Posted on 08/29/2011 7:29:33 PM PDT by Atlas Sneezed
The year 2013 might go down in the annals of numismatics as significant as 1933 when gold coinage was suspended or 1965, the year copper-nickel began to displace the former silver coinage.
That’s the opinion of Deputy Mint Director Richard Peterson, who has been the top executive at the U.S. Mint since Ed Moy resigned the directorship at the end of last year.
He was speaking at his Aug. 19 press conference at the American Numismatic Association’s World’s Fair of Money held in Rosemont, Ill.
It will be in 2013 that Peterson will have to go back to Congress with his evaluation of the present state of American circulating coinage and what his recommendations are to fix the problems.
And there are problems.
These include a copper-coated zinc cent that costs more to produce than is recovered when the Mint is paid 1 cent by the Federal Reserve.
The 75 percent copper, 25 percent nickel coin not only costs more to produce than can be covered by its 5-cent face value, but its metallic value at 5.9 cents creates a risk of mass melting that is only countered by a Treasury regulation that makes it illegal to melt or export this denomination as well as cents.
Almost nobody uses or wants to use the half dollar or the dollar coins.
Dimes and quarters face escalating production costs, but at least for now, these costs are not threatening to exceed face value.
Could the cent, half dollar or dollar coins be abolished?
Might the nickel and other denominations be changed to cheaper compositions?
Might there be coins with denominations of $2 or $5 in our future?
How about diameter changes?
Helping Peterson in making his evaluation will be Concurrent Technologies Corporation, which was given a $1.3 million contract by the Mint.
The Johnstown, Pa., firm announced this Aug. 18, the day before the news conference.
“CTC will undertake studies to identify issues with current coinage materials and recommend potential alternative metallic materials for future coins,” said Dr. Joseph R. Pickens, CTC chief scientist and technical lead for the new contract.
Critical to the coinage evaluation process will be the reaction of the vending machine industry. When Congress asked the Mint for this evaluation, it also specified that it have almost no impact on the vending industry.
That might be hard to do.
Given that there has been ample inflation on the order of 10 since the last change, and we have an excessive array of confusing coins and low-value currency, it is time for a practical simplification.
First, denominations need to proceed in a proportional way without large value ratios or crowded ratios. The classic 1-5-10-50-100... progression with ratios of 2.0-5.0 is ideal as a minimum, with denominations of 2, 20, etc. being optional for important valuations.
Second, we want to avoid coins of such low value that they are more trouble than they are worth. Economic waste occurs with the extra time wasted dealing with needlessly small coins. A dime is worth less than a minute of labor at minimum wages, and no currency transaction requires anything smaller than this denomination. The penny and the half-cent served well as the smallest denominations when their values were that of today's dime. (Note to any economic imbeciles: electronic transactions are often conducted in smaller units than our smallest coin, and that cash registers have been "rounding" - without bias up or down - to the nearest small coin for sales tax purposes for generations. Google “sales tax rounding” if you have doubts and read a few articles).
Third, we want to set the coin/currency transition at a practical level that avoids our wallets being overstuffed with small bills, or our pockets with too many coins. Coins should be suitable for purchases like a magazine, a coffee, a lunch, or a brief cab ride.
Fourth, the ratio between the largest and smallest coin should be limited to a practical factor. Consider that the economy functions effectively with coins at 0.05, 0.10, and 0.25, with pennies treated as trash, and larger coins generally not used. That is a factor of 5 between the largest and smallest coin. A factor of 10-50 may be ideal, and a factor of 100 (as in actual current coinage) is excessive.
Fifth, we need bills of adequately high value for large cash purchases (consider the largest Euro note has a value of about 6.5 times that of the largest US note.)
Sixth, coins should be sized approximately proportional to their value for ease of recognition and use.
The proposal:
Coins: $0.10 (slightly smaller than the current dime) $0.50 (slightly smaller than the current nickel, larger than the penny) $1.00 (slightly smaller than the current quarter dollar, larger than the nickel) $5.00 (slightly smaller than the current half-dollar) Or it could be set at $2 to avoid overlap with a $5 note.
Currency Notes: $5 (optional) $10 $20 (optional) $50 $100 $500
Our current 6 coins are replaced with 4. Our current 7 notes are replaced with 4-6.
