and the account's basically a bottomless pit where you can draw as long as you're generating income.

> I'm not really familiar with accounting in English but is it really a liability in double-entry accounting?

Only if you're the central bank, but for them, it really is, yes. For everybody else, money held is an asset, since it's somebody else's (in this case, the central bank's) liability to them.

Yes, but the liability account in the Fed's case is /dev/null, isn't it?

For the Fed though that liability is just a line in a spreadsheet.

Yes the Fed creates an entry in the balance sheet by convention but it’s basically just a formality to the currency creator.

I’m certain there’s policy that allows for national mint to create non-spendable exemplars of currency in a way that does not count as cash.

Most probably these are voided notes, they actually have zero value because they were taken out of circulation.

It costs about $.032 to produce a 1 dollar note, so an extra 500000 new bills would be about $16k.

It could be even cheaper if these were old bills than needed to be pulled out of circulation. In that case they'ed be paying money to dispose of them anyways.

Paper money in the UK used to be incinerated, if they used the heat to generate power, or even just heat water for the facility, then there would still possibly be some cost in not burning it ... but much though.

Not sure if they still burn the plastic money, would be nice to imagine they dissolve it in acid and use it to make more money (but they probably can't because of the dyes, at least).

> Maybe it's easy for the Fed to acquire more cash as long as it's guaranteed not to be spent.

Based on Fed policy since 2007, they may be happy to hand out cash especially if it's going to be spent.

"Money printer go brrr" and all that...

That ignores the other option which is it's not solid and they just filled the empty space with foam or a wooden box.

Which destroys what the exhibit is trying to show.

The exhibit only claims this is what a $1M cube would look like.

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