Death to the Penny

by on December 3, 2011 at 6:41 am in Economics, History | Permalink

Excellent.

Alistair Cunningham December 3, 2011 at 6:56 am

Genius!

NAME REDACTED December 3, 2011 at 7:39 am

I don’t accept pennies in change because they are more hassle than their value.

anonymous... December 3, 2011 at 10:06 am

Ever since my local bank installed a coin-counting machine, I just toss anything smaller than a quarter into a tin can as soon as I get home every day. When the can is mostly full, it fits nicely into a car’s cupholder on the next trip to the bank. Problem solved: the hassle is now more minuscule than the value.

Mister J December 3, 2011 at 7:40 am

Pennies are useful props in the high school science class that I teach!

Jasmine December 3, 2011 at 7:55 am

Haha! This is just brilliant. Many countries have abolished the one-cent coin, particularly in recent years. The US should really get on with this.

Paludicola December 3, 2011 at 8:31 am

Could we redenominate our currency to makes ‘new’ pennies equivalent in value to current quarters, or something similar?. I don’t know that there’d be any advantage to that, but it might be a way to circumvent Linconlphilia. Old people might find a bottle of soda costing 5¢ a bottle, or something like that.

And could we stop putting presidents on our money as though they were monarchs or Roman emperors? Especially Thomas Jefferson and the awful Andrew Jackson.

David S. December 3, 2011 at 8:32 am

The problem with this of course is that while pennies are mildly annoying to a lot of people, they’re intensely interesting to Jardin Corporation and the employees of their zinc blank production facility in Tennessee. Abolishing the dollar bill in favor of the dollar coin would also be a good idea, but not to Crane and Company and the employees of their plant in Massachusetts that makes the cotton rag stock for the bills.

Jim December 3, 2011 at 11:32 am

Yeah, you don’t mess with Big Zinc.

But seriously, another by-product of this overdue excellent idea would be the eliminations of pennies in cash registers, freeing up a register bin for dollar coins. Lack of register space is a big hurdle for dollar coin acceptance.

question the question December 3, 2011 at 3:35 pm

Dollar coins also need to die.

zrzzz December 3, 2011 at 3:41 pm

It’s going to the strip clubs an interesting experience. It’s a lot harder to pick up a coin with your boobs.

Rahul December 4, 2011 at 2:43 am

Market for silicone inserts with magnetic properties.

anonymous... December 3, 2011 at 8:26 pm

Cash register bins are the stumbling block? Seriously? Canada has had one-dollar coins for nearly a quarter of a century, and two-dollar coins for fifteen years, and still has pennies too. Surely you can just retrofit and insert a new plastic… bin thingy.

In the meantime, is there any reason why you can’t just toss pennies and nickels into the same bin? Cashiers needing to make change won’t have much trouble telling them apart.

zrzzz December 3, 2011 at 3:39 pm

Don’t we already have dollar coins? And don’t people try to get rid of them as quickly as possible? Hey… there’s an idea. Make a law that rich people must be given in payment in dollar coins. They will be so annoyed with them that they’ll be dying to exchange them for goods and services. The increase in spending will kickstart an economic reanissance.

Urso December 5, 2011 at 11:23 am

Hey if you hate dollar coins so much I’ll trade you: you give me all your awful, irritating, dollar coins, and I’ll give you an equal amount of old-fashioned, good American quarters in return. Hell, when all’s said and done I’ll throw in an extra quarter to sweeten the deal, just because I’m a nice guy.

Matthew C. December 3, 2011 at 8:41 am

Abolish the GD Federal Reserve instead, who brought us the worthless penny by toilet-papering the dollar. . .

Mitch December 3, 2011 at 8:48 am

I suspect this is a stupid question: Why does it matter that it costs more than a penny to make a penny? (Not that the intrinsic value of the commodities might be worth more than a penny.)

Rahul December 3, 2011 at 9:15 am

For one gives incentive to melt them.

Mitch December 3, 2011 at 9:27 am

Yes. If the commodity value is more than a penny. But what if that’s not the case? Maybe it costs more than a dollar to print a dollar after taking all costs into account (e.g., secret service). Isn’t this irrelevant? The value of the dollar or penny circulating in the economy is what matters.

