Is the Cent Wothless?

You're obviously too young to remember "penny" candy. Hell, you could buy a whole Snickers bar or ice cream sandwich for a nickel! ...that really wasn't that long ago...45 years. In my home town (Indian Hills, Ohio) we could see a matinee movie with a Coke and popcorn for $.50 ...in 1963.

 

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Not only do I think coins that cost more to make than their face value should be phased out, but I think the government has a duty to do so when they are wasting taxpayer's money by continuing to mint uselessly low-value denominations for nothing other than sentimental reasons...

It needen't have got to this state if governments all over the world hadn't abandoned the gold-standard early in the last century in favour of fiat currency that they could devalue and inflate at will for the sake of temporary political expediancy, but there you go.....

 

Some many say it worthless.
:kewl: but I still love to search roll of them!!

 

Ok I'm confused now. If the cent was worth about what a dollar is today why did they mint a three cent piece to make buying a stamp more convenient only to have the price of stamps exceed thee cents before the first piece hit circulation? Are you suggesting it cost the equivilent of four dollars today to mail a letter? Given inflation based on these numbers we'd be paying just under a hundred dollars today to send a letter. What am I missing here?
Guy

 

Just a gold standard inquiry.

The total amount of gold ever mined is estimated at about 160,000 tonnes which based on the current price would be worth about 5.5 trillion US dollars. World Governments hold significantly less than this amount (say 20% or so) in reserves.

So if we calculated the value of all the world's outstanding currencies in US Dollars - took this value and backed it with gold - how much would gold have to be valued at per ounce?

 

One the value of a cent then having the purchasing power of a dollar today was for when the cent was introduced not sixty years later when the postage was set at 3 cents. By then it was closer to the purchasing power of todays fifty cent piece. So call it a dollar and a half to mail a letter. Two the three cent postage lasted for many years it did not disappear before the first three cent pieces were issued. Three postal rates are relatively much cheaper today because of economies of scale, much better and faster transportation, and the introduction of interstates and airplanes. Just what do you think it would cost to pay someone today to carry your letter across the country today if they had to walk or go on horseback and not use the paved roads we have today? It just might cost you $50 to mail that letter.

 

Hey, if it wasn't for the penny we'd all be broke.

 

Apparently it does.

The cent and the nickel costs more to make and distribute than they are worth.

See the chart at the top of page 30 on their annual report which is at http://www.usmint.gov/downloads/about/annual_report/2009AnnualReport.pdf

And the sentence: "One-cent and five-cent coins were produced at a loss of $22.0 million"

And the table on the bottom of page 32

Overall cost for producing and distributing:
cent: 0.0162
nickel: 0.0603
dime: 0.0565
quarter: 0.1131
dollar: 0.3040

 

There is no need for the one-cent coin

Pennies are not totally worthless, but we should stop making them.

1. It costs the government (taxypayers) more to produce and distribute them than they're worth.

2. It costs time at the cash register to hand over or receive pennies in change. This is not a trivial amount of time. I believe it's on the order of two seconds per cash transaction. Multiply it out and that's a decent amount of time and money spent.

3. Most people don't use them, instead throwing them away or putting them in a big jar. Retailers don't like them either. Look at the mintage figures. Do we really need 8,000,000,000 new pennies made each year for commerce? No. Most leave circulation quickly and are not used.

4. The coin serves no practical purpose. Nothing costs one cent. Rounding the total cash price to the nearest nickel would cost neither consumers nor merchants anything, but would save the time spent dealing with pennies.

Other countries have eliminated their low-denomination coins and saved time and money. I understand the emotional attachment to pennies, but in 2010 they serve no practical purpose. Besides, with so many pennies made just in the last 30 years (the practical lifetime of a coin) there would be enough pennies to last many years even if people still wanted to use them.

Paul

 

nothing costs 5, 10, or 25 cents either, so does that mean we should get rid of them too? i'm sorry, but imo, that is a lame excuse to get rid of the cent.

as far as it costing more than face to make, then change what it is made of. it's been done before.

 

Nice link. Thanks. Interesting to look at the costs.

On page 32, why don't they have any numbers for the Kennedy half dollar?

Did they make any 2009 halves for circulation? Or were they all numismatic products?

 

You could make an argument that the nickel should be eliminated, too, but let's take things slowly.

There is no need for the penny even if it's made from something that reduces its cost. It serves no purpose whatsoever. There is no need to have a coin of such little value.

If we don't update our coin and bill system, by eliminating the penny and dollar bill for example, coins will become increasingly worthless and bothersome and will hasten all coins' demise. I don't think that's what any of us want.

Paul

 

Since 2002, the Kennedy half has strictly been produced for sale (at a premium) to collectors throught the mint only. I think the stats overlooked the Kennedy half because it for the most part does not circulate anymore.

Anyway, I love collecting the cent, but in all fairness it costs too much to produce them to justify continued production. We could change the composition, but honestly why even bother? I vote eliminate cents, and change the composition of the nickel. Then hang it up with the dollar bill while they are at it. I like the $2 bills better anyway!

 

get rid of the dollar bill too?? so, we'll just round up to the next $5?? i fail to see the benefits of that. and please don't be so naïve to think the government would ever round tax DOWN to the nearest $5.

 

I agree. I hope the cent stays for a long time. TC

 

Not at all -- if we keep the $1 coin

 

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Actually, you can buy things for 5, 10 or 25 cents. I'll admit that it is uncommon...but it is certainly more common than 1 cent. I know you won't go into a store and only spend a nickel, but there are private sales that will cost very little...one example can think of is making a minor purchase at a garage sale. There are often 5, 10 cent bins and those events because people are just trying to get rid of things. Plus, (and more importantly) smaller denominations to a degree are needed to make change. I believe we would be better off to drop the cent and round prices to 5 cents at this point. The cent is just impractical.

You are only considering materials cost. At some point, due to inflation, the simple cost of production of a cent makes it worth less than face value. No matter what it is made out of at this point, it costs too much to make. The machinery to make it, the dies, and electricity to run the machines all cost money and must be factored into the cost of the coin. The cent is worth so little, making it out of dirt probably wouldn't be worth it.

Exactly, the $1 coin is a great idea. Far superior to the bill in nearly every respect.

 

I think he was referring to replacing the bill with coins, like I was thinking. This move would save the taxpayers money, just like eliminating the cent denomination.

 

he didn't state keeping the $1 coin, just eliminating the $1 bill. i'm all in favor of getting rid of paper. there's something about the clank of coins that makes me feel like it's worth something, even if it is not metal-wise.

 

I think they need to keep the penny. My biggest question is how would they get rid of all of them? There are millions and millions in circulation. I realize people would start hoarding them for possible profit, but it'd still cost a lot of money. Also, i'm in charge of marking down dairy at the store i work at and i recently marked some yogurt to 25 cents. :smile 26 cents with tax. Also roman noodles are 20 cents plus tax.