A hot topic every now and again, albeit a touchy one as well, is the discussion of eliminating the Lincoln Cent and Jefferson nickel due to cost. The collector in me would hope that a solution existed whereby the cents composition could be altered to make it cost effective. Yet the reality says that it can not be with the criteria required.
All coinage has several properties which they must have. They must be durable, be somewhat anti-corrosive and be conductive for vending machines and counting machines which determine denomination. Size, thickness and weight are flexible. Taking all of this into consideration, it is no easy task.
So what should be done? How does the Mint cut cost while satisfying both the financial market which break down transactions one cent increments yet satisfy the collector?My thought is a revised Three Cent coin to replace the one cent. With the latter costing 1.82 cents to coin this is very plausible. The composition, size and Lincoln could still be used to satisfy us collectors. And, yes, transaction would still break down in one cent increments. It may require and extra coin or two in the higher denominations.
As for the Nickel, the United States Mint contracted out with the National Institutes of Standards in Technologies in Gaithersburg, Maryland in 2013 to solve the problems. They have. But so far I could not find much about the specific breakdown in composition to meet the requirements in current use. So I'll keep digging.
Since 1792 the Mint has eliminated five denominations. The one cent faces the inevitable. Only how and when.
I was unaware of the mint contracting with NIST Gaithersburg for nickel research in 2013 - do you have any links to more info? I am curious since I was working there in 2013 and was not aware of that project
Nothing, absolutely nothing. This constantly comes up from fake savings that don't take into account rising costs of goods eliminating them. The mint should keep making them and their "cost" isn't even a rounding error in the federal budgets where oh by the way the mint is in the black.
it is Congress that determines the denominations of coins that the Mint must produce and put into circulation. As the United States Mint produces the coins that Congress mandates, it does not have the authority to abolish a unit of currency. If directed to do so by legislation enacted by the Congress and signed by the President, the Treasury Department would again study phasing out the penny. If demand exists and the Federal Reserve Banks require inventories to meet the demand, the United States Mint is committed to producing the penny and can't NOT make it.
Which is why in previous times when the Treasury Dept. has studied phasing it out, they have come up instead with compositional changes to cut costs instead, because U.S. commerce REQUIRES the cent denomination currently and in the past. How business is conducted would need to change, no longer requiring the cent denomination for any transaction nationwide for them to actually get rid of it.
In all cases denominations that were removed have all been unnecessary denominations, like the Half Cent, 2 cent, 3 cent, half dime combination the cent and the nickel do all that, the dime and the nickel do the 20 cent coins job ect.
in the end, it would take the house, the senate, and the president, to get rid of the cent, and even then the treasury department is more likely to look for a way to change the composition to make it cheaper than to try and teach all businesses and people in the country to do without it without rounding up to a nickel or higher everything.
The cent is here to stay, it might become a plastic of some sort, who knows.
What they might lose in the cent or the nickel they make up for and then some with the dime and the quarter. it's just speculation really, the story is always "it cost 1.5 cents to make a cent" or " "it cost 8 cents to make a nickel",,
Nobody is talking about this type of thing mentions it costs 3.91 cents to make a dime, or 8.95 cents to make a quarter, they keep a balance of production of the circulating denominations, that doesn't actually "cost" them a loss for any year while staying within their operating budget. two they make money on, two they lose money on. It's fine what they are doing, ideally a business would want to make money on everything they produce and get rid of what doesn't make them money, but it's not exactly a "business" is it? They make the coins for a country for commerce. it's not only about profits, and in the end, while they lose on cents or nickels, the profit from dimes and quarters makes up for it, and they don't run a loss for any year.
People talking on this subject just want to look at cents independently and say "it's costing the taxpayers millions to produce them!! The sky is falling the sky is falling!" lol
Maybe you feel like there is no need for the cent, but if every business rounds up to a nickel, then says "hey, we don't need the nickel, it cost too much to produce!" then every business rounds up to a dime, then "hey, we don't need the dime, why not just quarters? We can just round up again! WINNING!"
Until we get to the $100 bill.....lol
Cents are necessary, for business, banking, currency conversions, ect. even parts of a cent are accounted for, and add up. could it be done without it,,,, yeah probably, but the cents will still be there, building up on somebody's ledgers and bank accounts, better yours than Bank of America's in my opinion.
Quote: ...it might become a plastic of some sort, who knows.
Doubtful. The Zinc lobby is a big reason why it remains. The truth is that plastic might even cost more than zinc (not just the material, but hidden cost of needing all new equipment to "strike" them).
Getting rid of the 1 cent is easy, indeed, inevitable as many have stated - inflation is an unavoidable fact of modern economics, the removal of low denomination coins is a symptom of inflation, not a cause. Most countries with currencies of similar value to the US dollar have already abolished their cent-equivalents.
