Quartz:
It now costs 1.6 cents to produce each US one cent coin due to the high price of zinc, which makes up 97% of each coin, according to the Wall Street Journal. President Obama has proposed phasing out pennies and nickels (5-cent pieces) on numerous occasions, including in the 2015 budget, but Congress has yet to bite.
It’s one of those things we all know but inertia seems to keep America from getting rid of this useless coin.
I wish they would just get rid of it … and nickels while they are at it. I don’t understand the nostalgia.
Inertia, or inflation.
The French minister of economy, shortly after the Euro was introduced, was asked by a journalist something to the order of: “What’s the point in these one and two euro cent coins? And, doesn’t the euro introduce a risk of inflation because shops would round prices to the nearest five euro cents?”
He answered casually: “Your answer is within the question.”
When I was in the service the Far East PXs they did away with the penny. Every item ended in Zero or five! I liked that a lot better than the penny.
Thr high price of zinc? More like the low price of the usd.
What about printing less money so the penny actually has value?
Only a small portion of transactions are conducted in cash, and half of the cash transactions the nearest cent is down. Canada eliminate the penny last year and as far as I’ve been able to tell nothing changed.
Damn you, zinc lobby!
Useless? How exactly would I pay for my 7-11 Big-Gulp that costs exactly $1.07 after tax?
This is a little more than simply phasing out the actual coins.
It’s not inertia, it’s not nostalgia. It’s it’s about the metal sales to the Mint.
Years ago the dollar bill was to be phased out in favor of the dollar coin. But there’s a company in Massachusetts that supplies the paper for dollar bills. So, both senators from MA (at the time, a Democrat and a Republican) acted to keep the dollar bill. They put a lot more into keeping the paper dollar than anyone else cared to bother with phasing it out.
I don’t know what states are involved with selling metal to the Mint, but it’s the exact same dynamic at work.
Also, due to the dollar bill being still around, there are billions of new dollar coins sitting in Mint vaults that have never been circulated. They apparently didn’t stop production of the dollar coin with the continuation of the paper dollar.
The same way you pay a half a cent of tax… round it off.
I’ve heard the argument that it’ll screw people over. But it’d be for no worse than 4¢ per transaction. And that’s assuming you’re actually using cash. Plastic & other electronic payments can still be in cents.
That gets into the issue of debt in a deflationary environment. Inflation is one of the tools to keep the economic effects of the national debt at bay. However it does so by sapping the value from each and every dollar.
Government wants to fight Deflation. This was the reasoning behind the huge influxes of new money from “Quantitative Easing” over the past few years.
Contrast this with Bitcoin, which relies on deflation to a degree.
Is pricing still to the cent? i.e. when you buy something online is it still $19.99?
I’ll go one further:
Get rid of the penny, the nickel, and the dollar bill.
Not only will we get rid of silly coinage and low-value paper currency, but our coins will finally only increase size as they increase in value!
Yes, as far as I can recall. I’ll have to make a point to look around, but I’m sure prices haven’t been moved to something like $19.95 and marketing psychology should have kept them from going to $20.00.
Here’s a nice summation that I saw a couple days ago. Maybe the idea is gaining traction!
Ugh. Why does this bizarre fallacy persist? PRINTING currency has nothing do with money, or the value thereof. Currency is just documentation that REPRESENTS money (specifically, M1 money). How much is printed would only have an effect on inflation and/or devaluation of the mint gave it away for free – i.e.: they printed more currency than there was money that it represents.. They don’t, however – people have to draw down their accounts to get them – the currency is only a convenient way to represent the money that people already have.
Devaluation is a function of the creation of MONEY, not the printing of currency.