Plug that Nickel!
In a neat admission that his bosses are rotting the money in our pockets, Chicago Fed economist Francois Velde has come up with a bright idea: debase the nickel by a factor of five!
"The problem [of the current high price of metal] remains for the nickel, but there is a simple fix that encompasses both coins. If we formally discontinue the one-cent denomination, the existing stock of pennies (a billion dollars’ worth of resources sitting in cash registers, jars, and sofas across America) could be recycled as five-cent coins, by simply declaring that pennies are henceforth worth five cents. Rebasing the penny would at the same time debase the five-cent piece and put it safely away from its melting point. The new value would be instantly established by the Treasury’s standing ready to exchange 20 pennies for a dollar bill."
Comments (12)
John Goes
To be precise, the nickel would probably not be debased by a factor of five. The penny would be worth five cents and would thus debase to some extent dimes, quarters and dollars as well, but it would be most easily observed relative to the nickel.
Published: January 31, 2007 6:17 AM
George Gaskell
Nero would be proud.
Published: January 31, 2007 8:13 AM
Charles Sterling
Debasement! Lest us declare quarter coin worths 1 dollar!
Every emperors in the past, like Nero as Mr. Gaskell said, will walk out from their graves and praise Dept of Treasury for establishing a record of debasement.
Hurray for Debasement! Debase everything! Long live the Bush Regime!
Published: January 31, 2007 10:04 AM
Mike
If you would like to withdraw $5000 dollars in pennies from your account at the bank, will they accomadate you? I'd at least like to be one of the first to recieve the new money if this happens.
I don't understand how a decree, declaring that a penny is now a nickel, solves the problem with the nickel. It seems it would just make it worse. Inflating the money supply with one type of coin would eventually just make the other coins and bills worth less right? So if a nickel can then buy even less "stuff" wouldn't it be more desireable for people to melt them down?
Published: January 31, 2007 10:35 AM
mike
can't we just get to electronic money already? this debasing thing is such a pain! it should be a good long time before the dollar becomes worth less than a pulse of electricity, although at the rate we are going I am not so sure.
Published: January 31, 2007 11:21 AM
billwald
AMEN to that! Less than 2% of the money in circulation is cash. Let's kill cash. The existance of cash aids and abets every kind of illegal activity. There is no legal need for coins and paper money.
Published: January 31, 2007 11:30 AM
Angelo
I've been saying stuff like this for a while now, and no one listens to me. If we would just call what is now a single cent a dollar, then everyone would be a hundred times richer. There's no limit to the amount of or overvaluation that the government can do to money, so it seems to me they're completely neglectful.
Published: January 31, 2007 12:41 PM
Matthew
"In our current (fiduciary) system, the stock of tokens we use in transactions, and their value, is determined not by minting and melting—as under the old (commodity) system—but by the monetary
authority’s policy."
And that sums up rather neatly why I rely on precious metals as a store of value.
Published: January 31, 2007 1:03 PM
Yancey Ward
Great! I just rented out a warehouse to store all the pennies I am going to buy up with borrowed money. Any who wish to invest with me just e-mail me. I guarantee a 200% return on your money.
Published: January 31, 2007 1:51 PM
John Delano
"AMEN to that! Less than 2% of the money in circulation is cash. Let's kill cash. The existance of cash aids and abets every kind of illegal activity. There is no legal need for coins and paper money."
- billwald
That sounds like a reason to have more physical money. (Hopefully real money)
"illegal activity" Hah!
Published: February 2, 2007 5:46 AM
billwald
Illegal activity such as street robberies, bribery of politicians, tax evasion, gambling and dope sales . . . .
Published: February 2, 2007 11:07 AM
Peter
Of which only "street robberies" are an actual crime.
Published: February 2, 2007 6:16 PM