CNN Business: “The US Treasury is phasing out production of the penny and will soon stop putting new one-cent coins into circulation, the department said in a statement Thursday.”
The article goes on to say each cent costs 3.7 cents to produce/distribute and later indicates this cost is 13.8 cents for nickels. It seems the increase in nickel production that will be necessary is expected to be greater than the savings from phasing out the penny. The article includes graphs indicating dimes cost 5.8 cents (58% of face value) & quarters 14.7 cents (almost the same).
Why don’t we consider phasing out nickels also? It seems overly simplistic to think this would actually save money, but I’d like to hear 1) How people would feel about this and 2) Why it would / wouldn’t save money.
There are still a number of jurisdictions that use nickles and dimes for parking meters. I use them every week where I work. That would be an expensive overhaul for some places.
I frequently use cash for purchases if possible to avoid the extra charges that many businesses now place on credit cards. I also tip frequently with cash.
I’d prefer if we phased out all coins in particular and cash in general.
I can’t recall the last time I paid for something in USD coins of any denomination. Must’ve been decades ago?
I use checks more often than paper bills, even. We almost never have cash on hand anymore, but I keep a stash of emergency checks in the car, and we usually use them to pay for campsites that don’t take credit cards or app reservations.
I wouldn’t ever choose to pay with cash if I can help it. I don’t carry any, I don’t have any, and if someone gives me some, I’ll immediately deposit it so I don’t have to carry it around. It’s just heavy and messy and prone to human error and takes forever for cashiers to handle…
I know cash is still important for a segment of the population, but to me it’s a minor annoyance that I’d be happier without.
I would vote to phase them both out, but there are lots of people who don’t have any other way of paying for something besides cash, which includes small coins. How will stores be able to make change without pennies and nickels? I guess they can price things so there are no odd cents transactions.That would work in a state like mine because we have to sales tax, but for states that do have sales tax?
Phasing out pennies is fine. Phasing out nickels gets a little weird.
You can make change for some 5-cent increments but not others. Obviously you can’t just have 5 or 15 cents of change. But you can have 25 or 75 cents.
Multiples of 10 also get weird. Normally, you can make change by starting with the highest denomination coin, doling out as many of those as possible, then moving on down to lower denominations. If you need to make 30 cents change, you can give out a quarter and a nickel.
But without the nickel, the only way to give 30 cents change is with three dimes. If you start with a quarter, you get stuck! Then you have to backtrack and start with a dime.
My understanding is that modern cash registers tell the person how to make the change, so maybe in practice it’s not a big deal, though the 5 or 15 cent thing is still strange.
You could get rid of nickels and quarters and round everything to 10 cents.
We could phase out nickels and quarters at the same time, and phase in fifty-cent pieces (remember those?). But we won’t. (When was the last time people used fifty-cent pieces? I can remember them circulating occasionally in the 1970s and maybe the early 80s, but not since. Even then they were rare.)
When I worked at a cafe in the mid-90s, we would see half dollars maybe once every three months or so, so somebody was still using them. For all I know, it was the same quirky customer, but I never paid much attention. I knew what they were so I never really did a double take — I had a ton of them as a kid in the 80s. Why, I don’t remember. Even had those Eisenhower dollars.
I cannot see why the cost of producing the money we use for exchange is particularly relevant. Why not just print $1000.00 bills? They cannot cost anywhere near a thousand to make. Think of the profit for the Treasury.
The actual problem is that the value of a penny is too small to be worth tracking in most cases. The value of a 2.5 g lump of zinc pressed into a disc is already quite small, and the face value of a penny is less than that.
At some point, all denominations will be phased out as inflation continues.
With that being true, at some point you have to reissue the dollar with the decimal point moved to the left, or you just end up with junk zeroes at the end of every price tag.
There’s really no reason to not do that, relative to dropping the penny, that isn’t just being lazy.
It’s okay to just do the correct things instead of the quick fixes.
You’d think, but the last coin to be phased out was the half-penny… which was worth about 36 inflation-adjusted cents. It’s way past due for a correction.
I’m not fighting the need to phase out the lower denominations. I’m just fighting the urge to do it the lazy way. If you’re just going to round everything to the dime then that tail zero is a waste of space. Just remint the dime as the penny, the dollar as the dime, and set the path for the rest of time.
Cash is dead anyway, so may as well go the easy route and string along the current system for minimal cost.
I’m fine with phasing out all coins. Completely. Make the dollar the minimum denomination. If you want “change,” throw in a pack of gum or something to your purchase.
Do away with both coins, and then for all cash transactions round the total to the nearest five cents. They’ve been doing it that way in Oz and Canada for years, and it works fine.
These days I carry a $20 bill just in case I need to make a small purchase somewhere that can’t take electronic payment. I’ll carry that bill for months without having to replace it.
I remember Trump first floated the idea of dropping the penny early in his second term (which is, remember, only four months old) and I had to admit it was one of his few good ideas. However, at the time, news articles pointed out that deciding how many coins of each type should be produced isn’t up to the POTUS but instead is decided by Congress. However, that’s never stopped him.
I strongly disagree with the premise that cash, in its entirely, should be phased out and replaced with direct bank-to-bank digital transactions.
Banks and banking operations are subject to regulation and supervision at the federal level. Everything that happens is captured and reportable, in premise if not in actual fact. This becomes another lever by which political powers can enforce their policy goals.
Consider state-level legalization of marijuana, in defiance of the federal prohibition. In Washington State, the official state policy was that all business should be conducted in cash. This was because the feds refused to carve out an exception to their drug-trafficking laws with respect to federal supervision of the banking system: to wit, any business registered as a weed shop would be barred from opening any bank accounts and processing card purchases, and any business which opened an account and was found later to be engaged in the weed business would be subject to having those accounts seized and forfeited.
This was as of the initial legalization. I’ve since left the state and don’t know how things may have evolved since my departure. At the time, they were discussing various workarounds, which may or may not have been introduced and which may or may not be functioning as intended. But the principle holds: if cash hadn’t been available, it would have been impossible for the state to enable marijuana shops to do business, because the banking system would have been closed to them. And you can extend this principle to all sorts of policy topics where the feds want to exert influence.
Cash must remain as an option. Yes, there is public expense, and yes, it’s arguably inefficient in a bottom-line analysis. But it’s wildly inadvisable to further centralize federal power over the economy.