Wednesday, November 2, 2011

When the penny drops

Note this incident in Portland, Oregon, in which a mom down on her luck was hassled for trying to pay for her groceries with 32 bucks worth of quarters.

Comments and coverage vary from populist rage to "this is news?"

But it also illustrates one of my pet issues: the US coinage system, because it's gone unchanged despite serious inflation, is comically out of step with the value of the dollar.

The Portland woman racked up a modest 32 dollar grocery bill, or 128 quarters' worth of sundries. In 1950, according to the Westegg Inflation Calculator, those same groceries would have cost $3.57. or six half-dollars, two quarters, a nickel, and two pennies.

The lady's purchase was of a level traditionally paid for with coins--just not with our current ludicrously valueless coins.


  1. Larger coinage has failed in the marketplace - at least partially because the primary installed base for coin purchases (vending machines) saw fit to retrofit for bills rather than different-sized coins.

    Notes-of-hand started killing coinage in at least the Elizabethan times. The world economy has expanded beyond the capacity of physical stores of value, see my rant on the physical impossibility of returning to a gold standard. Horses were traditional methods of transportation, but are now kept by nostalgists and for certain highly-specialized uses.

  2. Even where paper money is widely accepted and "hard" money has been abandoned, though, coins (including base metal "fiat coins") have still always been popular for small purchases due to their smallness and durability. All I'm remarking on is that the US coinage system doesn't reflect the current small-purchase needs of US consumers. 50-cent pieces are far too big for their value, quarters are the only generally useful coin, and dimes, nickels, and especially pennies are a joke, their value so low that they're used only to make change, and hoarded until they can be redeemed for real money.

    European economies, which I'd regard as even less attached to physical currency than the American economy, generally use coins up to the value of around $1-2, or even up to the equivalent of $5, and it seems to meet their people's needs well enough.

    What I'm suggesting is that the Unites States should update its currency system to reflect the current value of the dollar. The least disruptive way to do this would be to drop the penny and nickel at least, and stop offering a dollar bill. Not that I expect either to happen, mind you, but I can still stomp my foot and insist it should. ;)