US govt agrees to supply coins to Zimbabwe

[madfranks]

Link Here (http://www.bulawayo24.com/index-id-news-sc-national-byo-1514-article-US+govt+agrees+to+supply+coins+to+Zimbabwe.html) - note this is a local story written in Bulawayo, a city in Zimbabwe.

FORGET change problems, getting a token or a sweet as change and being stuck with greasy soiled notes. This is because the United States Federal Reserve has agreed to supply coins and replace soiled notes to Zimbabwean banks in a bid to end change problems in the economy, businessdigest has established.

According to sources, representatives Bankers Association of Zimbabwe led by its president and FBC Bank boss John Mushayavanhu met Finance minister Tendai Biti last week to map a way forward in dealing with change problems in the economy.

The sources, said the US Federal Reserve have “formally” agreed that Zimbabwe’s economy is now dollarised and will now supply Zimbabwe with coins and replace notes.

Officials from the Finance ministry will soon depart for the US to airlift the coins to Zimbabwe, the source said.

Banks and government, according to the sources have agreed to charter an Air Zimbabwe flight to pick up the coins in the US. The flight costs will be met by both government and banks.

Zimbabwe has been saddled with change problems since the introduction of multi-currencies in February 2009.

Retailers are offering consumers credit notes, tokens and even sweets to settle small change.

Mushavanhu on Wednesday declined to comment on the matter referring all questions to Biti who was unreachable at the time of going to press.

In his 2011 budget statement, Biti said government had engaged the United States Federal Reserve over possible provision of coins and replacement of soiled notes to ease small change problems in the country.

Biti said: “I am pleased to advise on the fruitful interactions with the US Department of the Treasury which stands ready to facilitate access to acquisition of smaller denominated coins and replacement of soiled notes through the US Federal Reserve and commercial banks. I will, therefore, be finalising on this in conjunction with the banking system, that way resolving the matter of challenges with change and coins.”

“The availability of both US dollar and rand coins will do away with the challenges posed by the current need to apply cross rates in giving change in rand coins for transactions undertaken in US dollars,” Biti said. “Whilst this problem should be alleviated by electronic payment systems, the large size of the informal sector and the lack of infrastructure for electronic payment systems in rural areas necessitate the availability of large volumes of small denominations”.


Source: ZimInd

[chad]

can you imagine what a bitch it's going to be to live there now? you'll have to take 27 wheelbarrows full of quarters in to pay for a kit-kat bar.

[Cebu_4_2]

It's sick watching how the Elitists take over to consume the poor and innocent that they themselves have created....

[joe_momma]

Umm, wait a minute - doesn't it cost more that the coin is worth just to manufacture it?

(Certainly true for the zinc penny.)

[osoab]

:ROFL:

[mick silver]

money laundering

[solid]

Maybe they are passing the torch, and handing down the dollar to Zimbabwe to make room for a new currency for us. Here you go Zimbabwe, a bunch of coins that go poof, become worthless overnight. The government surely wouldn't do that now. :oo-->

[MNeagle]

money laundering


http://msnbcmedia3.msn.com/j/ap/aptopix%20zimbabwe%20money%20laundering--1177254706_v2.grid-6x2.jpg
Alex Mupondi hangs one dollar notes on a drying line after washing them in Harare, Zimbabwe

http://www.msnbc.msn.com/id/38106716/ns/business-world_business/

[Cobalt]

Maybe it is a good thing that Ponce is visiting his doctors today because when he hears they are gonna start shipping nickels over there while his bank is rationing them he is going need someone to monitor his blood pressure

[MNeagle]

Maybe they'll send them these:

http://news.bbcimg.co.uk/media/images/48631000/jpg/_48631347_heads304x171.jpg
http://gold-silver.us/forum/numismatics/why-the-us-keeps-minting-coins-people-hate-and-won't-use/

[Serpo]

OK kid and here is your change....

