Inflation

[Josquius]

So. Inflation happens almost constantly. It goes on and on, quite noticably so. When reading history books you see things like the king's top advisor being rewarded with the princely sum of 100 pounds, which in todays money is actually well up in the millions.
Things used to be cheaper, newspapers cost a penny, etc...
In the UK this has been further upset by decimalisation of course but...I believe that such a pattern has also happened to the dollar over the years.

Now then. A point.
Yesterday I was in a cafe and noticed some rather cool posters on the walls. They were adverts from a century ago, pretty nifty stuff. I noticed one of them in particular; it was an advert for kex chocolate. It cost 5 öre for a little bar iirc. Now this amused me greatly.
In Sweden the current is the krona, its one of those currencies that are widely seen to be non-decimal (probally using the wrong word there). 1 euro=10 krona.
You know the type of thing I mean. Like the yen and the Spanish peseta back in the day. Things don't cost a matter of £1.99, they cost a blank 6000 or some sillyness.
However, with the sek there is indeed a version of the 'penny' in the öre, the smallest coin you can get however is 50 öre, worth around 4 pence, this is going to be fazed out in a few years too.
Looking up it turns out many other units of currency actually have small subdivisions too. The yen for instance (143 to the pound by todays reckoning) is actually divided into 100 sen; not that this has been used for quite some time due to the rubbish value of the yen of course.

Bleh.
I'm getting away from the point.
So, of course you get extreme situations like Zimbabwe where things cost ten million dollars but...even going off natural evolution....How long will it be (ever?) before the dollar, euro and pound become 'divisionless' currencies? That is cents and pennies become so worthless that coins are no longer minted and when you buy a bar of chocolate you get very little change from your £50 coin?
Yes, deflation is the current trend rather than inflation, but this is likely just a blip due to the recession, inflation has been going on for hundreds of years, why should it stop now? (genuine question)
I find it very odd to imagine that situation, I'm used to a 'divisionless' currency now after over a year of using one but still, they're rather alien.

[Josephus]

..How long will it be (ever?) before the dollar, euro and pound become 'divisionless' currencies? That is cents and pennies become so worthless that coins are no longer minted and when you buy a bar of chocolate you get very little change from your £50 coin?

Any day now. Decimal currencies have been on their way out for years.

If to use your example that bar of chocolate used to cost $1.67, they would just round it up to $2.

[Brazen]

Decimalisation and revaluing have been used extensively as a mask for massive inflation. I believe prices went up around 20% when the UK went from pounds, shillings and pence to pounds and pennies. Not to mention how some of the poorer countries, like Ireland, got royally screwed over when they went Euro.

[DontSayBanana]

The problem with decimal in the US is that private citizens don't typically use denominations smaller than $0.50 in dealings with each other- pennies are strictly used for the finer pricing and change in exchange with businesses.  Some picky people might use quarters, but dimes, nickels, and pennies typically only go from business to business (vendors and procurement), business to individuals (payrolls and change), or individuals to business (exact change transactions).

[Fate]

We're probably all going to plastic in the future, so why not have prices denominated as accurately as possible?

[Neil]

Decimalization is extremely useful from a marketing standpoint, as people only pay attention to the first number or two.  Thus, you sell much more of something for $1,999.99 than you do for $2,000.00.

[Brazen]

Decimalization is extremely useful from a marketing standpoint, as people only pay attention to the first number or two.  Thus, you sell much more of something for $1,999.99 than you do for $2,000.00.

Maybe this still works for large purchases, but supermarkets and larger "everything" stores (such as Marks and Spencer) are moving away from it over here. Partly to pinch margins (a supermarket selling something at 96p will sell a lot more - and produce better "real basket" comparisons than one which sells the same at 99p) and partly because in a recession, people perceive a shop that sells things at "real" prices as being more honest than one that expolits the 99p effect.

On a side note, M&S never down-labelled its VAT-rated items when VAT went from 17.5p to 15p, which makes a pleasant surprise when buying knickers. I'd be willing to bet no retailers will make a big fuss when rates go back up to 17.5% at the beginning of January.

[BuddhaRhubarb]

The problem with decimal in the US is that private citizens don't typically use denominations smaller than $0.50 in dealings with each other- pennies are strictly used for the finer pricing and change in exchange with businesses.  Some picky people might use quarters, but dimes, nickels, and pennies typically only go from business to business (vendors and procurement), business to individuals (payrolls and change), or individuals to business (exact change transactions).

about one a month or so we roll all the pennies, nickels, dimes we got in the last month and deposit them. quarters are our biggest change given as we have a lot of prices that are blah blah and a half dollars. we will not rent or sell anything that isn't either an even dollar price or .50 price. no pennies. I scowl in disgust when ever a customer starts counting them out. I hate small change.

[Admiral Yi]

about one a month or so we roll all the pennies, nickels, dimes we got in the last month and deposit them. quarters are our biggest change given as we have a lot of prices that are blah blah and a half dollars. we will not rent or sell anything that isn't either an even dollar price or .50 price. no pennies. I scowl in disgust when ever a customer starts counting them out. I hate small change.

My bank has one of those automated change counting machines.  Take your coin jar in once a month, get back some crispy bills.

[Syt]

about one a month or so we roll all the pennies, nickels, dimes we got in the last month and deposit them. quarters are our biggest change given as we have a lot of prices that are blah blah and a half dollars. we will not rent or sell anything that isn't either an even dollar price or .50 price. no pennies. I scowl in disgust when ever a customer starts counting them out. I hate small change.

My bank has one of those automated change counting machines.  Take your coin jar in once a month, get back some crispy bills.

Over here you put your bank card into a special ATM, pour in the coins and get the amount credited to your account.

[Zanza]

Not to mention how some of the poorer countries, like Ireland, got royally screwed over when they went Euro.

I thought Ireland got in at a rather favorably rate. And they were not a poor country anymore in 1999, rather mid of the field.

[Admiral Yi]

I thought Ireland got in at a rather favorably rate. And they were not a poor country anymore in 1999, rather mid of the field.

I think Red is talking about the widespread perception that retailers took advantage of eurofication to boost their prices.

[Cecil]

I thought Ireland got in at a rather favorably rate. And they were not a poor country anymore in 1999, rather mid of the field.

I think Red is talking about the widespread perception that retailers took advantage of eurofication to boost their prices.

Yes and IIRC that turned out to be mostly bullshit. People complain because they like to complain. The euro was just a convinient vehicle.

[Iormlund]

In Spain it was very noticeable in certain stuff like coffee or drinks.

Anyway, the peseta was only division-less for a relatively brief time. Cents were used by my parents' generation.

[dps]

I'm not sure that the whole line of thinking isn't flawed.  Long-term, persistant inflation seems to only have been prevalent in the last 40 years or so.  Before that, prices tended to fluctuate up and down.  In fact, before then, in most economic downturns, dramatic deflation usually occurred.