If you want to talk about making coins out of silver or gold, I'm even more enthusiastic:
$1000 gold coin (1 oz) $500 gold coin (1/2 oz) $100 gold coin (1/10 oz) $20 silver coin (1 oz) $10 silver coin (1/2 oz) $2 silver coin (1/10 oz) $1 copper or base metal coin (1/2 oz) $0.50 copper or base metal coin (1/4 oz) $0.10 copper or base metal coin (1/10 oz)
I think having 2 and 5 dollar coins sounds good. But after dealing with the euro for five years, by the end of the day, you had so many coins that it was kinda a pain. Now what was good was if something was 20 euro and you gave it all in coins was sorta nice but otherwise....
Ya know, I was about to say good grief to the original article, but your proposal actually is pretty logical. It also is a good way of bringing back in commodity based currency without making the entire system dependent on it.
Just numerate them with bas relief numbers and words.
Electronics can take care of almost every situation. Even the blind can check the value with a simple hand held device.
“A dime is worth less than a minute of labor at minimum wages, and no currency transaction requires anything smaller than this denomination.”
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A rather arrogant statement.
Tell that to the guy standing on the corner with a cardboard sign.
Lots of countries have lighter, smaller coins. Some feel like they’re aluminum.
Why not have aluminum pennies? Or nickles?
Seriously. No reason I can think of. Besides a whole lot of people could find jobs fixing coin changing machines.
As long as we forbid them from being made in China.
pennies are worthless.
the only reason that we still have them is john mccain’s copper mines in az.
Or return to the Gold standard and those worthless coins are now worth what they were in my youth. Problem solved. No Costs for retooling.
Odd that they are considering getting rid of the dollar coin. Granted it is not popular, but it is cheaper over its lifetime than the paper dollar. I’d think opinion be damned and withdraw the paper dollar.
You need a new reserve currency with a far higher value, and less widely distributed ownership.
Maybe we could use Plutonium. Sure, you can always make more of the stuff but it's constantly degrading into something else.
Banks won't stock the half dollar and the dollar coins are poorly designed.
They are not easily and immediately distinguisable by size.
Apparently, you didn’t read my comment, which answers your question.
And I’m not sure what relevance beggars have to the choice of appropriate coinage units. If you can explain, I’m all ears.
There are many more of them in use in captive coinage streams in factory and office canteens, automats and snackbars than are held in storage at federal reserve banks.
A number of universities around the country have been experimenting for several years with the type of small purchase cards popular in Europe. In some college towns the equipment has been installed in offcampus shops and restaurants and has proven popular.
So far that approach to displacing coinage is not all that popular among Americans, but it does work.
i like to think of "coins" as simply small, stiff, long lasting "bills". With all sorts of ways for electronics to judge their size and value I see no reason to continue producing coins in different sizes and colors.
If we do this correctly we will be able to use the same coins ON-LINE with electronic devices and OFF-LINE as traditional pocket change.
They’re not worthless. How would you make change if you didn’t have pennies?
Don't you mean that's always been the problem with currency?
What difference would it make to round up to the nearest nickel? or dime?
Even in the town of Williston, ND, where the census says there are 15000 people, the mere 1 cent of city sales tax brings in over 4 million dollars a year.
Which means each cent extra paid would cost consumers millions of dollars a year in even small areas.
While it would lose much of its monetary credibility, perhaps the cent could be made of aluminum instead, as are many foreign coins, or an alloy thereof to improve durability.
Yes, I still pick up (tax free!) cents on the ground. Some are copper and worth more than their face value.
It isn't the coins that are the problem, anyway, so much as the insane generation of paper which devalues them.
No pennies? I bought a hamburger and a small drink recently at Jack in the Box. The total came to $5.03. I didn’t have three pennies on me. No way was he giving me the food without that three cents. I had to hand him $6.00 in bills to cover the three pennies. How does you plan work around this problem?
Not at the statutory price of $35 dollars an ounce.
Set the statutory price at $10,000 an ounce, and there is more than enough.
Or is there?
At that price, who knows, maybe alot of foreign governments (or even domestic entities) would demand that their T-bills, etc. be redeemed with gold from Ft. Knox.
That’s the real problem with gold and why they will do anything to suppress the price.
The higher the value of gold, the more interest there is in knowing EXACTLY how much is (OR ISN’T!!!!!) in Ft. Knox.
And all the other sovereign and financial institute holdings in the world where they have yada-yada tons on the books...
Sales tax will, of course, be rounded up.
Your plan sounds great until you realize many of the people that make minimum wage are also the ones that would be counting out your change. How many minutes of labor will be lost while the employee and the customer argue that the change isn't right? Then the manager or some employee with an IQ above room temperature will have to come over to figure it out.
Not really
1982–present 97.5% zinc, 2.5% copper (core: 99.2% zinc, .8% copper; plating: pure copper)[5]
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