In For a Penny, In For a Nickel

In the "It's Crazy, But It Just Might Work" department: Austan Goolsbee reports on the possibility of the government waving a magic wand and decreeing that pennies would hereinafter be worth five cents. Before you laugh and shake your head at yet another divorced-from-reality article in the New York Times, read it, and also the actually serious (PDF) article by François R. Velde, an economist with the Chicago Federal Reserve, in the Chicago Fed Letter.

This is via, appropriately enough, the Freakonomics blog. One of the commenters there points to this guy, who's amassed a million pennies and is at a loss as to what to do with them. Wouldn't it be neat if their value went from $10,000 to $50,000 overnight?

I haven't seen it pointed out elsewhere, but adopting this plan would eliminate a stumbling block to the introduction of a dollar coin into everyday commerce, not just as a wacky addon to ordinary currency: there would be an extra coin cup freed up in ordinary cash registers across America.

And, of course, the move would also be an educational experience, as we'd be reminded of what the word "fiat" in "fiat money" actually means.

Last Modified 2017-12-05 4:46 PM EDT