[ximmy]

Maybe they'll send them these:

http://news.bbcimg.co.uk/media/images/48631000/jpg/_48631347_heads304x171.jpg
http://gold-silver.us/forum/numismatics/why-the-us-keeps-minting-coins-people-hate-and-won't-use/


I wouldn't doubt it.. and they'll be easier to carry around inside of asses... "Low-denomination U.S. bank notes change hands until they fall apart here in Africa, and the bills are routinely carried in underwear and shoes through crime-ridden slums."

[Down1]

Now the big question is, is this story true ?
Every link I see links back to the link madfranks gave out.
I would like to see a US treasury confirmation of this.
It's been almost a week since this story came out.
I wonder if Mugabe is trying to keep from being Mubaraked ?

Edit.

The flight costs will be met by both government and banks.
I hope they are talking about the Zimbabwe government and not the US.

[madfranks]

Maybe they'll send them these:

http://news.bbcimg.co.uk/media/images/48631000/jpg/_48631347_heads304x171.jpg
http://gold-silver.us/forum/numismatics/why-the-us-keeps-minting-coins-people-hate-and-won't-use/


That's what I think. There must be hundreds of millions of those things just sitting vacant in treasury vaults.

[Festina Lente]

Maybe they'll send them these:

http://news.bbcimg.co.uk/media/images/48631000/jpg/_48631347_heads304x171.jpg
http://gold-silver.us/forum/numismatics/why-the-us-keeps-minting-coins-people-hate-and-won't-use/


That's what I think. There must be hundreds of millions of those things just sitting vacant in treasury vaults.


In the words of Carl Sagan,"billions and billions" of them.


In hidden vaults across the country, the US government is building a stockpile of $1 coins. The hoard has topped $1.1bn - imagine a stack of coins reaching almost seven times higher than the International Space Station - and the piles have grown so large the US Federal Reserve is running out of storage space.

http://www.bbc.co.uk/news/world-us-canada-10783019

[mightymanx]

Actualy it is a brilliant move by the FED that could jumpstart the US economy.

This time next year Zimbabwae dollars are going to be worth 10 times the USD. So the Fed then swaps back and gets a 10-1 return in a years time.

[Sparky]

In hidden vaults across the country, the US government is building a stockpile of $1 coins. The hoard has topped $1.1bn - imagine a stack of coins reaching almost seven times higher than the International Space Station - and the piles have grown so large the US Federal Reserve is running out of storage space.

http://www.bbc.co.uk/news/world-us-canada-10783019



The portrayal of waste and incompetence in this article makes my blood boil.

[Down1]

Trying to see if this has happened yet.
It appears, not yet.
Came across an interesting story while searching for info though.



Zimbabwe banks to return South African coins
By MIKE MAKOMO
Published: February 28, 2011

LOCAL banks are set to return R8 million worth of coins to South Africa that they have been holding onto since last year because retailers have resisted buying them to ease change shortages that consumers have long complained about. President of the Bankers Association of Zimbabwe Mr John Mushayavanhu yesterday said they had been sitting [...]
LOCAL banks are set to return R8 million worth of coins to South Africa that they have been holding onto since last year because retailers have resisted buying them to ease change shortages that consumers have long complained about.

President of the Bankers Association of Zimbabwe Mr John Mushayavanhu yesterday said they had been sitting on the coins for nearly eight months now.

A shortage of rand and US coins in circulation means people often spend more than they intend to in shops so that their bills can become round figures.

Shops also give out credit notes indicating how much change customers are owed, but these are only redeemable in the specific branches where they are given.

The Consumer Council of Zimbabwe has said this has contributed to the high cost of living in Zimbabwe as people spend more than they want to.

Banks had sought to ease the problem by buying coins in South Africa, which they offered retailers at prevailing rand-US dollar exchange rates, but the latter appear not to be interested.

Said Mr Mushayavanhu: “We have already received app-roval from the South African Central Bank and we will be returning the coins anytime now.”

