Time to retire the penny

This morning I read a blog entry from Tim McAlpine of Currency Marketing explaining that there is a proposal to eliminate the Canadian penny on its centennial. This reminded me that my first experience with a penniless currency was the year that I lived in the Netherlands. I don’t know what the current conversion rate is with U.S. dollars, but at the time, their guilder was worth about 40¢. This meant their penny would have been worth much less than a U.S. penny, and in fact, they had eliminated it from their currency. In cash transactions, everything was rounded to the nearest nickel, which was worth about as much as a U.S. penny.

About the only thing that U.S. pennies are good for are for reconciliation purposes in check and debit transactions, and we can keep their theoretical existence there, but eliminate their physical manifestation. This would save the U.S. govenment a large amount of money in continuing to mint these nearly worthless coins. It now costs a little more than a penny to mint a penny. I’m sure the only reason we’re hanging on to this appendix is fear of inflation. I don’t think the Dutch economy experienced any inflation when they abandoned their penny, so I think it’s time we abandon ours. Just think of how excited all the numistmatists will be! That will make their penny collections much more valuable. What do you think?

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6 Responses to “Time to retire the penny”

  1. Christopher Says:

    It also now takes about 10 cents to make a nickel. Go figure.

    The New Yorker recently had an interesting piece on this:

    http://www.newyorker.com/reporting/2008/03/31/080331fa_fact_owen?currentPage=all

    We need to get rid of the penny….and the nickel.

  2. Morriss Partee Says:

    @christopher – Thanks for the link to that excellent New Yorker article. I couldn’t stop reading it. Fascinating! Wow, we should get rid of the nickel too. Interesting that the Canadians have eliminated paper dollars. I know that paper currency decays in 18 months compared to coins at 30 years, but I know I’d rather have paper than coins for what cash I continue to use. Much easier on the pockets.

  3. Jonathan Says:

    Funny, I was actually thinking we should bring back the hay penny so big banks could increase their fees by it and we wouldn’t notice the difference. Just joking 🙂 I totally agree about kicking the penny and maybe even the nickel. In an age where cards reign and cash is getting pushed back more and more, we should probably do away with dollar coins as well. I am not an economic guru, but those things either collect dust or if you actually use them, pull your pants down from the weight. Ha.

  4. Tony Mannor Says:

    But what will I use to buy my penny candy at Ye’ Olde Candy Shoppee?

  5. Andy LaFlamme Says:

    I agree that the penny is pretty much useless. The only time I ever see them used is when somebody charges *.99 for something and then its just annoying.

  6. Morriss Partee Says:

    There was a great segment on CBS’ 60 Minutes show last night on the penny. It costs nearly two cents to make each penny now. One MIT student estimates that Americans spend nearly $10 billion worth of time dealing with pennies in the course of a year. Also, nations that have eliminated the penny have experienced a short small bit of inflation just after doing so. We are soon coming upon the centennial of the penny. Just think, when the penny was first issued, it was probably worth nearly 100 times what it is today. They were probably nearly the equivalent of what a dollar is worth today. There is nothing left that you can buy for a penny. So why do we still have it again?

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