Rahul December 3, 2011 at 9:34 am

You are right. Melt value is only $0.005 per penny.

http://www.coinflation.com/coins/1982-2007-Lincoln-Cent-Penny-Value.html

anonymous... December 3, 2011 at 10:12 am

On the other hand, the scrap metal value of a nickel is reportedly 6.8 cents

John Thacker December 3, 2011 at 9:44 am

Isn’t this irrelevant? The value of the dollar or penny circulating in the economy is what matters.

It affects the money supply. In normal situations, where there’s seigniorage, printing extra dollars increases the money supply. In the case of the penny, creating a penny decreases the money supply.

It’s not true that it costs more than a dollar to print a dollar.

JRPtwo December 3, 2011 at 11:37 am

Don’t see how it reduces the money supply to make a penny. If government made fewer bridges and more pennies, wouldn’t that increase the money supply, regardless of how much it cost to make the penny?

Also, pennies get used more than once, further suggesting that the value versus the manufacturing cost is the wrong comparison. It costs more to make a tennis ball than the value of hitting the ball once.

Perhaps a more useful comparison is the cost to use a penny, not the cost to make one.

Mitch Berkson December 3, 2011 at 11:43 am

Hypothetically. Isn’t it possible that if it cost more than a dollar to print a dollar, it could still be worth doing because the net value of the existence of the dollar is more than the cost of printing the dollar?

Rahul December 3, 2011 at 12:04 pm

@Mike

Might this limit be the multiplier in a fractional reserve system.

Mitch December 3, 2011 at 12:35 pm

> It’s not true that it costs more than a dollar to print a dollar.

That’s surprisingly definitive. Are you including the cost of the whole money-printing infrastructure – anti-counterfeiting enforcement, etc.?

john personna December 3, 2011 at 8:57 am

Any sane Congress would have killed the penny and gone to a dollar coin. It seems just emblematic of wider problems that we let emotions rule.

Jake December 3, 2011 at 9:39 am

Great, just round up all those transactions nation wide and put those pennies none of you want in my account.

JoooJoo December 3, 2011 at 12:22 pm

The point is that it would probably cost more to transport, store them and count them than what they are worth.

pennies! December 3, 2011 at 10:01 am

I wonder if there has ever been a survey to estimate the amount of money sitting around in jars….

Rahul December 3, 2011 at 10:14 am

Just like pennies the other glaring inefficiency that always made me pause is how the state of New Jersey can prohibit self-service gas stations? It boggles the mind how a lobby can convince the entire voting population of a state that an act is dangerous when the whole damn world is doing it other than NJ.

Yancey Ward December 3, 2011 at 12:37 pm

Would you really want people who allow this to happen in the first place anywhere near a flammable liquid?

Rahul December 3, 2011 at 1:11 pm

Sure. Why impede natural selection?

Matt Flipago December 3, 2011 at 1:15 pm

Best argument I’ve heard for the status quo!

ziel December 3, 2011 at 2:44 pm

We Jerseyites like it because it’s preferable to have someone else pump your gas than to have to pump it yourself. While logically this should make the gasoline more expensive in New Jersey, it doesn’t seem to.

Yancey Ward December 3, 2011 at 6:30 pm

Do you not tip the server?

Kyle s December 4, 2011 at 9:37 am

When i drove in jersey, I could never find a gas station close by. Is there data on gas stations per capita? If price doesn’t adjust then supply must, right?

DKN December 3, 2011 at 2:45 pm

Oregon has the same stupid rule.

The Anonymouse December 6, 2011 at 6:40 pm

Oregon does indeed have the same stupid rule. I have taken to calling it the ‘full employment for unskilled teenagers’ subsidy.

Jeff Holmes December 3, 2011 at 10:24 am

Actually Walmart self-checkout machines do take pennies, a fact I’ve exploited before.

Paul McMahon December 3, 2011 at 10:29 am

Before ditching the penny, how about getting the oil companies to stop that nonsense of the 0.9 cents on the gas prices? It’s been, what, near a century since the US had a coin so small?

One might also consider what this does to State sales tax rules. Will they round the amount of tax to the next nickel? Doesn’t this make a regressive tax even more so?

penny_pincher December 3, 2011 at 11:31 am

I always pick up pennies even for luck value.. and if i find a penny it invariably does make my lucky day (perhaps because of anticipated luck but always for the fact that I now have an extra penny), I never had any cash sit in jars and speaking of NJ a penny has saved me many times when I was driving down the parkway :)

Ted Craig December 3, 2011 at 1:05 pm

That’s not about pennies. That’s about left-digit bias.

