It wasn’t long ago that the price of copper started rise to the level where a pound of pennies (about 145) cost more than their face value to produce. The last year a 95% copper penny was made was 1982, just under 17 billion pennies minted that year. Since then, pennies have been made of zinc with a plating of copper less than 1% of the penny’s weight. By the way, if you want to try to tell the difference between a current penny or a pre-1982 cent, just drop it on the table, the copper cent has a slight ring, but the zinc just a mild thud. Still, with the price of zinc rising as well, there are efforts to stop producing the penny and just rounding purchases. We’ll see if the penny leaves our change purses one day.
But, that’s all an introduction. It seems now the dollar bill is now at risk. Earlier this year, the GAO (Government Accountability Office) produced a report concluding that by removing the dollar bill from circulation and forcing the distribution of the dollar coin, the government can save nearly $5.5 billion over 30 years or $184 million dollars per year net present benefit. When we look at the Federal Budget of $3.7 trillion dollars (That’s 3,700 billions) this savings might seem small. But, to quote Senator Everett Dirksen, ““A billion here, a billion there, and pretty soon you’re talking real money.” In this case, let’s kill the paper and start to look for other ways to save a couple hundred million dollars, soon, we’ll be talking real money.
How would 4 dollar coins feel in your pocket? I often find the quarters adding up, and pulled eight out of my pocket last night. They weighed 45 grams, just a bit more than 5 dollar coins weigh. So, to keep my pockets from ripping, I’d probably be just a bit more careful to spend the change when I spend cash and don’t charge a small item. What would you miss more, the penny, or the dollar bill? I do have one proposal. If we get rid of George’s bill, let’s keep minting his image on the coin, at least for some fraction of coins per year. And then just mint as many as it takes to keep the cashiers happy.
I wouldn’t miss either the penny or the paper dollar bill. I enjoyed the coin dollar in Canada.
I don’t like the idea of rounding up (or down for that matter) the cost of an item after tax, etc. That will go against the buyer when it is up, and against the seller when it is down. Someone will always lose money. Not good. So,my vote is to keep the penny.
I have NO problem in changing the dollar to a coin though, but would agree to leaving George’s picture on it though… Converting to a coin may mean that men go back to carrying “coin purses” as they use to many years ago. (My grandfather did until he died a few years ago! He didn’t want to lose any of his money and wanted it all together.)
Don
http://exposeyourblog.com
Don – excellent point, but after say a dozen transactions, won’t the average be for both buyers and seller to break even? You’ll have as many 3 or 4 ends that round to 5 as you would 1 or 2 rounding down to 0. Of course this is in theory. In reality, it’s 50/50 for each and every purchase, And you’d have some chance of a bad losing streak.
Joe, when I was in Germany, they rounded at the Armed Forces Stores to “check it out”. I found that, with the way pricing was (and still is) and with taxes, etc, that in my case, 96% of the time, *I* lost out most of the time, with the store losing out about 4% of the time. i.e., most of the time it was rounded up. That said, even if it is a 50/50 break, it still messes up the books and makes accounting at the back end a bit harder…
Don
http://exposeyourblog.com
Now you have me wondering. I’ll start paying attention or look at a recent credit card bill to see the last digit of transactions.
I think if we’re going to lose the penny we should just take the next step and lose the nickle so we just drop a decimal place like we did when we dropped the mills and half pennies.
While were at it we could drop the 50 cent piece the 2 dollar bill and susan B anthony to stop people thinking it’s a quarter and add back the 500 and 1000 bills due to inflation.
Two things that would be nice would be: Redesign the dollar coin and a new five coin with a hole in the center for a coin loop or stack for clean pockets. Mandate that only vending machines that accept all the new coins can be in service. It’s hit or miss if a vending machine will deal with a dollar coin even if it looks like it’s the same model as one that accepts it.
Remember the U.S. Mint’s attempts to get more dollar coins in circulation by “selling” $1 coins at face value, with tax-funded shipping charges, and letting buyers pay by credit card? It was a rewards bonus free-for-all!!
Ha! Yes, I remember. It seemed a lot of trouble to get $500 worth of coins, spend the time and gas to get to the bank, wait on line and deposit them. But I know enough people did this that they now charge for shipping and don’t take charge cards.
Are the costs so high because paper money falls apart so soon? Why not use something other than paper for our single dollars? Like that white indestructable plastic stuff made into mailing envelopes.
As for coinage, what do other countries do? What would a steel penny cost to produce, like that used during WW2? What about aluminum?
If the penny were eliminated, sales taxes would increase, as would the price of stamps. It would be more income for the government but wouldn’t help the consumer any. No more 99 cents sales.
I’d keep the penny in some form or another, and go for Tyvek dollars.
Drockel,
I agree with the redesign of the $1 coin, and the making of a $5 coin, but disagree in the removal of the nickel and penny, as that increases the cost of each item again. When the mills and 1/2 pennies were removed, cost went up as well, and it became harder for many to buy items they use to buy. It would be less of a problem today, but still an issue to consider.
$500 and $1000 bills are still produced today, but only for bank use, and aren’t used as much now with the transfers happening electronically instead of physically as in days of old, so putting them back into circulation wouldn’t be that hard, but the only user would be the Drug Lords probably…
Don
http://exposeyourblog.com