Mr Denford Mberi of the Retailers Association of Zimbabwe is on record as saying the banks were trying to profit from the coins by selling them higher than the exchange rate.

Many Harare retailers have maintained an artificial rand-US coins exchange rate of 10:1.
This means R5 is equivalent to 50 US cents.

The actual rate would have R5 at around 71 USc as the South African currency has long since gained on the greenback.
Oddly, Harare’s informal traders apply more realistic rates and even commuter omnibus operators have tried to give people value for their money in coin terms by charging a normal trip at R4 or 50 USc.

Street vendors also have coins and these are easily changing hands, a development that has stoked people’s fury as to why formal establishments cannot give them a fair deal as well.

Harare retailers have failed to explain why they can apply the prevailing rate quite easily on notes, but not on smaller denominations and for change purposes.

AfroFood Julius Nyerere Way branch said they only applied prevailing rates to amounts of R50 or more, but would not explain why this was so.

TM Mbuya Nehanda Street, OK Robson Manyika and Spar Joina City also had no reason as to why they undervalued South African coins.

Some of these retailers have branches in Bulawayo where similar problems are not being experienced.

Mr Mberi referred all questions to a Mr Ndebele at Truworths’ headquarters in Harare, who was not available for comment.
Finance Minister Tendai Biti has for months said Zimbabwe will soon get US coins, but these have not been seen.
People have also questioned why the finance minister is prepared to bring in coins from across the Atlantic Ocean when the South African option is readily available much closer home.

The public has called for legislation to be put in place to force retailers to be fair.
“The Government must make it illegal for this daylight profiteering which these shops are practising.

“They are forcing us to buy useless things like sweets and if you add up all the money that people are forced to use, you will find that they have extra sales of over US$100 in each shop a day,” railed Mr Cosmas Dumba of Warren Park who had been forced to take lollipops as change after buying a cough mixture in OK First Street.
The situation is much better in Bulawayo where the actual exchange rate is applied.

For instance, kombis in Bulawayo generally charge R3 per trip and coins are readily available as change in just almost every shop.
http://www.zimtelegraph.com/?p=683

[Ponce]

If their coins are bad now they then will be worse, in the future, with the US coins.

[ShortJohnSilver]

Correct me if I am wrong, but the Treasury Department, not the illegal Fed, gets the seignorage for coins that are produced.

[Ponce]

You got it John, and that's why I want the coins to stay here in the US, when the paper fiat is worth nothing the coins will keep the same value and maybe even go higher.

[madfranks]

You got it John, and that's why I want the coins to stay here in the US, when the paper fiat is worth nothing the coins will keep the same value and maybe even go higher.


Not quite. Our coinage is just as fiat as the paper, the only difference is that the coins have an inkling of intrinsic value due to their metal content. The metal content value of a modern clad quarter is 6.2 cents. The fiat value is 25 cents. So when the dollar collapses one way or the other, the quarter will not lose all of it's value like the dollar, it will lose ~75% of it's fiat value and then the metal content value reigns.

[Sparky]

You got it John, and that's why I want the coins to stay here in the US, when the paper fiat is worth nothing the coins will keep the same value and maybe even go higher.


Not quite. Our coinage is just as fiat as the paper, the only difference is that the coins have an inkling of intrinsic value due to their metal content. The metal content value of a modern clad quarter is 6.2 cents. The fiat value is 25 cents. So when the dollar collapses one way or the other, the quarter will not lose all of it's value like the dollar, it will lose ~75% of it's fiat value and then the metal content value reigns.


Sadly, Ponce has me saving my quarters. ;)

Where's the break even point on it making a difference? Let's see...

If I have 4 quarters now, I have 25 cents worth of metal. If the dollar "loses half its value", my quarters will have 50 cents of metal, but still have 100 cents face value.

