A funny thing happened on the way to Inflation Heaven– the cost of the raw materials of the penny have outpaced the actual value of the penny, so the coin is more “valuable” as raw materials than it is as actual currency. Now, economically, this poses a problem– especially if clever speculators gather pennies, ship them overseas and melt them into their raw components for resale. We’ll have a penny shortage in the US, and all will fall into chaos. Or something like that.
Some people are suggesting that we make a penny worth 5 cents. That means a nickel would be worth a quarter, and a quarter is worth $1.25, and the dollar would be worth 5 dollars. OR you could just revalue the penny to be 5 cents and keep everything else the same. No longer would we have a 1 cent base to our money, but a 5 cent base, so all prices would have to be adjusted to be a multiple of 5.
I don’t like it. What’s the point of having a “cent” (which is 1/100th of a dollar) if you don’t plan to have a currency which matches that cent? In reality, why don’t we change the denomination to a “twentieth” instead of a “cent” to properly represent its worth? It’s Base 20 math.
I think the much easier answer would be to change all currency. Make the dollar worth 5 times its value and all other related currency. So, instead of earning 50,000 a year, someone would make only 10,000 a year. At the same time, something that used to cost a dollar would now cost 20 cents. And something that cost $.10 (Raman Noodles!) would now cost two pennies. It would be like the good ol‘ days, when candy only cost a nickel! Now you can turn the tables on Grandpa. (Oh yeah, well when I was a kid, a candy bar only cost a dime!)
Now, of course, this isn’t good news for the rest of the world. The Euro would now be worth about 25 cents. The Dollar would be what the Pound was. And why shouldn’t it? Our country kicks ass– so should our currency.
I’m not sure the allies would buy that, though. But given that we’re not basing our wealth on metallic holdings any more (fiat currency, folks!), we can basically decree how much our money should be. So why get out of the base-10 currency system? Keep the penny around, as well as other denominations– just change the inherent value.
This also has the added value of knocking the wind out of the millionaires. Those with a paltry million are now only two-hundred thousandaires, and they have to work back to the top of the money pile and dream of having their own reality television show.