Mitch Berkson December 3, 2011 at 11:42 am

Hypothetically. Isn’t it possible that if it cost more than a dollar to print a dollar, it could still be worth doing because the net value of the existence of the dollar is more than the cost of printing the dollar?

Brian December 3, 2011 at 11:44 am

This kind of argument is great – it is as clear and simple as the truth.* The problem is that after about the first 30 seconds, I want to know why it hasn’t already been done. Where are the vested interests that keep the penny? And can you explain what they are in non-polemical fashion? This may be Debate 101, but addressing the counter-argument is critical to persuasive success.
* http://www.amazon.com/Clear-Simple-Truth-Writing-Classic/dp/0691147434/ref=sr_1_1?s=books&ie=UTF8&qid=1322930107&sr=1-1

Bill December 3, 2011 at 12:00 pm

Mint less penneys and they will become more valuable.

As they become scarcer, people will price in nickel increments or round up or down at the cashier stand.

Or, grocery stores could go to round up/round down cash pricing: if its two cents or less, you get it for lower; 3 cents or more, round up. You could even imagin a situation where stores compete on the convention they use: we start rounding up at 4 cents.

Bill December 3, 2011 at 12:02 pm

I bet the nickel lobby is involved in this campaign to kill the penny.

Dan Weber December 3, 2011 at 3:47 pm

They’re next.

Yancey Ward December 3, 2011 at 6:31 pm

The penny lobby is being nickeled and dimed to death.

Urso December 5, 2011 at 11:24 am

better than being drawn & quartered

Seth C December 3, 2011 at 12:43 pm

Writing from the EU, I can’t decide which is more baffling, the one-eurocent piece or the two-eurocent piece. Vending machines won’t even take the 5-cent piece, and ticket machines at the Metro impose a limit of 20 coins per transaction, to prevent you from offloading your pocketful of small change. (Conversely, the 2-euro piece is a great thing. When you’re used to using bills, everything feels cheaper when paid for with coins.)

Ted Craig December 3, 2011 at 1:06 pm

And take the paper dollar with it!

anon December 3, 2011 at 3:00 pm

I ask this in all sincerity, no snark:
Why are dollar coins preferable to paper dollar bills?

(I want less weight in my pockets, not more.)

question the question December 3, 2011 at 3:40 pm

Ditto.

When in Europe, I need to tote around a heavy pocketful of 1 and 2 and .5 Euro coins. I don’t understand why anyone prefers coins to bills.

MD December 4, 2011 at 7:54 am

The basic reason is that they can remain in circulation a *lot* longer.

The Anonymouse December 6, 2011 at 6:43 pm

I can understand why the /Treasury/ would prefer to go to the dollar coins (Lord knows they’ve been trying to get it going for long enough, and following failure with failure with failure). I can understand why the vending machine industry wants to go to dollar coins. I do not understand why consumers would possibly want to convert to cumbersome, irritating dollar coins.

Steve C. December 3, 2011 at 1:24 pm

I’ll agree to support this proposal if he will agree to support my proposal to eliminate income tax with holding.

Bill December 3, 2011 at 1:32 pm

The penny, and any last increment monetary unit, represents an irony of coordination in any currency.

Ask this question:

In the 1920′s, would you have supported the creation of the quarter cent piece….worth a 1/4 of a cent at that time. No.

Yet, today, we have something worth less than a 1/4 cent of the 1920′s. Go figure. You resist. Why?

Its a coordination and social acceptance problem–if you thought a penny were unavailable, you would think there had been inflation since 1920.

With the penny, you don’t, but then you won’t be able to buy a penny bubble gum either.

I miss the comics that came with the gum.

Bill December 3, 2011 at 1:42 pm

Here’s a coordination way to reduce the demand for the penny and increase the demand for the nickel.

Require all state’s to pick sales taxes that are in increments of 5%. I posit that we use the penny more because states use different integers than multiples of five and use fractions of a percent which leads to the greater use of pennies.

Would be interesting to look at the useage of pennies in a state based on changes in sales tax integers.

