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What If The U.S. Stopped Production of Pennies?

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merclover
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 Posted 08/05/2011  03:01 am Show Profile Bookmark this topic Add merclover to your friends list Get a Link to this Message

What would happen if the U.S. government announced today that the U.S. Mint would cease all production of the one cent coin by the end of this year, 2011?

No, this isn't a thread to suggest we should ban pennies... I am asking from a purely numismastical standpoint, what do you think would happen if the U.S. stopped making pennies?

Specifically, things I'm wondering:

- Would the government pull existing coins, say over a five year (or less) time period?

- Would EVERYBODY (and their brother) start hoarding all pennies?

- Would Canada follow suit and stop production of pennies also? (And vice versa, if Canada suddenly announced they were no longer going to make pennies, would the U.S. follow their lead and do likewise?)

- Would effect would this have on short and long term values in collecting pennies?

I am having a blast searching through bank rolls of pennies, and these questions just popped into my head. What's your opinion on what might happen should this come to pass?

Les

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 Posted 08/05/2011  06:36 am  Show Profile Bookmark this reply Add John1 to your friends list Get a Link to this Reply

John1
( I'm no pro, it's just my humble opinion )
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 Posted 08/05/2011  06:53 am  Show Profile Bookmark this reply Add Tim Stroud to your friends list Get a Link to this Reply
It would make a lot of people mad in my area. If for some reason you run short on them in your till and you end up owing them a penny in their change, they will wait till you get some more to give them one before they leave. I have literally had to dig into my pockets to find a penny for my wife when she ran out of penny once, just so she could give it to and older man who had been waiting 5 or so minutes to get his one cent coin. I then had to run to the bank and get her some more change.
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 Posted 08/05/2011  06:54 am  Show Profile Bookmark this reply Add eddiespin to your friends list Get a Link to this Reply
McDonald's would raise the price of the McDouble from $1.08 to $1.10.
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 Posted 08/05/2011  07:57 am  Show Profile Bookmark this reply Add John Bonzo to your friends list Get a Link to this Reply
It would be much later in time than by the end of this year....the federal government is not exactly the most efficient well-oiled machine out there. Look at the digital TV transition: In 1996, congress passed the law analog broadcasts would shut off ten years later in 2006. In 2005, they delayed it until February 2009. In February 2009, they delayed it again until June 2009. Not to mention the fact that today's congress is never on the same page about anything.

If it happened, I think that many more people would start hoarding their pre-1982 copper pennies and take their post-1982 zinc pennies to the bank.
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 Posted 08/05/2011  08:40 am  Show Profile Bookmark this reply Add nod2003 to your friends list Get a Link to this Reply
I think there are enough pennies already out there that we would do just fine for a couple of years with no change at all to commercial transactions.
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 Posted 08/05/2011  08:45 am  Show Profile Bookmark this reply Add Kopper Ken to your friends list Get a Link to this Reply
1) I wouldn't have anymore rolls to search

2) Wheaties would go through the roof

3) copper LMCs would be hoarded

4) the gov't would reclaim all cents to melt, just like Canada did

KK
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Australia
10705 Posts
 Posted 08/05/2011  09:17 am  Show Profile Bookmark this reply Add Sap to your friends list Get a Link to this Reply
I'm going to assume that the American government and American people aren't all that much different to those of other countries where the smallest currency unit was abolished long ago.

Quote:
Would the government pull existing coins, say over a five year (or less) time period?

The government wouldn't really have to. Look at the huge annual mintages for 1 cent coins, just to meet current demand. If they stopped making them, the supply would dry up within a few weeks.

Quote:
Would EVERYBODY (and their brother) start hoarding all pennies?

From where? If there aren't any pennies circulating, where would the hoarders get their coins from?

Quote:
Would Canada follow suit and stop production of pennies also? (And vice versa, if Canada suddenly announced they were no longer going to make pennies, would the U.S. follow their lead and do likewise?)

That would depend entirely on which currency was stronger. Historic example: Australia and New Zealand. New Zealand scrapped their 1c and 2c coins in 1987. Australia did likewise in 1990. Was Australia "following their lead"? No. Australia's dollar was worth more, so our 1 cent coin retained it's buying power slightly longer. But in the end, inflation finished them both off.

Right now, the Canadian dollar is slightly stronger than the US dollar. Assuming this remains the case, and assuming all else being equal, the US cent should therefore disappear first. Countering this is the fact that "all else" isn't quite equal, since (unlike in the Australia/New Zealand example) the US and Canadian cents aren't exactly the same weight, size and composition. And either government may choose to try to stave off the inevitable for a while by making the cent out of something cheaper.

Quote:
Would effect would this have on short and long term values in collecting pennies?

There are two opposing forces at work when an entire denomination ceases circulating. One one hand, if nobody sees the coins in everyday use, few people are going to suddenly be inspired to start collecting them. Very few of the half-cent, 2, 3 and 20 cent collectors began collecting them when they received one in change. So the size of the collector pool shrinks, causing reduced demand.

On the other hand, the supply shrinks too, as coins are withdrawn and destroyed, and you can no longer simply go down to the bank and get as many as you want for face value.