Getting rid of the 5 cent piece is harder in America (and Canada) that it would be elsewhere, because of your 25 cent piece - it would be impossible to "make change" properly if the 10 cent and 25 cent were the smallest denominations. For a practical currency system, America and Canada would have to do one of two things: - replace the 25 cent coin with a 20 cent coin, and round prices to the nearest 10 cents. - abolish both the 5 cent and 10 cent, and round prices to the nearest 25 cents.
Introducing new lower denominations like a 2 cent or 3 cent coin would only delay the inevitable; such coins would only be issued for a few years before they too would be uneconomical to produce.
To those who say "the Mint is still making a profit on the other denominations, so why change it?", the obvious answer is: yes, the Mint is making a profit now. The Mint could make even more profit if it stopped wasting maney making negative-profit coins.
Suppose it costs 2 cents to make a 1 cent coin, and you make a billion 1 cent coins per year. That's a billion cents lost - $10,000,000 that the government could have spent somewhere else, instead of producing a loss-making coin that nobody ever actually wants to use as money any more. For most countries, deciding to stop making loss-making coins is a no-brainer.
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
We as a country are slow to change...but we need to deal with reality...get rid of the penny as we did 160 years ago with the half-Cent. Rounding on cash purchases can be alleviated for those below the poverty level with a tax credit of $XX dollars. How many cash purchases can one make in a day...a month...a year. Can't be more than 5...5 x 365 = 1,825 purchases x .04 cents maximum loss = $73 tax credit.
Quote: Rounding on cash purchases can be alleviated for those below the poverty level with a tax credit
Yeah, let's involve some more bureaucracy. I'm sure that will make everything much simpler. How, exactly, would that be tracked? Also, why only for people below poverty level?
Quote: yes, the Mint is making a profit now. The Mint could make even more profit if it stopped wasting maney making negative-profit coins.
The Mint doesn't exist to make profit and less so to maximize profit. It exists to make coins. I'm surprised no one has mentioned the BEP. What's the profit margin on a $100 bill?
Contrary to what may be popular belief, one cent coins do actually circulate and are used in transactions in both directions. If we were to eliminate them, then there is the rounding question. Up or down and exactly how? Oh, great, more regulations and enforcements...I love those.
Rounding reminds me a lot of high-frequency trading and skimming fractions of cents off the top, except it would be several full cents going into the business's pocket and out of the consumer's. Think about that. If the cent were eliminated, every cash transaction could be rounded up a maximum of four cents in the right situations simply for the lack of having a one cent coin to give change. Who does that help? (Hint: not the consumer)
As a side note, if we really want to get rid of the cent, then we should probably get rid of charging less than a cent for anything first.
Quote: The cent is here to stay, it might become a plastic of some sort, who knows.
It will all be plastic eventually.
Tantum religio potuit suadere malorum. -Lucretius
"Just because you're paranoid don't mean they're not after you." -Kurdt Kobain
Quote: The Mint doesn't exist to make profit and less so to maximize profit. It exists to make coins.
It exists to make coins, but it is also required to show a profit. Why not maximize that profit?
Quote: I'm surprised no one has mentioned the BEP. What's the profit margin on a $100 bill?
Huge, that's why no one has really pushed to stop making hundred dollar notes.
Quote: If we were to eliminate them, then there is the rounding question. Up or down and exactly how?
Almost every business out there already uses electronic cash registers, and the already have the rounding software built into them. Flip a few switches and it will round up or down to the nearest $0.05 after the sales tax is applied. The up/down rounding will even out, and frankly the public will never even notice it. Probably 99.9% simply pay what the register/cashier tells them. I don't know anyone who after getting their total, adds it up themselves, adds the tax and then makes sure they haven't been overcharged one or two cents.
Quote: Rounding reminds me a lot of high-frequency trading and skimming fractions of cents off the top, except it would be several full cents going into the business's pocket and out of the consumer's. Think about that. If the cent were eliminated, every cash transaction could be rounded up a maximum of four cents in the right situations simply for the lack of having a one cent coin to give change.
This would require NOT using the registers built in rounding, and then looking the customer in the eye and quoting them a price HIGHER than what the register shows they owe. Then having to explain to the customer why they are charging them more. Getting the customer to agree to it. And then repeating the whole process over again with the next customer. Then generates a lot of unhappy customers.
Meanwhile your competitor uses the automated rounding, their register lines move faster, and they have lower prices and happy customers.
Oh and by the way it is the SALES TAX that gets rounded up or down, and the register tracks and reports how much tax was collected and needs to be remitted to the state, so with the automated rounding the business doesn't make or lose anything. If the state audits the business it is going to be the register records it is checking.