Could future coins change in size/composition?

Decades ago coins were used a lot in commerce. Paper money has now replaced that role.

Nowadays when I get change back, I find myself thinking the coins I get back are more related to old-system currency formalities and accountant record books for fractions of a dollar they no longer own. Considering in 1950 a nickel is equivalent to 50 cents today, a quarter today is only 2 1/2 cents relative value. By those standards we should’ve stopped making the penny, nickel, and maybe dime a while back.

Do you think the sacagawea dollar, which is mostly copper, could ever turn into something equivalent to a large cent? Or maybe a future change in composition or size of coins?

Maybe a titanium quarter might hold some value over copper nowadays.

Sometimes it seems possible there may be a resizing of coins and changing composition because their value seems to be losing ground as-is. I don’t think credit cards will totally replace cash, but when I get back my change and it’s all common date and mostly unworn and can’t buy much by itself, I keep thinking why I bother getting it back at all. (But I still keep it)

Just thinking out loud.

 

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Maybe the Mint should consider making all coins that are smaller in size than a quarter from lead. They would wear out quickly and encourage people to melt them down to make fishing weights instead of looking for stupid errors that aren't there.

Chris

 

After all, look at how well it's working with the self-destructing copper-coated zinc cents.

 

The "coin value backed by metal content" ship sailed a long time ago. It's a recipe for slamming the brakes on commerce any time there's a spike in metal prices.

I've been preaching the death of cents, nickels and dimes for years now, using your same argument. When we started making coins, one cent was a measure of significant value, enough so that we needed half-cents for commerce. We stopped making half-cents in the 1850s because their value was no longer significant. Today, that "half-cent in 1850" value is between 10 and 25 cents, and closer to 25 cents.

When it comes to commerce, one, five and 10-cent coins are just a source of friction. They should go away. Instead, though, I think all coins will go away, along with paper money, in favor of electronic payment.

 

The mint currently loses money on every penny and nickel they make.

If they were required to make a profit like a real business, they would have ceased production on them a couple decades ago.

 

@cpm9ball Heh if the coins were lead people probably would repurpose them.

@JeffB I see your point about coin value not backed by metal content working out. I’m not sure how electronic cash would work. I keep thinking that it would never be fully adopted because people have too many vices they want, but don’t want anyone to know about.

@physics-fan3.14 it is kind of interesting now that you say it, that the mint loses money making all these pennies and nickels on one hand, but on the other charge a lot of money on their collector products.

 

Thanks for the opening question Lev. See my article here on "The Future of Numismatics" from the ANA convention.

New inventions, both material and ideal, will alter the forms and formats of money, but the old media will not vanish. Lots of people still ride horses. Consider that even in a world with submachine pistols, nothing would astound an ancient more than a Swiss Army Knife. I work in a machine shop with all kinds of modern smart tools and we still have hammers and chisels.

That said, a major disruption in the economies around us will, indeed (guaranteed) bring an end to this system and the start of something similar but different.

I disagree on several grounds. First of all, we do still have gold and silver coins. The US Mint and others sell them by the ton. The US Mint will take those FRNs and sell you a gold coin for them. That is a gold-backed currency.

Moreover, there is only so much gold and silver in the universe and we can guess how much that is. As new inventions are created, the value of precious metals increases relative to them. It takes less and less to buy more and more. Hard money gains in value over time.

Furthermore, it is a Keynesian pipe dream to think that we have or need "stable prices." The relative value of everything from shoelaces to space satellites from retail clerking to research physics changes all the time -- and somewhat differently in different spaces at different times.

What, in your opinion, would cause a "spike in metal prices" that would result in "slamming the brakes on commerce"? I am asking because I believe that you have cause and effect reversed. In times of trouble ("slamming the brakes on commerce" - war, for instance) people turn to the stability of precious metals.

For that reason alone, I see world mints continuing to make and sell gold and silver coins.

You might think that "no one" spends them today. It just depends on which circles you socialize in. I assure you that if you run out of gas in West Texas, a silver round will do you better than your cellphone.

