5 cents is right for the smallest coin of the US Dollar

[scyther]

As everyone here knows, a lot of people want to get rid of the penny. It's a very worthless coin at this point, and in my opinion it makes sense to get rid of it. But I've also often heard that we should get rid of not only the penny, but also the nickel, and possibly even the dime. After all, what can you buy for less than a quarter? But this the wrong way to look at it. A coin doesn't need to be able to purchase something by itself in order to be worth having. If a coin's only purpose is to make change, that's fine.

Also, people often say that the dollar has lost 96-98% (depending on the source, and what you're comparing it against) of its purchasing power in the last hundred years. That's true, but what people don't always realize is that the dollar actually gained a lot of purchasing power throughout the 19th century. According to this inflation calculator http://www.westegg.com/inflation/, a dollar was worth about twice as much in 1900 as it was in 1800. Therefore, since 1800, cumulatively, the dollar has only lost about 92% of its value. Thus one cent in 1800 = 13 cents in 2012. But, there was originally a half penny as well. This was worth about 7 cents. Thus, if we were to eliminate the penny and have the nickel as the smallest denomination, this would actually be pretty close to the way it was in the beginning.

Again, I agree that the penny should go, but I think doing away with the nickel would be a bit much. Remember, they still used fractional tax tokens as recently as the 1960s. I think it's better to have a unit of currency that can keep track of small amounts of value.

[scyther]

Also, if we use the original denominations as a guideline, we really don't need to reintroduce the 500 dollar bill yet. The original highest denomination was $10, which was worth $132.93 in 2012 Dollars. Not that I wouldn't still like to see a $500 bill come out...

[IdahoCopper]

There is a 500 Euro note .... you can stash a lot of value in a small money belt with those.

[TwoPenniesEarned]

There is a 500 Euro note .... you can stash a lot of value in a small money belt with those.

You can stash a lot of Euros. You could stash a lot of value in the same belt by cramming it full of gold

[creshka46]

This is a good observation. I agree. I still see nickels as valuable. Maybe it's because they are big and heavy and feel valuable. Maybe it's because they are silver colored. But I also think it's because they do still have utility. I've never found a vending machine that doesn't take nickels, and it's not unfeasable to buy a candy bar with all nickels. I can buy a pack of gum in the vending machine at work for 10 nickels. That's just my anecdotal evidence, but I believe that most people still find utility in nickels.