Sebastian December 3, 2011 at 2:26 pm

In Argentina stores have just practically abolished the peso-penny (worth about 1/4c) by rounding all final prices downward. I think the 1c coin still exists but you hardly see it anymore.
So – where’s the private sector solution to this in the US my libertarian friends?

anon December 3, 2011 at 2:58 pm

Stop accepting pennies.

sunbomb December 3, 2011 at 2:49 pm

I especially hate that singularly awkward moment at a cashier’s when something is worth exactly 1 cent less than what I just gave the cashier. The embarrassing permutations of this moment are many:

1. walking away only to have the cashier call you back to hand you a penny
2. walking away only to have the cashier call you back to hand you a penny, you say no, then the cashier says “well I can’t keep it,” you thinking “these 5 seconds were definitely not worth me stepping back for a penny,”



and so on.

anon December 3, 2011 at 2:56 pm

On the (declining number of) occasions when I pay cash and have change coming, I always decline the pennies.

There are few places where I get a discount for paying cash, and I have a couple of cash rebate credit cards that I prefer to use (for the last 5 years the annual rebate has never been less than $1250).

Almost all (all?) sellers who accept credit cards have already factored the associated fees into their prices.

YMMV.

Evan December 3, 2011 at 4:20 pm

This is even more of a time waster than pennies – people who pay for everything, including $1.50 cups of coffee, with a credit card.
The way that credit card companies have set up their fee structures impose large externalities on everyone else. Firstly, there is the cost of time externality. Secondly, the fact that stores have to incorporate the fees into their prices places an externality on people who have a preference for using cash.

I don’t have a good solution for these externalities, but it sure bugs me.

Rahul December 4, 2011 at 3:27 am

It may be an economic drag but can’t see how that wastes time? Especially now that they don’t need you signing receipts for small charges.

The Anonymouse December 6, 2011 at 6:46 pm

This. Did you see that godawful commercial where all the happy little consumers are zipping along with the credit cards until the one guy tries to pay cash and they all scowl at him like he just kicked a puppy?

Bill December 3, 2011 at 3:50 pm

You can still get a penny for your thought.

With inflation, the quality of thoughts may have declined.

Pentagron December 3, 2011 at 4:27 pm

Hooray! I’ve been saying this for years and nobody listens. I also say: while you are at it, please get rid of the nickel too. However, now that I think about it, let’s get rid of all currency and use stored value cards for micropayments.

Ed December 4, 2011 at 8:05 am

The argument for the dollar coin is similar for the argument for getting rid of the penny. With inflation, the dollar is now worth much less than when the currency was first set. Its now essentially small change.

I favor bringing back the two dollar bill into circulation and coverting the one dollar bill into a coin, which would ease the transition. With the two dollar bill back, and some of the more useless sub-dollar coins eliminated, I don’t think the net result would be more heavy change in people’s pockets.

I’d rather get rid of the dime than the nickel. With nickels and quarters, people should be able to make change in any amount they want divisible by five, which include all amounts divisible by tens.

Its probably the metals and mining lobbies blocking the change, along with general inertia, instead of presidential enthusiasts. No one seems upset by the disappearance of the Eisenhower half dollar. Except for FDR, every president on a coin is on a bill as well. You could move FDR to the quarter and put George Washington on the new dollar coin, keeping traditionalists happy.

Bill December 4, 2011 at 11:06 am

Or, you could keep the one dollar bill by printing a new colored one, and exchanging two for the old one.

What would George say.

Hail December 4, 2011 at 8:50 pm

I’ve been throwing pennies away for a decade. Helps curb inflation.

Ryan December 5, 2011 at 9:21 am

Curse those accursed tangible monies and their accursed tendency to cost the government for devaluing our currency. Curse!

Mario December 5, 2011 at 12:11 pm

What they should do is declare that all pennies are now worth 5¢, mint new pennies with the new face value, and stop minting the nickel. This solves both coin problems, pacifies the zinc lobby, and functions a small amount of widely-distributed monetary stimulus.

The Anti-Gnostic December 5, 2011 at 3:46 pm

Alternatively, we could define pennies as a certain weight of elemental metal and let prices reflect supply and demand instead of reflecting whatever a few Keynesian economists think prices should be.

Reedonly December 8, 2011 at 9:46 am

At 0:50 “…manufactures 4 million pennies each year.” Nope, more like 4 BILLION each year. 4.6 billion in 2011 – that’s 15 new pennies for every man, woman and child in the United States EVERY YEAR.

When I was covering US Mint production for Coin World in the 80s and 90s, about 75 percent of the US Treasury’s coin-making capacity was used to make pennies. That’s 25 million pounds of pennies EACH YEAR. Where do they go? Trash, jars, left on counters, dropped on the ground…

Shameful waste of resources.

jack-o December 14, 2011 at 1:51 am

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