 

Sorry... one more point... I could not find in the archives here a video that someone posted from a private world coin mint. They make coins for small nations. The video touted the value (and beauty) in hard money, albeit of common metals.

Also, I want to point to a classic work, FRACTIONAL CURRENCY by Neil Carothers. This was his doctoral dissertation from 1930. His thesis was that the best currency is made of durable, inexpensive materials backed in convertible precious metals. Do not circulate the gold and silver, just use something better than paper.

 

According to a tour guide at the Denver Mint (which may or may not be a reliable source on this topic), the Mint is the only profitable organization in the U.S. government. He freely admitted the loss on cents and nickels, but then said that they more than make up for it with quarters, which alone obliterate the losses on the lower denominations, so no one really complains because they come out ahead overall. But if one looks at cents and nickels alone, yes, it looks bad. He concluded by wishing that the press would show the big picture instead of just discussing cents in isolation. But in the end, it's up to congress to change things, and until they do, the mint is pretty much stuck minting the lower valued coins.

Could they make them out of aluminum or tin instead? I don't know, and I don't know how much it would cost to make that change. One wonders if congress is just waiting to see where electronic payments go.

 

The mint should drop the cent, nickel, and dime from normal circulation. However, they should sell a limited number of 30,000 to speculators/collectors each year, charging some outrageous price.

 

The us mint does do metal, economic and acceptance analysis for future coin variations. They have to meet many requirements in their "alternative metal studies".

But for people that use circulated coins for their designed use .. Money ... A quarter is always worth a quarter.

 

I think you've stretched that definition past its breaking point.

The US Mint will take those FRNs and sell me a bag of cents for them, too, but that doesn't define a zinc-backed currency.

When the price of gold goes up, the Mint promptly (well, as of the following Wednesday) demands more FRNs for each gold coin. Same thing for platinum and palladium. When the price of gold goes down, the coin prices drop as well.

This isn't a gold-backed currency. This is an organization selling gold and silver coins, and pricing them in terms of a currency -- the same way nearly every other item sold in the US is priced. And those prices fluctuate as metal prices fluctuate, just like gas prices fluctuate as oil goes up or down.

 

Yes, and that guess would be "so much that we could crush every human that's ever lived under his or her own million-ton solid gold cube, and still not make a discernible dent in the total". It's irrelevant. It's all about cost of production (or retrieval) -- which varies, depending on long-term demand and technology shifts, but also on short-term fluctuations in (say) energy costs).

Of course. And you can, I suppose, pick any one of those things -- say, gold -- and choose to define other prices in terms of it. Most of us use the dollar as our measure of value, though.

"Slamming the brakes on commerce" -- I'm thinking of the change shortage in the 1960s around the time of the shift from silver to clad. People hoarded silver coinage because they thought it would be worth more in the future, and stores couldn't make change.

"Spike in metal prices" -- sure, this can happen in the face of war. It has also happened when a couple of ambitious brothers decided to corner the silver market (1979-1980). If a couple of low-life grifters can cause the price of a metal to spike 10-fold or more, I'd just as soon not look at it as "suddenly the price of bread and milk has dropped 90%, but so has my salary".

 

I've arranged much of my life to avoid running out of gas in West Texas.

 

The whole idea of paper vs. base metal vs. precious metal vs. crypto, etc. misses a basic point. All money is backed only by faith, whether it is electronic or electrum, it has always been backed ultimately by faith. Barter is different because an item I own seems to me to be of equal or lesser value to me than an item you own. If to you your item is worth less than or equal to the item I own, we trade and both are happy. There is no need for backing. But gradually a more or less recognized system of value begins to be attached to some items, let's say shiny metal stuff or cows, and suddenly there is money. I may not value the cow, but I have faith that someone else will, and so there is money.

If a government, or anyone for that matter, issues a substitute for the item, such as paper, that substitute relies on faith that someone else will accept the substitute in exchange for something I want. Thus the dollar is accepted in many parts of the world today, not because they believe the US government will give you gold for it or accept it in payment of taxes but because they believe someone else will give them something of value for it. I doesn't matter what form that is, whether a base metal, warehouse receipt, paper bill, or even numbers in an electronic account.

