Dear Mr. Rawles,
I read your article about US coinage and the opportunity to save nickels. I must admit that your post about nickels is the first thing I linked to and that it introduced me to the many other valuable and useful topics on your blog.
I have two concerns about modern coinage. The first is obvious and refers to the decreasing value of the coins themselves. The penny is now essentially worthless and should be abolished. We spend time making change. We spend money creating, transporting counting and wrapping them. Our tax dollar could be better used. The nickel too should be phased out and its time to own up to the fact that the dime is the new penny. In fact, using the Westegg inflation calculator we can see that a dime in 1947 was worth a penny in 2010. (Unless of course you want to consider that in 1947 that dime was composed of 90% silver and so a dime from 1947 is now worth about $2.31 according to Coinflation.com.
My second concern is that the government has persistently changed the currency itself. We have to pay someone to design the coin, approve the design (bureaucrat), engineer the dyes, et cetera. This too is a waste of the Taxpayer’s money. Moreover, because the designs are unfamiliar it takes store keepers extra time to simply identify whether a coin is a nickel or a quarter and doubtless there are more errors made. I find the change itself though insidious. I think the great thing about US currency was its stability. It never really changed. It reflected that our economy was stable. It conveyed that the money was permanent and worthwhile because it was US currency. Now there is a sense that the money is worthwhile because it is a collector’s item. People want to get all 50 states or see Thomas Jefferson from every conceivable angle.
Every country has its great values and its great symbols. Our country has the Statue of Liberty for example. But because we are a great country we should maintain our currency as a great symbol. We don’t dress the Statue of Liberty up in an elf costume at Christmas and neither should we be dressing up our quarters, and then nickels and then pennies.
As a last thought, how about converting the dollar (with an average life span 18-to-22 months) to a silver coin? The only problem is that it would weigh 1/32 of an ounce (which means it would be about 1/3 the size of a dime) – Bruce in Pennsylvania
JWR Replies: One alternative to dropping the penny and nickel from circulation would be redenomination–issuing new paper dollars with one or even two zeroes lopped off. The old paper dollars would be exchanged under a mandatory swap (most likely with a 90 day time limit before the old bills were repudiated inside the U.S., and considerably longer allowed abroad–perhaps 18 months.) Wages, prices, and bank balances would all be re-valued overnight. But the old coinage would continue to circulate at face value. Several countries have dropped one, two, three, or even four zeros this in the past 50 years, often without too much drama. (Such as in Turkey, Israel, Romania, et cetera.) Although redenomination would be a sign of surrender to chronic inflation and one of those Les Empereur Sans Culottes junctures in the history of our nation, a currency recall would have some merit. I predict that the new valuation would cause a short term economic boom as everything would suddenly appear “inexpensive.” (With just one zero removed, a gallon of gas would be 36 cents, instead of $3.60, and a Snickers bar would be 10 cents instead of a dollar. Even the lowly penny would again have some genuine value. (There would again be “Penny Candy”.)
Dropping two zeros would allow the issuance of new silver coinage. (The silver in a pre-1965 silver half dollar is currently worth around $15.00, but with a New Dollar–with two zeros removed–the silver in the 50 cent coin would only be valued at 15 cents. But I suppose it might seem quite strange to see gasoline priced at 3.6 cents per gallon.
And, needless to say, a paper currency swap would also make those of us that have been stockpiling nickels very happy.