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<p>[QUOTE=&quot;yakpoo, post: 2732206, member: 18157&quot;]Some argue that coins are obsolete and should be abandoned altogether in lieu of paper or digital currency. Under normal circumstances, I see their point. However, not everyone lives a digital life...and what happens electronic communications are disrupted?</p><p><br /></p><p>If we agree there&#039;s still a requirement for coins, what are reasonable denominations? Are the current denominations sufficient?</p><p><br /></p><p>This is a sticky subject. There have been many threads on Coin Talk dedicated to this subject. I think everyone agrees that we can no longer buy anything with a Cent, Nickel, or Dime. However, when anyone suggests that these denominations should be phased out, folks become very emotional.</p><p><br /></p><p>Frankly, I don&#039;t understand the reaction. As near as I can tell, the fear is that consumers will somehow get screwed if &quot;non-commercially viable&quot; denominations are phased out. They somehow believe that this would be a boondoggle for Big Business or the Government...that they would benefit at the expense of the average Joe.</p><p><br /></p><p>Let me try to address that point.</p><p><br /></p><p>Let&#039;s examine the extreme....what would be the effect if the smallest denomination of coin was $100? It would mean that the smallest unit of any good sold would be in $100 increments.</p><p><br /></p><p>Let&#039;s say you want some mulch for your flower garden. Instead of vendors competing on price, they would compete on quantity. You might get 275lbs of mulch from one vendor for $100 while another vendor might offer 320lbs. You would consider many factors (quality, accessibility, etc) and choose the mulch that offers you the best value...and vendors would adjust their product accordingly.</p><p><br /></p><p>However, another problem arises...what if you don&#039;t need 300lbs of mulch. What if you only need 50lbs of mulch? That&#039;s a problem. That&#039;s a problem that can only be solved with a lower denomination coin. If we were talking about chocolate bars instead of mulch, the smallest denomination would have to be smaller still.</p><p><br /></p><p>So...the purpose of lower denominated coins is <b>to provide sufficient granularity to purchase a reasonable amount of a good or service.</b> Implicit in this definition is that the lowest denominated coin must be able to purchase something...anything.</p><p><br /></p><p>Today, we encourage economic growth through inflation. To facilitate inflation (the taxation of wealth through the debasement of currency) we to moved away from the Gold/Silver standard and adopted a fiat currency (currency valued by the promise of repayment). Today&#039;s dollars are effectively zero-interest government bonds.</p><p><br /></p><p>If coins were still minted in copper, silver, or gold...we wouldn&#039;t be having this discussion...there would be no need to re-denominate our coinage. However, money has been devaluing at a rapid pace for the past 50 years and <b>it&#039;s time to increase our lowest denominated coin to some unit of value in commerce. </b>People won&#039;t be screwed by &quot;the Man&quot;...they will simply make purchasing decisions based on quantity vs. price.</p><p><br /></p><p>This is great news for Coin Collectors! Obsolete denominations become finite and desirable. Higher denominated coins are more difficult to collect, increasing rarities.</p><p><br /></p><p>Let&#039;s let the Cent, Nickel, and Dime go with dignity and focus on newer, higher valued coins to come![/QUOTE]</p><p><br /></p>

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