My idea for US currency reform

[hotdogPi]

Pennies and nickels cost more than their face value to produce. In addition, many currencies (euro, UK, Canada, Australia, New Zealand, Norway, Israel) have the equivalent of $1 and $2 coins, while two (Japan and Switzerland) effectively have $5 coins. Here is my proposed reform, in detail:

1¢: Get rid of it entirely. Cash purchases are rounded to the nearest 5¢ after tax is calculated. If it's exactly halfway between multiples of 5¢ (e.g. $6.375 because it's $6 + 6.25% tax), round down. They don't need to be demonetized, but if Canada is any indication, people will stop using them pretty much immediately.

5¢: Stop making them. Unlike pennies, they might continue to see use even after production stops, but they'll eventually stop being used. This does make a coin (the quarter) not a multiple of the smallest coin (the dime), but any amount except 5¢ and 15¢ is possible. You can't really buy anything with 15¢ anyway. If your purchase comes out to x.05 or x.15, you can put down a quarter and get two dimes or one dime in change, or x.75 + three dimes or four dimes if you don't want change.

10¢: No change. Roosevelt has been on the dime since 1946, but there's no need to change this. At some point in the future, the material might need to be changed; either aluminum (like Japan's ¥1 coin) or steel (like Canada and the UK currently do) would work, but this would be for the future, not now.

25¢: No change. The quarter continues to be the denomination with a different design every year. When the dime changes materials in the future, so does the quarter. I decided not to replace the quarter with a 20¢ coin to avoid the "missing denomination" mentioned above because that just delays it by 20-30 years (when dimes get phased out, 50¢ not being a multiple of 20¢) rather than eliminating the problem entirely, plus I don't want to have a denomination actually worth something suddenly become worthless.

50¢: Instead of having a huge coin, it would be a moderately small gold-colored 7-sided coin with size between the UK's 20p and 50p coins (which are also 7-sided). Kennedy can remain on this coin. The edge is reeded. For those unfamiliar with non-round coins: they're called a Reuleaux polygon, and they have rounded corners. They have a constant diameter so that they can fit in vending machines in any orientation. The Canadian loonie is also an example, but it's not as noticeable as it has 11 sides.

$1: Keep the size and color, and make it much more used. Edge lettering will still be used. $1 and $2 bills will stop being made; the smallest bill will be $5 (although $1 and $2 bills will naturally die out as they wear out instead of being forcibly demonetized). The $1 coin currently gets a different design every year, but we don't really need this for both the quarter and the dollar. Lincoln and Jefferson aren't going away (unchanged $5 bill, $2 bill → $2 coin), nor is Washington (quarter), so we have an option for someone entirely new. Obama is still alive, so he's not available to put on a coin yet. (Yes, many people don't like him, but Kennedy was put on the half dollar only four years after many people voted against him.) Henry Clay, maybe? Ruth Bader Ginsburg?

$2: Bimetallic, being careful not to have the dimensions be the same as any of the common in-use bimetallic coins (Mexico's $1, $2, $5, $10, $20; 1€, 2€; £1, £2; C$2; 10 rupees; 10 rubles). Edge lettering like the dollar, but reeded along with the edge lettering (which helps distinguish from $1 and many foreign currencies). Jefferson was on the $2 bill, so he gets transferred to the $2 coin.

Banknotes: $5, $10, $20, $50, and $100 see no changes, except Andrew Jackson gets replaced and the $20 is made harder to counterfeit. No higher bills are introduced; there's a reason that some euro countries decided to stop making 200€ and 500€ banknotes after originally making them. Some countries have switched to plastic, but the disadvantage of that is that a very select few people are allergic to it, plus it would require all vending machines to update.

Vending machines would only need to change by accepting the new 50¢ and $2 coins.

[1995hoo]

....

1¢: Get rid of it entirely. Cash purchases are rounded to the nearest 5¢ after tax is calculated. If it's exactly halfway between multiples of 5¢ (e.g. $6.375 because it's $6 + 6.25% tax), round down. They don't need to be demonetized, but if Canada is any indication, people will stop using them pretty much immediately.

5¢: Stop making them. Unlike pennies, they might continue to see use even after production stops, but they'll eventually stop being used. This does make a coin (the quarter) not a multiple of the smallest coin (the dime), but any amount except 5¢ and 15¢ is possible. You can't really buy anything with 15¢ anyway. If your purchase comes out to x.05 or x.15, you can put down a quarter and get two dimes or one dime in change, or x.75 + three dimes or four dimes if you don't want change.

....

