American currency question?
why is the dime the smallest of all coins but worth more then the nickel or penny?
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This entry was posted on Sunday, May 31st, 2009 at 6:09 am and is filed under Currency Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
May 31st, 2009 at 6:09 am
Why are the Cent (penny) and 5 Cent (nickel) still made when it costs more than face value to make them? Why are the new dollar coins smaller than a half dollar coin? Are you ready for the line? It's all about money.
May 31st, 2009 at 6:09 am
Dimes used to be made of silver, whereas nickels were made of nickel and pennies, of copper. Since silver is worth more than the others, even a smaller amount was generally worth more than the larger coins. However, US coins are now minted from much cheaper material, like Zinc with only a thin plating of the more valuable material.
Today's coins, and bills for that matter, have no commodity value (cost by weight in metal). Instead, they are valued by nominal denomination. In other words legal tender laws and Federal Reserve policy state that ten dimes are worth a dollar, and so the guy behind the cash register will accept ten of them in exchange for a 99 cent product and give you one penny in exchange just because he knows that he can by law hand those same dimes to the next guy and get the same treatment.
The question that will blow your head off is this: If money is only worth something because we all agree by law, and by convention that it is, then who has the power to make new money out of worthless stuff, and spend it into cirulation in exchange for real goods and services? In other words, where does all the money come from?
Hint: It does not come from the obvious source, the government.
May 31st, 2009 at 6:09 am
The monetary value of money is not measured by its size but rather its actual market value.
May 31st, 2009 at 6:09 am
Because ten cents is more than five or one. The value of a coin is unrelated to it's size or metal composition. The US dime's size is arbitrary. There were periods in history where the dime was a different size.