These two forces tend to balance out, though at any given moment one might outweigh the other, making the price go up or down. But what you almost certainly won't see is prices of bulk hoards of pennies suddenly soaring once they are withdrawn. The Australian example again: just tonight I purchased a bag of 107 Australian 2 cent coins, mixed condition, for $3 from my local coin club's auction. That's just above scrap value.
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
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 Posted 08/05/2011  10:21 am  Show Profile Bookmark this reply Add akane17 to your friends list Get a Link to this Reply
No more Wendy's "my my my 99" jingles.
What about the poor 99 cents stores? The government is going to cost them a fortune to change their name and pricing.
And what about my 99 cent cans of Arizona Iced Tea?
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 Posted 08/05/2011  10:50 am  Show Profile Check oih82w8's eBay Listings Bookmark this reply Add oih82w8 to your friends list Get a Link to this Reply
It's highly doubtful that the U.S. would follow anybody's lead; just about every country has eliminated their dollar (type) bill, and the BEP is still running them through the press. More than likely some Senator/Congressman/etc... would have a conniption if the zinc pennies were eliminated, which would cause job loss to their district.

I thought that they would stop production at the end of 2009; Lincoln's bicentennial.
oih82w8 = "Oh I Hate To Wait"

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Edited by oih82w8
08/05/2011 10:52 am
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 Posted 08/05/2011  11:33 am  Show Profile Bookmark this reply Add ljenkins990 to your friends list Get a Link to this Reply
I think that there would probably be some hoarding, but not too much. Most cents would eventually be pulled from circulation by banks and shipped off for destruction. As far as numismatic value goes, considering the extremely short time it takes the average Zincoln to become discolored in the wild, I just can't imagine very many post-1982 cents being worth much of anything, ever. As far as pre-82 cents goes, most people have no idea that they are worth more than face value due to metal content and I doubt that would change. Those who hoard them now would continue to hoard them as long as possible, but most people would treat them like any other cent.

Not that the mintage of cents will happen anytime soon, given our dysfunctional government.
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 Posted 08/05/2011  11:43 am  Show Profile Check oih82w8's eBay Listings Bookmark this reply Add oih82w8 to your friends list Get a Link to this Reply
ljenkins990 "As far as numismatic value goes, considering the extremely short time it takes the average Zincoln to become discolored in the wild, I just can't imagine very many post-1982 cents being worth much of anything, ever."


Wouldn't your reasoning be justification for the opposite; as far as value for those that retain their original red color?
oih82w8 = "Oh I Hate To Wait"

"I tell her coins keep me off the streets and out of the bars." Moe145

"WOO-SAA...WOo-SAa...Woo-Saa" (calm down)
Edited by oih82w8
08/05/2011 11:59 am
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 Posted 08/05/2011  1:04 pm  Show Profile Bookmark this reply Add merclover to your friends list Get a Link to this Reply
From a historic standpoint, I have no knowledge what the overall effects of past economic and social effects of elimination of coinage has been... I am just thinking that ceasing production of the U.S. penny makes a lot of sense in a lot of ways and I for one would not be surprised in the least bit to see it happen, and I'm thinking very soon.

Businesses will have to made a few adjustments, but besides coin collectors, I don't think anyone would miss it. Personally, I could see collectors/hoarders snatching up every penny from banks and general circulation ASAP if such an announcement was made. Rolls of pennies and bulk lots on eBay would skyrocket for a while, when return to earth once people realise just how many billions and billions of pennies are out there. Some non-collectors will turn in their hoards thinking they need to cash them in while they are still able to, while collectors I'd imagine will hold on to very penny possible for the long term ride.

I could imagine charity organizations starting "penny drives" to help people "get rid" of their useless pennies while at the same time supporting a good cause (actually, I am surprised this fund raising tactic isn't being done now).

Considering the state of the economy and the cost of production vs. usefulness, I am surprised the penny has lasted this long. So, to expand my original questions of what you think might happen overall if they stopped producing pennies, as a coin collector, what would YOU do now specifically if an announcement was made? Those of you recycling bank boxes, would you hold on to what you have now, or keep recycling as long as you could?

And, if they said it was OK to melt down the copper cents, would you turn them in or hold on to them?

Things to ponder. All this COULD happen!

Les
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 Posted 08/05/2011  1:54 pm  Show Profile Bookmark this reply Add littlemoney to your friends list Get a Link to this Reply
Canada is going to cease all production of the one cent coin, & maybe as early as the end of this year. What doe's that mean ? Probably everything will get rounded off to the nearest nickel. Everything will cost us more & higher tax as well.
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 Posted 08/05/2011  2:02 pm  Show Profile Bookmark this reply Add jbuck to your friends list Get a Link to this Reply
I can speculate what would happen, but I feel there are too many variables involved. One being the planning, if any, made by those handling the existing supply. That being said, I like Sap's analysis because it uses a historical perspective.

I must comment on the alleged 'chaos' that people seem to fear. Even if the physical cent disappeared, the electronic cent would still exist. As electronic payments become an increasingly larger percentage of all transactions, the existence of the physical cent becomes less significant.
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 Posted 08/05/2011  3:08 pm  Show Profile Bookmark this reply Add coinmap to your friends list Get a Link to this Reply

Quote:
Would EVERYBODY (and their brother) start hoarding all pennies?


With the amount of people in the United States that don't even know about the Pres, and Sac dollars, I find it hard to believe that the normal person would even know, or care that the cent had been discontinued until it was too late.

From some of the things that I have heard over the penny debate, some of the biggest opponents of stopping the penny, are the legislators in Illinois. The whole "Lincoln" and "Illinois" connection is too great for them to want to end it without a fight.

I believe that Illinois is the only state that still accepts pennies in its toll change booths.
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