Rounding to the nearest 5¢ seems to conflict with the idea of abolishing the nickel because of the problems it would cause with giving change when someone does pay cash.

[SEWIGuy]

I agree with your entire proposal, except for the "don't make any more nickels." Mostly because this reasoning has never made sense to me.

Pennies and nickels cost more than their face value to produce.

This doesn't mean they shouldn't be produced. If we need them for a currency system to operate as designed, the fact that it costs more than their face value isn't really relevant. 

[hotdogPi]

Maybe keep the nickel, but make it out of steel or aluminum instead?

Alternatively, if the nickel does stop being produced but people keep using the existing ones, the timing is about right that they'll be too damaged/worn for circulation at about the time where it would need to be phased out anyway.

[oscar]

Maybe keep the nickel, but make it out of steel or aluminum instead?

Canada phased in steel nickels (with nickel plating, and a little bit of copper) beginning in 1999.

Steel is attracted to magnets, which makes Canadian nickels just like all the other coins now that pennies are out of production. OTOH, U.S. vending machines, etc. reject magnetic Canadian coins.

[mgk920]

First off in this interesting and VERY relevant discussion is to end inflation.  It is simply a flat rate confiscatory tax on all cash-based assets that was not passed by any governing body.  Spend and then 'print' money to cover it on any governing idea and that is inflation. individual states and lower units of government here in the USA don't have that power, that is ONLY the federal government/Congress.  MANY other countries have also adopted the USA dollar as their own, either entirely or at least by common use, simply because not having that power is a very strong disciplinary restriction on governing.  Argentina is the latest to make a move in that direction and the USA's government has a fiduciary responsibility to all of those foreign and domestic governments to maintain that stability. That is the principal behind a gold standard.  In fact, the relationship between 'real' inflation and the market price of gold between the end of the gold standard in the USA in April of 1933 and now (100:1 to 120:1 for both) cannot be ignored.

That said, going on the assumption that inflation is brought under control in the next couple of years, I wold do these things with the supply of circulating coins and banknotes in the USA:

- Drop all coins below quarters.  They are no longer useful for any sort of legitimate commerce, only fine parsing of sales taxes.  Remember that a century ago, we had the same slate of coins, but that was befor the 100:1 or higher real inflation.  the penny of 1924 is the $1 bill of 2024.
  Today, quarters are only very barely useful for commerce.  One of them will buy 15 minutes of time from a parking meter here in downtown Appleton, WI or 7 minutes of time from a dryer at a laundry that I usually use.  a full sized glass of beer from a local bar is $5 or $6, compared with 5¢ in 1919 (before Prohibition).

- drop 50¢ coins, they are physically too big to be useful in commerce.

- drop $1, $2 and $5 banknotes, replacing them all with coins.  Ramp up production of current size/composition $1 coins to replace $1 notes.  $2 coins would be new in the USA, $5 coins would be a reintroduction.

- Introduce new $200 banknotes and reintroduce $500 banknotes.

as for designs on the coins, first and most importantly. I would make them as politically neutral as possible.  Once the current quarter design program runs its course, I would go with the 1932 'Fraser' design on both sides (the current program uses only her obverse design).  Since $2 would be a new to the USA denomination of coin, great latitude in design and compositions are possible, but I like the thought of matching any two of the three of a shield, allegorical image of 'Liberty' and an eagle on them.  For $5, I would reuse the designs that were used on the $5 gold Half Eagles in the early 20th century (they were GREAT!).  Also the same diameter, and about 1.5 times the thickness of the Half Eagles and the same materials that are used in the current $1 coins.  Further, use numbers for the denominations on all cions.

Mike

[kalvado]

First off in this interesting and VERY relevant discussion is to end inflation.  It is simply a flat rate confiscatory tax on all cash-based assets that was not passed by any governing body.  Spend and then 'print' money to cover it on any governing idea and that is inflation. individual states and lower units of government here in the USA don't have that power, that is ONLY the federal government/Congress.  MANY other countries have also adopted the USA dollar as their own, either entirely or at least by common use, simply because not having that power is a very strong disciplinary restriction on governing.  Argentina is the latest to make a move in that direction and the USA's government has a fiduciary responsibility to all of those foreign and domestic governments to maintain that stability. That is the principal behind a gold standard.  In fact, the relationship between 'real' inflation and the market price of gold between the end of the gold standard in the USA in April of 1933 (100:1 to 120:1 for both) cannot be ignored.

