Some thoughts for your pennies

[MaggieL]

Being of late importuned by the "View new messages" link to not "forget to start new threads too", the following new controversy is presented for your edification:

There's a move a foot to do away with pennies. Various inflationary forces, the same that have led us to the point of needing a $1 coin, also lead us to the point that pennies now cost .81 cents each to make, and costs people who must deal in these smallest soldiers in our decimal currency army 60 cents for a roll of 50...uh...cents. Additional costs arise from handling, counting, storing, etc, etc. etc.

Now comes Representative Jim Kolbe (R-Ariz.), offering up the Legal Tender Modernization Act, supported by the Coin Coalition, but opposed by "Americans for Common Cents", who support keeping pennies around, and who point out that Kolbe's home state is the largest producer of copper.

Now, you'd think a copper producing state would be in favor of pennies. But AFCC points out that pennies are only copper-clad, with a zinc core. Doing away with pennies will cause more use of nickels...which aren't nickel anymore, but nickel cladding over a *copper* core. Of course, the Coin Coalition points out that AFCC is funded by the zinc cartel...

Such a country!

http://money.cnn.com/2002/04/11/pf/q_pennies/index.htm

[russotto]

When are politicians and bureaucrats going to learn not to screw with the money system too much. Funny designs on quarters, OK -- but that's about as far as you can go. Trying to replace the $1 bill with the Sacajawea didn't work, despite initial demand for the coin. And eliminating the penny won't either.

Unless of course they replace it with a .04 and/or a .09 :-)

[Griff]

I guess if all local governments were to eliminate sales taxes we could get by without pennies.

[MaggieL]

Originally posted by Griff
I guess if all local governments were to eliminate sales taxes we could get by without pennies.

Not as long as the marketdroids mark things with prices like $4.97 so they can say "under $5". :-)

Eh, but when you gave them $5 to pay for it, they would have hell making change. I think they'd just cut it to $4.95 and eat the two cents lost

[tw]

Originally posted by dhamsaic
Eh, but when you gave them $5 to pay for it, they would have hell making change. I think they'd just cut it to $4.95 and eat the two cents lost

Eliminate the penny and nickel - and we have currency equivalent to 1950s. The dime today is equal to the penny of 1950. We don't need the penny or nickel today as we didn't need a 1/10th cent in 1950. However we have something in excessive numbers. MBAs. Bean counter mentalities who want to count every cent as if a missing penny would destroy the books - while a million here and a million there are lost due to stifled innovation. Classic example of bean counters.

Even taxes are rounded off to dollars.

No country in the world, except the US, uses paper for denominations so small as the $1 bill. A Pepsi commercial where a dollar bill is rejected by a soda machine should have made facts obvious. Paper dollar bills make life more difficult. The Sacajawea dollar would have been successful if we could find one. I ask often but no one has any. Almost half were saved, like pennies in a jar, as collector items. (Pennies? Notice the segway.) Vending machines and pay phones did not have adjust - even though dollar coins are legal tender meaning they had to accept the $1 coin.

Coins have an average life expectancy of 20 years. Half of your coins should be printed before 1982. But we throw pennies away so quickly that most all pennies are post 1995. You would think Congress would get the message. Nope. It requires thinking. Congress is still manipulated by legalized bribery - logic be damned. Eliminate the silly penny and nickel.

Get rid of the paper dollar bill whose life expectancy is a little more than 1 year. Paper dollar bills are a classic example of decisions based upon politics - reality be damned. Why do we keep them? You can't even make a toll call pay phones anymore for less than a dollar. You can't bribe a politican with a penny or a paper dollar. What good is it?

[elSicomoro]

IIRC, pre-Euro France did away with their equivalent of the 1-cent piece. I'll ask my boss Monday if she noticed any difference, as she spent a year over there in the late 90s.

One of the arguments here against retiring the penny is that prices will be rounded up to the nearest .05. So, at worst, I might have to pay an extra .04 on items I purchase. *shrugs* If it keeps the money circulating in the economy, it can't be all bad.

