Other than the great joy my wife gets from finding pennies in the parking lot, I can think of at least one legitimate reason that the U.S. one cent coin (commonly called the penny) should not be discontinued and that is to help maintain the illusion that the U.S. Dollar is a stable currency.
Rather than eliminating the penny, simply make it cheaper to produce. It might take an act of Congress, but why keep making them out of the same size copper-plated planchets that are currently used? I propose they be made out of aluminum. Aluminum is much less prone to corrosion than the copper-plated zinc we use now. Make them just slightly smaller than a dime. Give them a distinctive scalloped edge. Several other countries produce coins with scalloped edges. Also, the surface could be given a distinctive color by anodizing the aluminum. There are a wide variety of colors available for anodized aluminum. What color would you want the new penny to be?
According to my calculations, the material costs for this new penny would only be about $0.0024, i.e., about one quarter cent per penny. Of course, there are also production costs to consider. Please feel free to check my calculations on this.
I am aware that none of this will actually happen.
I don’t know that eliminating the penny would actually destabilize the U.S. Dollar. But it might be perceived by some as doing so. That is why I used the word “illusion.”
Although aluminum forms a protective oxide layer it will experience pitting corrosion in an aqueous condition that is more than +/- 2 pH from neutral, or if the oxide layer is removed by scuffing. Anodization provides a somewhat more durable passivation layer but once scratched can provide a corrosive path. Aluminum tokens are used for a variety of non-currency coinage but are extremely lightweight, and making them “slightly smaller than a dime” would actually make the coin so insubstantial that it would be difficult to handle and easily lost.
Frankly, there is little reason to continue to mint the penny; with the ever-reducing frequency of cash transactions and vendors often rounding off change to the nearest $0.10 or even $0.25 to minimize having to keep a fully stocked change drawer, the existing stock of pennies (and nickels and dimes) is likely sufficient for the foreseeable future. As much as I reflexively detest the notion of agreeing with Trump policies on anything, this is a long overdue measure.
The US has dollars and cents. We have a whole part (the dollar) and a fractional part after the decimal (cents). Japan only has yen and everything is counted in yen. There’s no decimal part to the money.
If the goal is to eventually drop cents then, sure, abandon the penny, nickel, dime, and quarter as they eventually become worthless. 2% inflation per year does eventually mean that all cents become useless at some point in time.
But, likewise, that same progression means that at some point the single dollar becomes worthless, the tenner, the hundred, etc. At some point, you’ve got a bunch of useless zeros at the end of every price tag and you’re forced the simply drop zeros. The government issues a declaration that old $100 bills are now just called the $1 bill. There’s not really any other option. At some point you have to shift the decimal point.
But so, if we want to keep dollars AND cents then knowing that we’ll have to shift the decimal point over at some point to maintain useful price points, why not just do that now?
What do we gain by dropping the smallest coins relative to shifting the decimal, except to lose our traditions? Unless, that is, that you want to drop the concept of cents.
Notwithstanding the apparent opposition to the penny on this message board, there are a great number of people in this country that would like to keep the penny.
Given that many people are opposed to eliminating the penny, why would those same people not be strongly opposed to switching to the new aluminum penny you propose?
Why would they settle for new pennies rather than insisting on keeping the current penny?
There are plenty of practical reasons to discontinue the dollar bill and switch to a dollar coin. This has not happened due to public resistance.
There is no reason not to switch from Imperial to Metric. This has not happened due to public resistance.
There may be (I honestly haven’t been following any threads on this) good reasons to eliminate the penny. If there is enough public resistance, it will not happen.
If it cost $1m to print a $1 bill, that would make it very difficult to work in physical currency.
Ideally, currency is either worth the face value or is a negligibly cheap token that simply serves as a stand-in for the value printed/minted into the face.
Given 2% compounding inflation per year - the Fed target - at the point where you can’t keep finding cheaper and cheaper sources of metals and cheaper methods of printing/minting, inflation will take over and cause the value of money to infinitely shrink and, eventually, you either need to stop supporting physical representations of smaller denominations - because they cost more to produce than the face value on the token - or you need to perform a trade (like swapping old $5 bills for new $1 bills). The former is just a stop-gap.
We’ve only been able to keep using the penny for so long because of globalization.
Aside from Artazn (manufacturers of the zinc blanks used by the Mint) and Americans for Common Cents (the Astroturf lobby set up by them), just who are these great advocates of continued production of the American penny?
I’m for the continued production of the penny, but mostly just because I don’t see the purpose in a short term solution to what is a known problem around which there’s also a known and eventually mandatory long-term solution.
Because eventually you round to ten cents, then to 50 cents, then to dollars (cents disappearing entirely), then to $5 CAD, then to $10 CAD, then to $100 CAD.
There’s a known, targeted 2% inflation of the currency. At some point, you’re rounding to the nearest million and you’ve just got 6 useless zeroes at the end - and that’s just dumb.
There is no long term solution except performing regular swaps. That’s always going to be the ultimate answer.