Precious metals have fared well over the centuries because people historically have had a certain faith in the "exchangeability" of gold or silver. This is not guaranteed in every situation. If your ship is sinking, how much gold would you accept in exchange for your seat on the lifeboat? Severe economic stress, such as famine and war, see the value of precious metals vastly diminish as people give more and more of it up for food or other necessities. But whatever value a metal has, it has it because someone has faith it can be exchanged.

This faith is what backs the crypto currencies as well. Even less than gold, which has many industrial uses, an electronic currency has no intrinsic and it has the added risk that hackers can disrupt the market or even unlock the chain-block technology that insures its limited availability. But people believe someone else will give them something of value for it. The wildly gyrating markets only measure the strength of that faith, which changes minute by minute.

To the OP's point, the form of money will certainly change over time. Inflation, which is also a measure of waning faith in the exchange value of that money, will eventually force change. Already I find many merchants that round my change to the next nickel instead of counting out three or four pennies. Economics will thus drive out or greatly change small change as surely as the half cent and large cent went away. And, as has been mentioned, there is a huge shift to electronic money, whether in dollars or not, and talk of a "cashless" society.

There is a downside and a backlash against a cashless society, however. First, it is a drain on the economy much more than producing worthless cents. In most states, the government already takes a bite out of almost every commercial transaction. With electronic money the bank or credit company takes a bite out of every transaction, even non-commercial, with no benefit to the consumer other than convenience. Cash can eliminate that. Also, it discriminates against the poor and underprivileged classes who cannot afford to maintain bank accounts or to rate credit cards. Further, most electronic transactions leave a trail, which may be innocent enough but may betray such things political leanings or beliefs that could lead to government control or civil discrimination, as in some countries today.

 

ROFLMAO

 

Lot of good observations I had never considered. Many thanks for the response.

It sounds like the observations on coins are part of a much larger trend where people are apparently questioning the use of coins, and at some future point should anything change, then the nature of money will simply change automatically to fill the role.

It sounds like the level of knowledge a lot of people know about this topic, and from the levels of disuse of average coins, and from monetary losses of at least pennies and nickels to produce, the system may be closer to changing than it is to staying the same. 13 years of losses on minting pennies and nickels is quite a trend. Losses must have begun around 2006. I guess if there’s plenty of taxmoney greasing the gears, no one will bother. From what I notice the only thing that causes change is pain, unfortunately.

@kaparthy I’ll have to check out the 1930s dissertation you mentioned. I never could find your ANA topic on the future of numismatics, though I did see what you’d posted on economy of cities by Jane Jacobs. Interesting.

 

Having just returned from a short trip to Japan, I can say that their coinage system makes more sense than ours. All denominations, which include (in approximate dollar equivalent) 1, 5, 10 and 50 cents, 1 dollar and 5 dollars, regularly circulate. The smallest note is about $10. Coins are easy to tell apart and are of convenient size, with the 100 yen no bigger than a US nickel and the 500 yen smaller than a half dollar. As a result, pocket change is functional and has significant value, versus US change which gets thrown into a jar as a nuisance. Euro and Pound coinage is also quite convenient but I think Japan’s is the best.

We could eliminate the penny and nickel, keep the dime and quarter the same, and issue halves using the same metal as a Sac but smaller. Dollar coins should say the same, and 2 and 5 dollar coins should be small but thicker than other coins, along the lines of British pounds. This would save the government money in the long run and make our coinage significant again while hopefully giving our hobby a boost.

Now I should have a beer so I can solve some more of the world’s problems...

 

I like that system, but I'm not sure where the 2 dollar coin came in. I'd rather deal with 1's and 5's without 2's thrown into the mix. In fact, if I had my way, I'd ditch the $20 bill in favor of $10's and $50's. Clearly, I'm in a minority there.

 

Euros and Pounds have 2’s that seem to work out well, but if I had to make a choice I would agree with you to have a 5 instead.