Uncommon cents

by Russ Roberts on November 17, 2010

in Monetary Policy

At dinner the other night, one of my children asked me why we have coins–why we don’t just use paper for everything and it got me thinking that coins, at least in the denominations we currently have. The penny is almost irrelevant already. Yesterday I was buying something that came to $2.03. I gave the cashier three singles and rather than give me the 97 cents in change, he just returned one of the dollar bills. With the Ben Bernank in charge, I am pretty sure that the penny (and maybe the nickel and dime, too) will be out of commission very soon. Merchants will post prices rounded to the nickel or the dime (or dollar) and the government will stop making pennies.

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