Wikinvest Wire

Steel pennies and belief systems

Wednesday, May 07, 2008

Maybe it's time that the U.S. Government skipped right to the chase and banned all coinage. They are fighting what seems like a never-ending battle to produce the stuff at a cost lower than the face value, more evidence of this provided today in this AP report:

Further evidence that times are tough: It now costs more than a penny to make a penny. And the cost of a nickel is more than 7 cents.

Surging prices for copper, zinc and nickel have some in Congress trying to bring back the steel-made pennies of World War II, and maybe using steel for nickels, as well.

Copper and nickel prices have tripled since 2003 and the price of zinc has quadrupled, said Rep. Luis Gutierrez, D-Ill., whose subcommittee oversees the U.S. Mint.

Keeping the coin content means "contributing to our national debt by almost as much as the coin is worth," Gutierrez said.
The proposals are alternatives to what many consider a more pragmatic, but politically impossible solution to the penny problem: getting rid of the penny altogether.

"People still want pennies, which is why we're still making them," Moy said.
What is it with the penny? Why do people think that we need it?

Is it some sort of a linchpin in the American psyche where, if we get rid of the penny, all sorts of other uncomfortable questions arise?

Like, while on jury duty once, a conversation was struck with another prospective juror who was about half-way through reading the DaVinci code and he remarked, "This book shakes your entire belief system".

See for more on the nation's money, no assistance can be provided for questions pertaining to religion.

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Davey Boy said...

Tim--- the dollar is the new penny! Since they founded the Fed almost a hundred years ago, the dollar has lost 99 percent of its value ---- problem solved.

dearieme said...

They've done away with low value coins in NZ and just round your bill. It seems to work pretty well. The alternative is to do what one of the more eccentric British political parties suggested - introduce a 99 cent coin.

Johan said...

In many European countries (non-Euro users such as Sweden) lower value denominations (f.ex in Sweden the 10 Krona) were moved from paper bills to coins a couple of years ago. The ideas was to save money since the coins will last longer than paper bill. Wonder if that equation still holds?

Lisa said...

New Yorker did an article on this just a short while ago, see article Penny readful

Page 3 discusses the attempts to get rid of the penny. Page 4 notes that both New Zealand and Canada already got rid of theirs without all this drama. Yet another reason to become a Kiwi.

I'd joke about changing to plastic, but as the price of petroleum . . . .

staghounds said...

It absolutely is psychological. Only foreigners with worthless money have to do away with coin denominations.

It's a profit thing for treasury, too. So many pennies are piled up, not circulating. It's a desk drawer and dresser top version of those Mexican and Colombian warehouses full of Greenbacks.

Actually everything up to the $5 or $10 ought to be coins only. If you recall your history, $20 coins circulated until 1933, and they had a buying power of well over five hundred of today's dollars.

staghounds said...

Plus, 7 cents for a nickel? That's 40% above face!

I'm getting as many nickels as the bank will give me.

Back when this first happened with the coper cents, I noticed it and told my stepfather. I think the differential then was like 12%. Doesn't sound like much, but he was a VP at a pretty big regional bank. After the transport and storage costs, he only made like 8%. But it was in a month, and on a round half million dollars worth of pennies.

Anonymous said...

Yes, kill off the penny, please!

I am so tired of having a bill rung up for $90.01 and when I hand the clerk $90 and say "here you go", they stand like deer in the headlights waiting for that penny. Or if it's $9.01 and you hand them a $10 bill they start counting out $0.99 in change. (Never mind that if I paid with a credit card like most everyone else they would pay a much larger fee to the credit card issuer.)

Yes, save clerks the time to count and everyone the time to sort something that isn't even worth the time.

Independent Accountant said...

We had steel pennies in 1943. We had a copper shortage during WWII.

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