American Coinage vs. Inflation

Last week, the U.S. Mint minted its last pennies for circulation. In my opinion, this was long overdue, but I'm glad the Mint is at long last taking action to get rid of practically useless coinage. I remember having conversations with one of my coworkers last year who agrees with me that the penny and even the nickel should no longer be produced. In my opinion, the lowest denomination of coins should be dimes.

This isn't the first time a denomination of coin has been made obsolete. Back in the day - and I mean WAY back - there were half cents. They were some of the first coins the U.S. Mint ever produced, and they stopped getting minted in 1857. The funny thing about half cents is that not only are they valuable today collecting-wise, but they were also more valuable back then than the penny, nickel, or even dime today. Using an inflation calculator, a half cent back then would be worth about 16 cents today! In terms of composition and size, the half cent was made of pure copper and just a little smaller than a quarter. Since 1965, quarters have been made of copper too with a nickel plating. Since 1982, pennies have been made of copper-plated zinc rather than almost pure copper, and even with that change, the metal of a penny is now worth three times as much as the penny itself. The half cent isn't the only obsolete denomination of coin. There used to be two- and three-cent coins, as well, which were somewhat impractical, and twenty-cent coins, which never really caught on because there were quarters.

The half cent, ironically almost as valuable as a quarter today.

Think about it: when was the last time you were able to pay for anything for less than a nickel, or a quarter for that matter? The least expensive thing I can think of ever buying would be a handful of small candies from a dispenser for a quarter. I've never paid for anything cheaper. To pay for anything with pennies anymore, you need a lot of them. "Five-and-ten" stores are now dollar stores, and even dollar stores have lots of things you have to use more than one dollar for. I'd say that pennies and nickels should have stopped being minted before the end of the 20th century, since they could no longer pay for anything by using only one of them.

Although I mentioned the quarter is the lowest denomination coin I've used to pay for anything, I say the dime should be the lowest denomination minted because it would be more convenient numerically. For example, if something is worth $1.61, we can round it to $1.6 rather than rounding it up or down to the nearest quarter ($1.5, 1.75, 1 1/2, or 1 3/4). That would make prices have no more than one digit after the decimal point. It would also make the sizes of coins match up with the value: dime, quarter, and half dollar. Dollar coins, on the other hand, are currently between quarters and half dollars in size, though they and half dollars aren't used much anyway. Then again, if we bring back Eisenhower dollars, the size and value match up very well.

Given the long history of inflation that has happened since the penny and half cent were introduced, I think we've been overdue to stop minting pennies for a long time, and I say the nickel should be next. Lincoln and Jefferson are still honored on $5 and $2 bills. Perhaps I'll see the day when prices have only one digit after a decimal point!