Iqra’i

Over at the American Scene, Poulos suggests scrapping the nickel (which costs almost a dime to make) and making the penny (which costs about two cents to make) worth five cents. It’s cute — I like the idea of keeping Honest Abe but avoiding Increasingly Deformed Tom. The question, though, is what this would look like practically, aside from slimmer change purses.

A brief Google search nets me the following information:

1. There are 150 to 200 billion pennies in circulation, which is between 1.5 and 2 billion dollars. [Source.]
2. There are almost 7 trillion dollars relatively liquid in the US, including about 1.4 trillion in currency or other extremely liquid forms. [Source.]
3. There are 20 billion nickels in circulation, which is a billion dollars. [Source.]
4. If pennies were suddenly worth five times as much, but nickels were removed, the money supply would increase by, at most, 9 billion dollars.
5. 9 billion is about .6% of 1.4 trillion, and only .12% of 7 trillion.
6. Increasing the money supply is apparently a thing one does to ward off recession. [Source.]

So far, so good, but I see a problem: people going to the bank to change, say, a thousand dollars into pennies, only to return a few days later to change the pennies back into five thousand dollars. The Reactionary Epicurean suggests that banks could simply ban this practice, refusing to change more than a certain amount of money into pennies in the weeks running up to the change, which sounds reasonable. Still, this kind of measure would have to go through Congress, and in the meantime no one would have anything to lose by changing their life’s savings into pennies on the off chance that it might pass.

Of course, the even bigger problem is retooling all the vending machines.

Also, people, really — pennies? Pennies are the big issue in the blogosphere this week?