Killing The Penny

Originally Posted: July 18th, 2006

Another one from the summer of 2006, this particular piece was my two cents on a fairly silly idea. I was vaguely amused; while I still haven't seen a balanced study on what the effects of getting rid of the penny would actually do, I'm still remain unconvinced that their death is necessary.

So this idea has been floating around for a while, and it keeps popping back up every now and again thanks to this dude from Arizona*. Basically, the argument is that because Zinc is now so expensive, pennies now cost 1.4 cents to produce. Therefore, the US Mint should stop minting pennies, and simply round all prices up or down to denominations of 5 cents, effectively killing the penny.

This has to be the single DUMBEST idea I've ever heard... I suppose it makes intuitive sense, but really:

1) What the hell would we do with all of those old pennies? There must be hundreds of millions, if not, more, pennies floating around in circulation. You mean to tell me that they're just going to be absolutely worthless? Maybe we can melt them all down and make a huge Zinc statue of the the dude that proposed the bill.

2) One thing the bill calls for is rounding prices up or down. If you were a manufacturer, wouldn't you just round you just inflate all of your prices to the nearest 5 cents instead of bending to the whim of the random teams of guys they pay to round all of these prices? (Who we also have to pay, which would surely cost a significant amount per year.) If everything you're selling is like, $X and 99 cents, wouldn't you make the consumer pay that extra cent and simply sell your product for $X+1? I sure as hell would. So we might save 4 cents on every penny, but consumers would still lose anywhere from a penny to 4 on every purchase.

3) Besides, what kind of freaking job is that anyway? "Hi, my name is Bob, and I update prices for the penny to nickel switch in 2007." Even if he's just managing the software that does it, I'm betting we'd have an all new contender for the profession with the most suicides per year.

4) Mr. Kolbe, I happen to like pennies and really do not appreciate your quest against them. Think about all the great things you can do with a penny. Donate it to charity... Penny wars... Make a wish on it by throwing it into a fountain... Flick it across the room at your buddy's head during Physics class...

5) Okay, but seriously folks. There is one real reason that there is no justification whatsoever for putting the country through all the drama of killing the penny. Seniorage. Every dollar that gets printed costs the Fed MUCH less than a dollar to produce. So what happens to all of that extra cash? The government keeps it. This is called Seniorage. The penny costing more-than-a-penny to make most CERTAINLY does not endanger such "profits"; the mint can afford to keep making pennies.

So this is NOT a serious problem. It's not even a real problem; it is purely imagined. Sure, it might be nice to have some extra reserves by killing the penny, but its existence poses no threat whatsoever to anything. What might pose a threat is state representatives wasting taxpayers' time, money, attention and cognitive abilities puzzling over a nonexistent problem.

*And by dude from Arizona, I meant, *ahem*, the respectable Senator from Arizona. My bad.