It’s been in the news recently that it costs more than 1 cent to make a penny, and it seems to be one of the reasons given for getting rid of it. But does it really matter? I thought the purpose of minting coins was not to create wealth, but to provide coinage to the population for use in monetary transactions.
Does the gov’t create significant (or any) wealth by simply minting coins and printing bills, when the cost is less than the face value of the money? Is the rising cost of creating pennies any more of a problem than, say, the rising cost of any other thing the gov’t has to buy, like pencils?
Wonderful point, and a question worthy of Cecil, in my humblest.
Coins suck though, and after having lost my credit card somewhere, again, I’m waiting for one of those thumb implants.
On another note (sorry), I’ve read that something like 60% of the bills in circulation, at least here in Norway, are of the largest denomination. Most people rarely use these, however, and the author of the article suggested that they to a large extent were used by criminals and such, suggesting again that the two largest denominations be removed.
No. It’s a factoid that sounds significant but really isn’t. It’s significant in the sense that if 8 million pennies must be minted each year, that’s more than $8 million that could be used for some other purpose, but it isn’t really meaningfull.
Get rid of pennies. Make some sort of government law that makes prices round numbers. I’d like to get rid of all change, but maybe we can keep quarters or half dollars or something.
I wonder if any of our EU Dopers would care to enlighten us as to how it’s done in Europe. As of 2002, I know they still had 1¢ and 2¢ coins, but in a cumulative total of 3+ weeks in Europe in 2002 and 2006, I think I got them in my change exactly once. Prices of individual items can be any multiple of one cent, but the total of almost every cash purchase I made there in 2002 was rounded to the nearest 5¢, and that was true of every cash purchase this year.
Since they’ve seemingly abandoned the 2¢ coin, which is worth between 2.5 and 2.6 American cents these days, without any ill effect, I’m sure we could get rid of our stinkin’ penny without any hassle. The damned things are nothing more than pocket clutter.
I’m not in the EU, but I think the procedure here is the same as in the EU. Australia ditched its one and two cent pieces in the early 1990s. Since then the total cash price of purchases has been rounded to the nearer five cents. If your total at the supermarket is $36.42 then you pay $36.40 in cash. If the total is $36.43 then you pay $36.45 in cash. If you’re paying electronically then naturally you pay the exact amount.
I’d say that the vast majority were glad to see the back of the useless one and two cent coins and adapted to the new system very quickly.
It’s also done at overseas military baes. No pennies. It works just fine. Actually it’s one of the things I hate about returning to the states; too many damn pennies.
Similar to Swedish Rounding. I had never heard of it before. I’d get rid of the nickels and dimes, though. Round to quarters or half dollars. Have multiple presidents’ heads on the coins so Lincoln, Jefferson, and FDR don’t get left out.
We should simplify. Hell, I’d even be about getting rid of ALL change. Maybe we can just call the difference between the true price and the rounded up amount “sales tax” or “extra tax” or some fun name like “incidental tax”.
Don’t we do this all the time anyway? You buy 1/2 lb of tomatoes at $2.99 a pound. Do you get out your tin snips so you can cut a penny in half and pay $1.445?
Why would we want to sacrifice the penny to inflation? We should do what Mexico did and just move the decimal point over. Make the current penny worth one tenth of a new penny, the current dime worth one new penny, the current dollar worth one new dime, the current $10 bill worth one new dollar and so on. After a few years or so you can drop the “new” and be ready to do it again when inflation takes its toll. Then we can keep the relevance of our idioms ( “a penny saved is a penny earned”, “a nickle bag” ) and have an added bonus: old people could no longer annoy you by saying things like, “You know, back in my day you could buy a new car for ten dollars.”
I was just in Paris and Marseille for the better part of a month, and, while not as common as the 5/10/20/50 cent pieces, I did get several 1 and 2 cent coins. Especially at grocery stores. I stopped every morning to buy an apple and a typical price was 62 cents. So I paid 62 cents. <shrug>
Makes me wonder what the melt price would have to hit before we started seeing this in a big way. The fact that pennies are an alloy, and not, alas, solid gold, seems to be an obstacle.
There are a number of industries which use copper/zinc alloys - if it was cheaper for them to buy raw materials as pennies rather than bulk metal, then I think the most significant hurdle could be the legal aspect (assuming the US has laws that ban the defacing of legal tender).
The answer is yes, the government does get richer when it mints money. It is called seigniorage, and it contributes about a billion dollars a year to government coffers for all coins and dollars combined. Unfortunately, I’m not able to find the latest specific figures for the cost and revenues associated with the penny, but the seigniorage from higher value coins is greater than for low values.