Obama economic advisor Austan Goolsbee once recommended eliminating the 1-cent penny -- by having the government declare pennies by fiat to be the new 5-cent nickel:
It's quite a neat idea, getting rid of the current seignorage loss and inefficiency of 1-cent pennies, without incurring the wrath of the penny materials lobby -- or even worse, voters with giant penny jars.
Given the reasoning here, perhaps pennies should become 3-cent pieces.
Rebasing small coins to be worth more isn't quite dropping cash from helicopters, but it should still have a mildly stimulative and redistributive effect. Something for everyone!
I love this idea. Not so much because of its efficiency, but because it'll make so many people say "Wait, you can do that?". Too many people haven't internalized what having a fiat currency really means. Having the government flex its muscle in this manner would be a fantastic civics lesson.
I'm not sure it would really succeed. For a long time after the change many people would still refuse to accept a penny as 5 cents. Vending machines, toll booths and the like would all also have to be reworked.
http://www.nytimes.com/2007/02/01/business/01scenes.html
It's quite a neat idea, getting rid of the current seignorage loss and inefficiency of 1-cent pennies, without incurring the wrath of the penny materials lobby -- or even worse, voters with giant penny jars.
Given the reasoning here, perhaps pennies should become 3-cent pieces.
Rebasing small coins to be worth more isn't quite dropping cash from helicopters, but it should still have a mildly stimulative and redistributive effect. Something for everyone!