05 April 2008

The penny revisited

If some Canadians find the loss of the penny unpalatable, then perhaps we would do well to follow French precedent and revalue our currency in toto. In 1960 the franc was revalued so that one new franc became equal to 100 old francs, whose value had been eroded by inflation, especially during the troubled years of the Fourth Republic.

What if we were to do the same thing here in Canada? The Royal Canadian Mint could issue one new dollar at the value of, say, 10 old dollars, thereby making the new penny worth 10 old cents. That would, of course, mean that our salaries would be slashed by 90 percent, but so would prices. Would it work? Or might the floating rates of exchange amongst international currencies be an obstacle to such a move?

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