It’s time once again to trot out my currency and coinage reform proposal.
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 that 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.
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 7.5 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, that’s another topic.
The bill should change numbers with time release printing. After 6 months it changes to 1,000 12 months 10,000 etc. We could save on printing costs.
What state do you live in? Every sales tax I've seen rounds up. My local 7% sales tax is 7¢ for a $1 purchase, but is 8¢ for a $1.01 purchase.
Other than that I generally like the idea. There's no real reason to change the size of the dime from the current one. The old 1:2.5:5 ratio of the weights of the dime, quarter and half dollar (and up to 10 for the old Eisenhower dollar coin) are a left over from when the coins were made of silver so the weight had to be proportional to face value, so there is no real reason to hold on to them. You might want to play with the edges so the coins are easy to identify by feel.
The best description of how to set the coin/bill break is that lunch should be purchased with a couple of coins. That sets the top coin value at $5 with bills starting at $10. Don't overlap the top coin and bottom bill or else one or the other will be generally unused, like our current dollar coins.
We need higher denominations. The Europeans have a 500 euro. The higher denominations will stimulate the economy just like in Europe- guess why?
Of course, the government hates cash because it’s hard to track. It is also a lot easier to take more than the equivalent of 10k US or more out of the country with 500 euro notes (you only need around 14 for 10k US). The Europeans are making the 500 bills harder to come by.
Precious metals would of course be the best thing and prevent a lot of mischief in the financial sector and restrain government inflationary policies.