That said, going on the assumption that inflation is brought under control in the next couple of years, I wold do these things with the supply of circulating coins and banknotes in the USA:

- Drop all coins below quarters.  They are no longer useful for any sort of legitimate commerce, only fine parsing of sales taxes.  Remember that a century ago, we had the same slate of coins, but that was befor the 100:1 or higher real inflation.  the penny of 1924 is the $1 bill of 2024.
  quarters are only very barely useful for commerce.  One of them will buy 15 minutes of time from a parking meter here in downtown Appleton, WI or 7 minutes of time from a dryer at a laundry that I usually use.  a full sized glass of beer from a local bar is $5 or $6 (compared with 5¢ in 1919 before Prohibition).

- drop 50¢ coins, they are physically too big t be useul in commerce.

- drop $1, $2 and $5 banknotes, replacing them all with coins.  Ramp up production of current size/composition $1 coins to replace $1 notes.  $2 coins would be new in the USA, $5 coins would be a reintroduction.

- Introduce new $200 banknotes and reintroduce $500 banknotes.

as for designs on the coins, first and most importantly. I would make them as politically neutral as possible.  Once the current quarter design program runs its course, I would go with the 1932 'Fraser' design on both sides (the current program uses only her obverse design).  Since $2 would be a new to the USA denomination of coin, great latitude in design and compositions are possible, but I like the thought of matching any two of the three of a shield, allegorical image of 'Liberty' and an eagle on them.  For $5, I would reuse the designs that were used on the $5 gold Half Eagles in the early 20th century, same diameter and about 2.5 times the thickness on the Half Eagles and the same materials that are used on the current $1.  Also Use numbers for the denominations.

Mike

On a grand scheme of things, electronic money transfer is the modern way to go. Cash may have some use cases, but a lot of it is due to messed up concept of credit card use. Which encourages overspending (and interest income to bank), high transaction fees - which are used to bribe consumer with cashbacks, and overall outdated US banking system and business approaches (going from NET30 to NET90? Are your messenger turtles becoming too old?).
Instead of applying bandaid to the problem, probably giants like Chase and Visa should be allowed to fail in the next round.

[SP Cook]

- "Swedish rounding" will never be adopted in the USA.  And the main reason the fact that the penny costs whatever to produce and is worth only one cent is irrelevant is because the use of credit cards for every transaction is going to become more and more and more common.  I'm old, and I don't use cash much, but everyone I know under 35 only carries, if any, an emergency twenty or fifty.  They charge everything.  As those people age and my generation goes away, cash is done for.  I listen to the Tony Kornheiser podcast and a couple of weeks ago he was talking about going to CVS and the cashier was getting trained, and the seasoned employee was telling the rookie "Oh, he pays cash, so you need to give him back change, the brown ones are worth one cent..." 

- 50c the problem with the 50 cent piece is that people, wrongly, think they are collectable, and they don't circulate.  As long as the generation that includes the Cult of Kennedy is alive, that won't change, no matter the shape or size of the coin.  Take him off if you want the coin to move.

- American Loonies and Twonies, I'm all for that, but we discussed in a different thread the political power that keeps the paper being made in his district, so its not happening.  It should, it is how Canada, UK, Euro, etc. do it. 

- Who is on what, is political.  So I will pass.  I don't know what you have against Jackson, and I think that any change of currency faces would blow up one side or another.  If they ever do change, I expect they will go with allegorical figures.

- The world has pretty much agreed that no bills worth more than about US$100 should exist.  Crime fighting, supposedly.  Of course, there will come a day, with inflation currently in explosion mode, when $100 is so small as to be impractical as the largest bill, but that is some time from now.

[hotdogPi]

- drop 50¢ coins, they are physically too big to be useful in commerce.

I suggested a size reduction in my OP rather than eliminating them entirely. The idea is "dollar coin color but smaller".

Further, use numbers for the denominations.

Absolutely agreed. I forgot to mention this.

- American Loonies and Twonies, I'm all for that, but we discussed in a different thread the political power that keeps the paper being made in his district, so its not happening.  It should, it is how Canada, UK, Euro, etc. do it. 

I think the company that produces the $1 bills would be fine with $1 being a coin and ramping up production of $2 bills to be used in everyday transactions, but of course, this is only halfway to what I suggested above.

[mgk920]

On a grand scheme of things, electronic money transfer is the modern way to go. Cash may have some use cases, but a lot of it is due to messed up concept of credit card use. Which encourages overspending (and interest income to bank), high transaction fees - which are used to bribe consumer with cashbacks, and overall outdated US banking system and business approaches (going from NET30 to NET90? Are your messenger turtles becoming too old?).
Instead of applying bandaid to the problem, probably giants like Chase and Visa should be allowed to fail in the next round.

