A while back, I moved into a new office at work. When I looked in the desk, I found 162 pennies in a drawer. I can only assume the previous owner used the desk as a repository for all the pennies he received in change whenever he went out for lunch.
I can’t really blame the guy. In fact, I think pennies need to be removed from circulation. Here are several reasons, some admittedly better than others…
1. Inflation has made the penny irrelevant.
In 1857, Congress stopped minting the half cent piece. Back then, one half cent had the purchasing power of 11 cents in 2007 dollars. Basically, when the half cent was discontinued, the penny had more than 20 times the purchasing power it does today. If the Congress of 1857 were still in power today, not only would the penny be discontinued, so would the nickel.
2. Pennies are expensive to produce.
By the end of 2010, it cost the U.S. Mint almost 1.79 cents to make a penny. That means that the Mint is increasing the national debt with every penny it produces.
3. You can’t use them in vending machines.
Well, I’ve never seen a vending machine that accepts them.
4. They slow down transactions at retail establishments.
While not as bad as the time I got stuck behind a lady who paid for her groceries with only quarters, I hate it whenever I wait for folks who dig into their lint-filled pockets for pennies – so they can get rid of their change.
I know what you’re thinking: Won’t eliminating the penny increase consumer costs?
Well, that’s the story being spouted by Americans for Common Cents, a pro-penny group that’s backed by the zinc industry. (Pennies are almost 98-percent zinc.) Let’s look at their two big arguments for keeping the penny…
- Rounding prices up to the nearest nickel would mean higher prices.
Evidence shows this claim is baseless. If this were true, inflation would’ve occurred in the years immediately following the abolition of the half cent in 1857. In fact, the opposite effect occurred: The United States actually suffered from deflation the following year.
Here are the rates of inflation between 1858 and 1861…
- 1858: -7.1 percent (deflation)
- 1859: 3.8 percent
- 1860: 0 percent
- 1861: 0 percent
- Many charities are totally dependent on pennies for their donations.
Preposterous! To make such an argument presupposes that Americans, the most charitable people on Earth, would suddenly stop putting money in the Salvation Army kettle or giving their change to other charities simply because the smallest coin in their pocket would now be a nickel instead of a penny.
It actually makes more sense that charities would see an increase in their contributions – because although a nickel is worth five times as much as a penny, it does have one big thing in common with its copper cousin. You simply can’t buy anything with it.
Congress is responsible for regulating the national currency. What do you think? Should Congress abolish the penny? If you’ve got a moment to spare, please share your thoughts on this because I really want to know.
In the meantime, I’m going to the grocery store to find something I can buy for $1.62 – all in pennies, of course. Hopefully, you won’t be the person that gets stuck behind me at the checkout counter.