[jaguar]

Syc - rounded the most extra you'd have to pay is 2c. They did the smae here (abolish 1 and 2 cent coins). I think they only people that noticed were lolly shops.

[elSicomoro]

Originally posted by jaguar
the most extra you'd have to pay is 2c.

No, the fear is that everything will be rounded up. So, if something is (and this is an odd situation, but) $4.51, it would become $4.55. No rounding down in this scenario.

[jaguar]

?!?!?!?
Why the hell would it work like that?
utterly stupid
damn yanks can't even do primary school maths properly =p

[elSicomoro]

Originally posted by jaguar
?!?!?!?
Why the hell would it work like that?
utterly stupid

Sure it is stupid, but businesses also like to make money.

After giving this more thought, I could see the scenario play out like this...I'll use retail as an example.

A supplier or distributor raises its prices...from my experiences, suppliers are more likely to have a price like $4.51. So, they raise their price to $4.55. Now, the retail shop has to pay 4 cents more, which could lead them to raise the price of the product to protect their profit margin...so I could wind up paying more than 4 cents.

Of course, this is a wild, worst-case scenario. Truth be told, I don't think we would really notice the price change. Get rid of the penny. It's of no real use to us anymore.

[hertz]

Originally posted by sycamore
A supplier or distributor raises its prices...from my experiences, suppliers are more likely to have a price like $4.51. So, they raise their price to $4.55. Now, the retail shop has to pay 4 cents more, which could lead them to raise the price of the product to protect their profit margin...so I could wind up paying more than 4 cents.

I don't see why wholesale prices need to increase. Most transactions between distributors and retailers use non-cash payment methods.

And even if cash is paid, worst case is an extra 4 cents per transaction. So the increase is distributed over the whole carton or pallette, or whatever the size of the order is.

[Undertoad]

I don't think the rounding is worth anything. Those people who use it to argue for the penny are stilly.

Whenever I buy anything with cash, I never pay with any change. I only pay with bills. The change goes into my pocket. When I get home the change goes into a jar. When the jar is filled it goes to the bank.

Effectively, I'm rounding every purchase up to the nearest dollar, until I turn that change in. And when I do, it works out to something like $30 a year.

So the price is $30 a year to round up to the nearest DOLLAR, but all we want to do is round up to the nearest nickel. That would be a fraction of $30...

But even that doesn't matter. After a period of time, the rounding would be taken into consideration by the market. It's not like the profit margin for every item suddenly increases by a few cents. Most businesses will take any extra money gotten from such rounding and put it right back into the business - because that's what the competition is going to do.

And that's especially true for items that aren't priced very high. The profit on a macaroni & cheese, at $.33, is probably 1 cent. To really get good profit margins, you have to stereos and web development and stuff.

[SteveDallas]

Originally posted by tw

The Sacajawea dollar would have been successful if we could find one. I ask often but no one has any. Almost half were saved, like pennies in a jar, as collector items. (Pennies? Notice the segway.) Vending machines and pay phones did not have adjust - even though dollar coins are legal tender meaning they had to accept the $1 coin.

Have we already decided that the Sacajawea coin is unsuccessful already? Jeez. I say get rid of the $1 bill. Can somebody point to numbers that give the minting costs of the various currency? It's not hard to understand why a new coin has trouble gaining a foothold (vending machines have to be adjusted and cash drawers need an "extra" compartment). Well, when they came out with the new $20 bills they had to reprogram bill mechanisms in vending machines that took $20s. In my personal experience dollar coins (Sacajawea as well as even some Susan B. Anthonys) are readily available in the form of change when you buy train tickets from vending machines in both Philadelphia and St. Louis. This is exactly where people get most of their coins... in change when they buy something. So make it easier for stores to have the coins & give them as change. (OK, I said that, I have no idea how to do it. Except, as I said, discontinuing the $1 bill.)

[russotto]

Originally posted by kbarger


Have we already decided that the Sacajawea coin is unsuccessful already? Jeez. I say get rid of the $1 bill.

Yes. The mint has ceased production. Treasury would love to get rid of the $1 bill, but such a move would be too unpopular; I think they hoped the Saccie would be popular enough to allow the bill to be phased out.