5 cents is right for the smallest coin of the US Dollar
Posted: Tue Feb 19, 2013 1:40 amAs 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.
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.
