Nickel for your thoughts

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According to this, the cost of producing a penny is now more than the value of the penny itself. If both the article's and the US Mint's numbers are relatively accurate, that means we're losing about $1.8 million a day on these things. Not quite a budget-saver, but I'm sure it could go to something nicer, like more gas for the fleet of SUVs congressmen desperately need to get around in while they stump about high gas prices.

Getting rid of the penny could solve this money-losing prospect. While Illinois may complain, I certainly think I could do without a pocketful of pennies. (Interesting question: just how much value is effectively taken out of circulation by all the pennies that sit around in people's change jars, piggy banks, couch cushions, etc., and what would happen if we all went to spend it at once?). Sure, the Mint says that the penny is the widest circulating denomination, but I'd bet that's just an artifact of their production. After all, it's not like pennies work on a just-in-time production schedule. The Mint's demand schedule for them is likely heavily distorted by the amount that get lost, get socked away, or end up rattling around laundromat washing machines because people forgot to empty their pockets.

The article mentions that pennies were once made from steel, when World War II-demands required copper. I'd be willing to bet that happens before the penny is totally phased out, if only because I can see someone one Capitol Hill claiming that buying steel for pennies would solve the domestic steel-industry problems.

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The Australian government ditched 1c and 2c pieces umpteen years ago for that reason (at the time, 1.4 cents to make a 1 cent coin), and Australian spenders have dealt with the fact of rounding in cash transactions ever since with no dramas. Digital transactions are still conducted to whatever accuracy desirable (usually to the cent), fuel prices still marked and calculated to the 0.1 cent, etc. Only physical hand-over-of-cash transactions are subject to rounding. Nobody really cares about the odd cent now and then, not even the total losers complained.

I assure you that the rounding gags and skits are now well & truly old old old (eg, a pair of 42c items bought individually cost 80c but bought together would have cost 85c), so if your country goes that root you can expect either (a) silence, or (b) plagiarism, from the comedy community.

In sum, the entire thing is likely to be a short mostly ho-hum affair, save for the occasional blather in the early days.



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This page contains a single entry by published on May 1, 2006 3:06 PM.

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