And While You're at It, Toss the Nickel

Producing a penny costs about 1.7 cents, and the Treasury’s annual penny deficit is about $50 million, according to a New Yorker article by David Owen.

Yet folks — and some companies — still want the penny around, in part because they fear merchants rounding up prices and increased reliance on the even more expensive nickel (which costs almost ten cents to manufacture).

But rounded prices would be virtually imperceptible to today’s customer, Owen argues — especially with a growing number of transactions being handled by non-cash media like PayPal or credit cards, which aren’t subject to rounding.

Owen makes a bold suggestion:

Get rid of nickels as well. (And don’t bother re-basing the penny.)

New Zealand successfully and peacefully axed its five-, one-, and two-cent coins. Canada stopped printing its one- and two-dollar notes (sans mass-protest) and — pointing to New Zealand’s success and minimal inflationary effect — is considering eliminating its one-cent coin.

If not success stories, and 60 Minutes segments, what will persuade Americans to drop the penny?

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  1. Nathan says:

    I think the issue to consider here is not only the production price of these coins. These are expensive now due to the high price of metals which go up and down over time.

    I’m for getting rid of the penny (and possibly nickel) but my greatest concerns are:
    How much money will this take out of the marketplace?
    Where will this lost value be compensated?
    Can we successfully incorporate a system for using the 0.01 in theory but not real life? If not, will this not increase all production costs, price adjustments and therefore money out of people’s hands?

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  2. Raj Pandravada says:

    I agree – pennies are nothing but dead weight. While I wouldn’t necessarily toss them in a trashcan, I do, like most people, toss them in a rather large mason jar and wait till I’ve saved about ten bucks’ worth….and then starts the painful process of carrying the jar to the local grocery store…and the 18% or whatever CoinStar charges…what a scam! So, every penny is worth, to me at least, only 82% of a cent…

    I hope they don’t drop the penny out of circulation any time soon – can’t imagine the line at the CoinStar machines, or the humongous demand-induced hike in their ‘processing’ charges.

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  3. frankenduf says:

    ironically, isn’t now the worst time to make this argument, since the dollar is falling?

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  4. james says:

    While on a simple transaction basis, this makes sense, one has to wonder about large volume purchases like the stock market. Millions of trades are made there and a change of a penny or two can have a significant effect at the macro level. Also, what will happen to ‘penny stocks’???

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  5. Argh says:

    The quarter is the new nickel.
    The dollar coin is the new quarter.

    Ask any vending machine, if you doubt me.

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  6. Jake says:

    I think we should get rid of the penny, not the nickel. The nickel is necessary for transactions involving the quarter. The nickel show be made of less expensive materials. This is the logical approach. And thus, I would think that the only way to get rid of the penny would be to say that it is a waste of money, time and resources. Oh, wait we’ve tried that and it hasn’t worked.

    At this point in the argument, our leaders would have to make up some kind of political story. Such as “Only communists use pennies!” or more recent “Only illegal immigrants use the penny!” or maybe even “Pennies cause Cancer.”

    I’m not saying that these tactics are correct, I’m saying that its probably the only way to change ignorant peoples minds. And those are the type of minds that are resistant to change. I’ve had conversations with people on this topic, and often times I feel as if I am stuck in the land of idiots. Does anybody care, anybody listening?

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  7. Jeremy says:

    Honestly, I don’t think Americans will be persuaded to drop the penny (then nickel). Too many religious Americans that will be afraid that this is a first step towards becoming a currency-less society, a la New World Order, anti-christ, etc.

    And before I get flamed, I’m not judging anyone’s belief’s, I’m just voicing my opinion about why it won’t happen soon.

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  8. mmm says:

    Riddle me this, is it reasonable to do away with the penny (and nickel) as currency but keep it for the purpose of non-cash transactions? Such as when funds are transmitted electronically, by check, or credit card.

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