A sizable number of locals here are (legal) immigrants from places where a serious level of distrust of banks is in their culture, so for them, coins and banknotes are a fact of life.  Also, then the power goes out or the system goes down either from a natural cause or worse.

Mike

[kalvado]

- 50c the problem with the 50 cent piece is that people, wrongly, think they are collectable, and they don't circulate.  As long as the generation that includes the Cult of Kennedy is alive, that won't change, no matter the shape or size of the coin.  Take him off if you want the coin to move.

...

- The world has pretty much agreed that no bills worth more than about US$100 should exist.  Crime fighting, supposedly.  Of course, there will come a day, with inflation currently in explosion mode, when $100 is so small as to be impractical as the largest bill, but that is some time from now.

There are about 6 quarters and 9 dimes per person in US minted in 2016 (just found data for that year). There is about 1 half-dollar per 100 people minted same year.

Yes, $100 and 200 euro ($212 right now) - 500 euro is no longer being printed. 

A sizable number of locals here are (legal) immigrants from places where a serious level of distrust of banks is in their culture, so for them, coins and banknotes are a fact of life.  Also, then the power goes out or the system goes down either from a natural cause or worse.

When the power is off, so are many ways of spending money. If there are ways of sending money via phone interface (think Venmo), power requirement is significantly lower. And if you're talking civilization collapse, cash may have limited value  anyway.

Psychological barriers to banking, though, are understandable. Moreso with... what's the latest politically correct wording for illegal immigrants?
Reducing entry threshold for bank use  may be part of the deal...

[SEWIGuy]

I think people would be surprised at how much cash is still used by a significant portion of our society. I doubt that's changing much anytime soon.

[kalvado]

There are about 6 quarters and 9 dimes per person in US minted in 2016 (just found data for that year). There is about 1 half-dollar per 100 people minted same year.

For 2023, half-dollars minting went up
Rough per-person numbers:
15 pennies (down from 20 in 2022)
5 nickels, 9 dimes and quarter each - small changes
1 half-dollar per 5 people (up from 1 per 25 people in 2022)
1 dollar coin per 150 people (small change, but who cares) 
 

[Rothman]

Just revalue our current currency to where 1 penny now equals $1.

[oscar]

Just revalue our current currency to where 1 penny now equals $1.

I would make out like a bandit, with all the bronze (1981 and earlier, and some 1982) pennies I'm holding, for their copper value, which is nowhere near $1. There are really serious penny hoarders out there, who would reap enormous profits.

[Rothman]

Just revalue our current currency to where 1 penny now equals $1.

I would make out like a bandit, with all the bronze (1981 and earlier, and some 1982) pennies I'm holding, for their copper value, which is nowhere near $1. There are really serious penny hoarders out there, who would reap enormous profits.

Of course, what costs $1 now would then cost $100...

[mgk920]

Just revalue our current currency to where 1 penny now equals $1.

I would make out like a bandit, with all the bronze (1981 and earlier, and some 1982) pennies I'm holding, for their copper value, which is nowhere near $1. There are really serious penny hoarders out there, who would reap enormous profits.

Yea, the bronze cents now about 2.84¢ each in 'melt' (market metal) value and the newer 'Zincolns' are now 0.74¢ each (source - usacoinbook(dot)cam ).  I'm still a bit surprised at how many 'bronzies' I'm still getting in change.  Neither cents nor nickles can possibly be made at a profit by the USA.

Mike

[Scott5114]

- 50c the problem with the 50 cent piece is that people, wrongly, think they are collectable, and they don't circulate.  As long as the generation that includes the Cult of Kennedy is alive, that won't change, no matter the shape or size of the coin.  Take him off if you want the coin to move.

There's a lot more to it than that—businesses don't ask for them in their change orders so people never get them to begin with, and because businesses don't ask for them banks don't either, so businesses can't even stock them if they want to. Also, if you wanted to have a separate pocket for every denomination of coin available, you would need six pockets in the cashier drawer, whereas the most I've ever seen is five (and some even have only four!) That fifth pocket can be used as a combination $1/50¢ pocket since circulation is so low, but if both of them started to circulate again it would get awkward really quickly.

50¢ coins do circulate in some specific applications, such as casinos. Payout on a $5 blackjack is $7.50. In the casinos I've worked at in Oklahoma, that would be one red ($5), two whites ($1), and a yellow chip (50¢). But casino chips cost over $1 each to have manufactured, so some casinos have figured out it's much cheaper to just use 50¢ coins rather than chips. (You never need more than one 50¢ chip at a time, and the ease of counting large piece counts is the main reason chips are used rather than cash.)

