Hey everyone. I've been gone for a while while taking a break from collecting. I saw this proposal on coinage though and just had to post it for you CoinTalkers. Will post coin collecting updates when I restart said collecting. Hope everyone is doing well out there! The full article is here from the Week. A couple of excerpts for those interested: A radical proposal to make coins useful again Forget ditching the penny: Let's multiply every coin value by 10 "Here's my solution: multiply the face value of every U.S. coin by 10. A penny will be worth 10 cents, a nickel 50 cents, a dime one dollar, a quarter $2.50, and a dollar coin 10 bucks. (We could also reinvent the half-dollar, which is barely produced now, as a nice $5 coin.)" "Now, this wouldn't be exactly fair, since coin-hoarders would get the biggest benefit, but distributionally it would be practically saintly compared to, say, quantitative easing. Some people will make out like bandits, to be sure, but I doubt they would be owners of large asset portfolios." PS - Cool forum changes!!
Yeah, let's do it right away! That would make my 18,000 Westward Journey nickels worth a cool $9K. Chris
And then when your pay check and bank balance would be adjusted downward by 90% to compensate, there would be no benefit to anyone but coin and currency hoarders. Before anyone jumps on these calculations, I'll explain: If $50 is now worth $500, you'd only get paid $50 instead of $500. Exactly the same spending power. Your bank balance is reduced from $5K to $500. Exactly the same spending power. But then, people don't want to acknowledge that side of the coin, they only see free money that isn't really there.
I support the proposal except they need to balance it out (make it a zero sum game). If those sneaky coin hoarders are going to make out like bandits, then someone else has to lose. This is the best wealth redistribution plan I have ever heard of.
This plan in no way increases wealth, except for coin and currency hoarders. This idea is the most dead idea ever. It'll never happen.
A currency reform that revalues the currency downward would be a nightmare. For me anyway, regardless of my copper-cent hoard. Think of the Weimar Republic in the early 20s.
And the simple was to do that is the NEW cent, nickel, dime etc have the purchasing power of 10 times the old coins (same for paper money). The old coins still have their same purchasing power. Of course this would mean the new coins would also have to be a different size so no one could pass off old coins as new ones. In effect what this would be would be a revaluing of the dollar, something that has been done in MANY countries around the world. It doesn't really accomplish anything economically, but it does allow for smaller denomination coins to remain in circulation, reduced production requirements for the coins, and everyone gets to deal with smaller numbers. I've recommended a 100 to 1 exchange though instead of 10 to one. Silver would be around 20 cents and oz and gold around $13 an oz. it would actually be possible to have silver and gold circulating coins again. (Maybe not practical, but possible.) A silver dime has $1.41 in Old Dollars bullion value. In New Dollar that would be 1.4 New Cents in a coin with a face value of ten New Cents. and it would have the purchasing power of a current ten dollar bill. Would it circulate? Why not? It has a face value six times higher than its intrinsic value. Some people might say they would hoard it anyway because it's silver! Sure but in effect you would be paying $10 for $1.41 worth of silver. How about a new double eagle with half an oz of gold in it? gold would have to reach the equivalent of $4,000 an oz in current dollars before the coin would contain its face value in gold. In other words gold would have to more than triple in value to break even hoarding the new gold coins.
Except that (essentially a 1-for-10 reverse split of the dollar) is not what they're talking about doing. They're just talking about altering the face value of coins. I like the idea of having coins denominated at .10, .50, 1.00, 2.50, 5.00, and 10.00. I love the idea of coin hoarders getting a windfall. What I don't like is the certainty of all change IMMEDIATELY disappearing from circulation as everyone jumps to get in on that sweet coin-hoarding action.
OK so if you are just issuing new coins that have 10 times the purchasing power, you can still eliminate the windfall to coin hoarders by changing size and/or composition and keeping the old coins at their current values. You buy and item for 70 cents you can use seven old dimes or one new one and get back three new cents (or three old dimes). Of course this creates a REAL headache because now you have to have a cash drawer with spots for all the old coins and all the new ones, Can't keep them in the same slots because you might get mixed up and seriously short change yourself giving out change. Frankly the solution to that would probably just be to stock your register with just the new change and as any old change came in dump it in a bucket for counting, rolling, and depositing back to the bank instead of putting it in the till. Of course then I can see a possible problem with sales taxes unless you want to round off all prices to the nearest dime.
