What If The Penny Was Discontinued?

Seriously? The cost of producing a cent is high not because Zinc is expensive, but because the cost of manufacturing and shipping them is so high. They're antiquated, outdated, and need to be eliminated. There is no reasonable argument that states otherwise.

The mint should produce seignorage with every single coin they issue. If they cannot produce seignorage on any denomination due to something besides the cost of the base metal it's made of, it's time to eliminate that denomination.

There's very little "spending cuts" which any government can do that wouldn't have an adverse effect on someone; both on the individual level and on the nation as a whole. Slashing spending in education reduces the quality of education. Slashing spending in research reduces the quality of science. Slashing spending on health reduces the quality of life. In a country with a chronic history of over-spending, savings have to be found somewhere, eventually. As anyone with a credit card eventually learns, raising the credit limit does not magically create money.

The key difference with eliminating the cent is that it isn't really a "spending cut". It's "income realization". The mint has not actually made a profit making either cents or 5 cents since before 2006 (though 5 cent coins were almost profitable in 2009). 2012 was the least profitable year for circulating coinage production in a long, long time. As Bassmaster said, the mint "should" be making 14 cents profit per quarter they make, but they're actually only making 8 cents per quarter; the rest is being sucked away to subsidize production of the cent and 5 cent coins. Eliminate the cent (because it can no longer be produced out of anything profitably) and find a cheaper alloy for the 5 cents, and the subsidies go away; the government can fully realize the profit it should have been getting all along.

I don't think there is a government quota of "money to waste" that must be filled, or will naturally fill itself...


This is a fabrication: items in Canada are still priced with 9s, because rounding occurs at the end of the sale. This will not change at all if the penny is discontinued.


The penny is one of the most wasteful government programs with the least amount of justifiability: nothing but the heavy weight of tradition keeps it going, and the only segment of the population that would be really against it is our tiny niche of collectors. What else is there to cut that would be more harmless? The penny is the low-hanging fruit that has been perfectly ripe for a long time.


While we're discussing policy changes, I'd rather we don't mix despair and apathy...


As far as I know, Panama is a heavily U.S.-influenced state and its coins are just a prettied-up U.S. dollar (I quite like Panamian coins, though). And yes, they still have their Centiesmos des Balboas (I only took French, not sure how to do this in Spanish). However, Panama is much more sensible in other areas of its coinage - they went straight from a rarely seen big Eisenhower-sized Balboa to, in 2012, a circulating bimetallic Balboa (and a bimetallic 2 Balboa as well)! I am trying to get some of these newer large issues, so let me know if you've got a few Medio or full Balboas you'd like to trade off.

As for recomposition - the cheap MPPS Canadian nickel is still unprofitable, and even if the $1 and $2 coins generate money for the government, I would be for the removal of the nickel - although I will, of course, miss searching through them! But I am willing to lay off digging through nickel-rolls if it means increased savings for our government.

@ Sap
As bassmaster said, we profit enough on the quarter to justify the penny and nickel. To increase profits though, we should cheapen shipping on our coins, lower mintages, and decrease die replacement.

And in some ways, we don't need the government to be in control of science and health care. If left to private organizations, competition would increase productivity and advancement in these fields, while decreasing government spending.

If anyone was wondering, the melt value of a penny is $0.0050815, depending on the stock market day. That makes the metal cost less than 22% of the total cost. You cannot mitigate the cost of the penny. The price of fuels controls the penny's cost more than the metals.

Number's associated with what sel was getting at:

Lost productivity and opportunity cost of use - With the median wage in the U.S. being about $17 per hour in 2011, it takes about two seconds to earn one cent. Thus, it is not worthwhile for most people to deal with a penny. If it takes only two seconds extra for each transaction that uses a penny, the cost of time wasted in the U.S. is about $3.65 per person annually, about $1 billion for all of the USA. Using a different calculation, economist Robert Whaples estimates a $300 million annual loss.

Basically, the cost of waiting for your cashier to give you the penny costs you more than a penny.

If you don't make $17/hr, you still have to think: the calculation is done with 2 seconds. Have you ever waited more than 2 seconds? Probably.

Also, the cost of goods is supply and demand, plus a sum of the overheads. The overheads being that cashier's time. She is paid for her time dealing with the penny. Plus, multiply in each person BEHIND you while you wait for your pennies.

Then consider the fact that the store PAYS more than a penny to get those pennies delivered.

You pay for the penny not only to be produced, but to STAY in circulation.

When you think about all the time spent with every person, it actually accounts for more loss than the production.

Yes, you are.


Yes, science always mixes well with money. And I wish I knew how to "cheapen shipping", and how making fewer profitable coins would raise profit (unless you mean lowering penny mintage, which is a half-measure compared to just getting rid of them)... but the "decrease quality" point is about valid! The problem is that roll hunting would become much worse. New, plentiful errors would become valueless (chipping away at the "thrill of the hunt" and probably hurting the market for older coin errors too) and coins would be uglier (take a look at some Indian coins - production has to be so high that almost none of the modern ones have a decent strike).