[bwana39]

I think some of you overthink this in the day of electronic transfers. I agree that at least the pennies and dollar bills should be dropped. The 1/2 dollar coin is of no particular worth. The coin is too large for the primary usages of coins today (vending machine and change back).

The 1/2 dollar was the first 20th century US coin that clearly had a value higher than its face value. The silver content used to be high enough that they were collectable for their metallurgical value. That has not been the case for over 50 years. People still collect them as opposed to spend them.

I think we should promote use of dollar coins. I think we have enough other denominations. I am unsure of the utility of the $2.00 bill. It doesn't really circulate because it does not fit in standard cash drawers. Perhaps it would do better if the $1.00 bills were gone.

$200 and $500 bills just add nothing to it. The $100. is not circulated very heavily except in gray and black market transactions and vanity use. By vanity use, I mean people whip out a $100 to look or feel important. The $50. should have wider usage than it does. It may fall victim of prohibitions of bills larger than a $20 in many (currently decreasing) retail locations.

The penny and dollar bill should be gone. The 50 cent piece as it is has little use. The jury is out on the nickel and dime.

[GaryV]

I think people would adapt quite quickly to rounding cash transactions to the nearest 5 cents, so the penny should go away. And getting rid of the penny opens up a spot for $1 coins in cash tills.

A few people might wait for the total price to come up and decide whether to use cash or card. "$23.42. If I pay cash I'll save 2 cents because it will round down." That's not going to be in most people's thoughts.

I'm not so sure about rounding to the nearest dime. Part of the problem is that 1, 2, 3 and 4 cents go down; 6, 7, 8 and 9 cents round up. What about 5? Yes, I know there's a standard method for rounding 5; I'm just not sure people will accept it all the time. And bias will sneak into peoples' memories. "They round it up more often than they round it down." That's less likely when rounding to the nearest nickel.

I also don't see much value in the 50 cent piece. They mostly aren't used now; putting out 2 quarters instead of a half dollar isn't a big deal.

[hotdogPi]

I'm not so sure about rounding to the nearest dime. Part of the problem is that 1, 2, 3 and 4 cents go down; 6, 7, 8 and 9 cents round up. What about 5? Yes, I know there's a standard method for rounding 5; I'm just not sure people will accept it all the time. And bias will sneak into peoples' memories. "They round it up more often than they round it down." That's less likely when rounding to the nearest nickel.

New Zealand rounds to the nearest 10 cents, and 5 goes down.

[SEWIGuy]

I think people would adapt quite quickly to rounding cash transactions to the nearest 5 cents, so the penny should go away. And getting rid of the penny opens up a spot for $1 coins in cash tills.

A few people might wait for the total price to come up and decide whether to use cash or card. "$23.42. If I pay cash I'll save 2 cents because it will round down." That's not going to be in most people's thoughts.

I'm not so sure about rounding to the nearest dime. Part of the problem is that 1, 2, 3 and 4 cents go down; 6, 7, 8 and 9 cents round up. What about 5? Yes, I know there's a standard method for rounding 5; I'm just not sure people will accept it all the time. And bias will sneak into peoples' memories. "They round it up more often than they round it down." That's less likely when rounding to the nearest nickel.

I also don't see much value in the 50 cent piece. They mostly aren't used now; putting out 2 quarters instead of a half dollar isn't a big deal.

Wouldn't every transaction be rounded to the nearest nickel regardless if its on a card or with cash?

Anyway, get rid of the penny. Get rid of the $1 bill and only use a $1 coin. That's really all that is needed.

[hotdogPi]

Wouldn't every transaction be rounded to the nearest nickel regardless if its on a card or with cash?

Canada currently only does so with cash. I don't know about other countries.


Any ideas for the design of the $1 coin? I mentioned above that we don't need both quarters and dollars changing every year, and removing $1 bills doesn't remove a person (Washington is still on the quarter), so we have a free slot to put someone new. mgk920 said they should all be neutral rather than people, but nobody else has chimed in on this.

[kalvado]

10-25-100 coin lineup without a nickel creates problems at the bottom of the scale, where 5 cents isn't used - but then 25s can only be used in pairs.  1-2-5 type of lineup makes more sense, but changing the existing quarter is too much to ask.

[NWI_Irish96]

My proposal is simpler:

Coins: 5c, 25c, $1
Bills: $2, $5, $20, $100