The break even point would be when the dollar loses 75% of its current value. Then, my quarters would have 100 cents worth of metal, and 100 cents face value. This would be the equivalent of money pre-1965, i.e. the metal in four quarters was worth a dollar.

Let's take some annual inflation rates and see how long it would take my four quarters to reach par with a dollar of fiat. At 1% compounded annualized inflation, it would take about 140 years for a quarter to contain 25 cents of metal. In 279 years, one quarter would have the value of one paper dollar.

At 3%, it would take 47 years to reach face, and 94 years to equal a paper dollar
At 5%, it would take 29 years to reach face, and 57 years to equal a paper dollar
At 7%, it would take 21 years to reach face, and 41 years to equal a paper dollar
At 10%, it would take 15 years to reach face, and 29 years to equal a paper dollar
At 15%, it would take 10 years to reach face, and 20 years to equal a paper dollar
At 20%, it would take 8 years to reach face, and 15 years to equal a paper dollar
At 26%, it would take 6 years to reach face, and 12 years to equal a paper dollar

[Note: 26% is the "hyperinflation" rate as defined by the International Accounting Standards Board, which is a 50% loss of purchasing power (or doubling of price) over a 3-year period of compounding inflation. This is about the lowest acceptable rate worthy of being called hyperinflation.]

Geez, now what about nickels? A nickel has already exceeded par at 6.9 cents apiece. How long will it take a nickel to have the buying power of a quarter dollar? (Not a quarter metal!) How about a paper dollar?

At 3%, it would take 43 years to equal 25 cents, and 90 years to equal a paper dollar
At 5%, it would take 26 years to equal 25 cents, and 55 years to equal a paper dollar
At 7%, it would take 19 years to equal 25 cents, and 40 years to equal a paper dollar
At 10%, it would take 14 years to equal 25 cents, and 28 years to equal a paper dollar
At 15%, it would take 9 years to equal 25 cents, and 19 years to equal a paper dollar
At 20%, it would take 7 years to equal 25 cents, and 15 years to equal a paper dollar
At 26%, it would take 5.5 years to equal 25 cents, and 11.5 years to equal a paper dollar

So, if you hyper-inflationists are right (I'm not one of them), these coins would really pay off. Keeping in mind that it's hard to maintain a high inflation rate for very many years in a row before some mitigating factor occurs (like high interest rates), I think averaging 7% over 20 years (with much higher spikes in the middle) is a more likely scenario. Stay tuned...

[Ponce]

Sorry back at you Frank..........people need to have faith in something in order to trade with, the government itself and not the Fed will take the value of the paper fiat away........so what will the people do? trade something for something that they dodn't want?.........trade with PM? forget it........Sparky? trade the quarters for nickels and and then once you have around one hundred bricks of nickel ;D you can then save your quarter.............remember that my quarters have been saved for over a period of 33 years only by accident...........I will probably have a security guard working for me for two shinny nickels a day, hummmmmmmm in the other hand I will need a second security guard to protect me from the first one..... hay mama......this sounds to me like "Who was born first? the chicken or the egg?"

PS: It has been proven that the chicken was born first.

[Twisted Titan]

This man took it to whole other Level...........




http://www.youtube.com/watch?v=tARo4ryW1M8&NR=1&feature=fvwp

[Cobalt]

This man took it to whole other Level...........




http://www.youtube.com/watch?v=tARo4ryW1M8&NR=1&feature=fvwp


Ha ha

That is some funny shit, that boy just made quadrillions off a few pieces of silver :D

[Awoke]

Haha, Serpo. That pic of the coins you posted with "Here's your change, kid" made me LOL

I kept thinking of that pic of the dude carrying the giant stack of fiat bills for grocery shopping, and I thought "How the hell do they expect them to box all those coins around"...


http://goldprice.org/bob/uploaded_images/zimbabwe-money-guy-727491.jpg

In Zimbabwe, they call you "Moneybags" no matter how much you have...