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Is it time to get rid of the Penny?

 
Anonymous Coward
User ID: 944253
United States
08/19/2012 09:37 PM
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Is it time to get rid of the Penny?
According to the U.S. Mint’s 2011 annual report, the current cost of a penny is 2.4 cents per coin. With nearly 5 billion pennies minted in 2011, the U.S. spent almost $120 million to produce less than $50 million of circulating currency.

Right, left, or center, all parties know that the country needs to save as much money as possible. And it’s impossible to save money when it’s being wasted.

The U.S. has already phased out a coin with no ill effects. The Mint stopped producing the half cent in 1857, when it was worth what a dime is worth today, and there was no public outrage or damaging economic effects.

The penny served us well for a while. But now, at more than 200 years old, it’s unable to keep up with inflation. Isn’t time to let the penny retire?

For those who think it un-American to stop production of the penny, consider this: the Department of Defense abolished the use of pennies at overseas military bases more than 30 years ago. According to the Army and Air Force Exchange Service, the coins are “too heavy and not cost-effective to ship.” The same logic could be used in the States, as five pennies weigh 12.5 grams compared to a 5-gram nickel.

Some people believe that to eliminate the penny is to forget Abraham Lincoln. Lincoln, and his memorial, however, are firmly ensconced on the $5 bill, which is not going anywhere. At a cost of 8.5 cents per note (based on the Federal Reserve budget for 2012), the $5 bill is both conducive to commerce and cost-effective.
Anonymous Coward (OP)
User ID: 944253
United States
08/19/2012 09:42 PM
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Re: Is it time to get rid of the Penny?
Troubling Myths

Myth #1: Elimination of penny means higher prices.
This claim is based on a flawed study that found a majority of prices would be rounded up rather than rounded down to the nearest nickel. This study, however, did not take into account factors that randomize the direction of rounding, such as sales tax and the purchase of multiple items. It also did not consider pricing strategy. For example, a business owner might choose to round a 99-cent item down to 95 cents to keep the price less than $1. When these factors are included, there is no net change in prices, on average. Indeed, a recent study by Robert Whaples, chairman of the Economics Department at Wake Forest University, confirmed that rounding is neutral. The Department of Defense stopped using pennies at overseas bases more than 30 years ago, implementing a rounding system whereby cash transactions ending in 3, 4, 8, or 9 cents are rounded up, and those ending in 1, 2, 6, or 7 cents are rounded down. The Army and Air Force Exchange Service believes that the rounding system has benefitted neither the consumer nor the the store. Additionally, many other countries (e.g., Canada, UK, Australia, New Zealand) have eliminated one-cent currency with no ill effects for consumers.

Myth #2: People will be stuck with useless pennies.
Pennies will not become obsolete overnight. While no more new pennies will be made, the coin will still be valid currency. In time, pennies will be phased out as their numbers in circulation slowly diminish.

Myth #3: Charitable causes will be adversely affected.
Once the considerable number of circulating pennies is exhausted, charities that historically collected them will instead collect nickels. After the elimination of similar one-cent pieces in other countries, there have been no major announcements of charities reporting lower donation amounts.

Myth #4: The poor will pay the most.
Whaples’ research included comparisons between purchases made in both wealthy and poorer neighborhoods. He found that in more than 200,000 transactions, regardless of socioeconomic status, both consumer and store broke even.

Myth #5: The penny produces a profit.
This argument is no longer made, as all sides agree that it now costs more than a penny to make a penny. Even if this were not the case, it is a silly argument. In theory, the Treasury could obtain an infinite "profit" by printing a trillion $100 bills. They do not, however, because printing bills and minting coins increases the supply of money and causes inflation, thus decreasing the value of all money in circulation. This "profit," therefore, is really just a hidden tax.
Anonymous Cowherder
FEMA Region IX.

User ID: 2488979
United States
08/19/2012 09:46 PM

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Re: Is it time to get rid of the Penny?
focus attention on the minted money and away from the printed.

misdirection.
I'm a Libertarian Constitutionalist.

I don't give a shit what you do with your own life, whether you make it a success or a failure, that is an outcome of the choices you make, but please take responsibility for yourself and don't make ME pay for YOUR choices and we're all good.

Repeal the 17th Amendment and the Apportionment Act of 1911!

Thread: First steps down the road to a return to the Constitutional Republic that we were intended to be.

Restore the Republic.

It's a flower, not something to be feared.

cow - Moo!
Anonymous Coward
User ID: 21704313
United States
08/19/2012 09:49 PM
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Re: Is it time to get rid of the Penny?
I hope they eliminate it soon. I can then melt down my 125,000 copper pennies.
Anonymous Coward
User ID: 1361430
United States
08/19/2012 09:59 PM
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Re: Is it time to get rid of the Penny?
Canada is now fazing out the their penny...The cost of goods will increase. No not much. Their inteneion would to round UP to the nearest five cents. Quit hoarding those pennies and they won't need to make the damn things every year. Do pick out the 1985 and priors because those pennies are worth 2 pennies for scrap copper weight, but, it is illegal to melt coins if you get caught.
Anonymous Coward
User ID: 22235804
United States
08/19/2012 10:03 PM
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Re: Is it time to get rid of the Penny?
They've been bouncing this one around forever.
I remember around '72 the government proposed getting rid of it and the merchants got all booboo faced about it. Lots of stupid reasons for not doing it. People have to buy stuff whether they get back a nickle or a penny. Pennies are dirty little things and more trouble than they're worth.Most of them wind up on the ground anyway, be done with em already.
DaveGillie

User ID: 21571628
United States
08/19/2012 10:07 PM
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Re: Is it time to get rid of the Penny?
Troubling Myths

Myth #5: The penny produces a profit.
This argument is no longer made, as all sides agree that it now costs more than a penny to make a penny.
 Quoting: Anonymous Coward 944253



Actually, that this is a myth, is in itself a myth.

for it does NOT cost two cents to make one, it does not any REAL money at all.
The US creates money out of thin air to pay it's bills. Even it's penny printing bills, therefore a penny made IS nearly a penny profit still
www.DaveGillie.com
Anonymous Coward
User ID: 778024
United States
08/19/2012 10:09 PM
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Re: Is it time to get rid of the Penny?
bsflagwhile it may cost 2.5 cents per unit,each penny generates tax at each exchange. Do all of the math.......
Anonymous Astrophysicist
User ID: 1204596
United States
08/19/2012 10:11 PM
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Re: Is it time to get rid of the Penny?
The j e w s will never allow it, because they know that $9.99 sounds like less that ten dollars or $99.99 sounds like less than 100.00 dollars. They're not going to just give up that extra four cents by making it $9.95 or $99.95
Mark my words.
Anonymous Coward
User ID: 11934995
Canada
08/19/2012 10:12 PM
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Re: Is it time to get rid of the Penny?
Canada is now fazing out the their penny...The cost of goods will increase. No not much. Their inteneion would to round UP to the nearest five cents. Quit hoarding those pennies and they won't need to make the damn things every year. Do pick out the 1985 and priors because those pennies are worth 2 pennies for scrap copper weight, but, it is illegal to melt coins if you get caught.
 Quoting: Anonymous Coward 1361430


i thought the plan was to round down at 1 and 2 and up at 3 and 4 over the nearest five cents. i'll have to check. if you're paying credit or debit it's still exact number of cents. they start taking the penny out of circulation in September.

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