Would this compromise work for the "Eliminate the Penny" Debate?

I know that this was brought up myriad times on this forum, but this WSJ Article from last month sparked my interest in the topic some more. So I reread older proposals that predominantly suggest that we follow suit with some of the European countries and our neighbors to the north, and simply eliminate the penny altogether. But, this seems to be going nowhere as lobbying by Zinc producers remains strong due to the profits made from the billions of pennies produced each year. Not to mention, I've also read that the 2 and 5 euro cents also cost more to produce than their face value, so the European minters seem to have held only a short run solution to the matter.

So, I brainstormed a bit and thought about this solution:

• Eliminate the 1 cent denomination

• Convert the penny as we know it into the 5 cent, with a higher copper content.

+ This appeases the mostly zinc producers who lobby heavily against previous proposals to simply eliminate the penny altogether
+ Go back to 95% Cu 5% Zn, or some variation of Cu & Zn with a much higher Cu content than the present 2.5% Cu content
+ Add edge reeding to help consumers and banks to more easily differentiate between older 1 cent pennies and newer 5 cent copper coins of the same size. ​

• Convert the nickel as we know it into the 10 cent

+ Add edge reeding to help consumers and banks to more easily differentiate between older 5 cent nickels and newer 10 cent coins of the same size. ​

• Eliminate the dime as we know it

+ To create a parallel between denomination value and the coin's diameter​

• Quarter and higher denominations remain unchanged

​

We then have all denominations but the penny, and what results is a win-win compromise among all major parties. And, correct me if I'm wrong, but vending machines wouldn't need any major mechanical overhaul, but would need to change how it reads the coins coming in (a relatively simple coding change?).

All that said, I know that eliminating the dime altogether may not sit well with many collectors, but a) there will be new designs and reeding to plain edge coins to bring some more novelty into the hobby, and b) I fear that change one way or another is inevitable and the alternative would be to simply eliminate pennies from future collecting without anything new added.

Thoughts?

Thanks in advance!


Just some graphs showing the cost to produce a penny and nickel:

 

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Or we could eliminate money altogether and just use plastic.

 

Is Britain debating getting rid of the penny?

 

The OP's idea would necessitate a massive reset or redesign of vending machines. Dead in the water.

I'd like to know the gross revenue collected by vending machines, annually, over the past 25 years, but I'm too lazy to look for statistics.

 

So if cents no longer exist, we now have to round up to the nearest up everything we buy?? SOUNDS LIKE IM GONNA BE LOOSING A BUNCH OF MONEY NOW

 

Right! Change the cents value to 5 cents and the nickels value to 10 cents!

That way, the folks who cannot tell the difference between a SBA Dollar and a Washington Quarter will go completely insane!

 

Another RIGHT!

You will LOSE SO MUCH MONEY that bankruptcy will be right around the corner!

Markets will fail around the world based upon that 2 cent loss and I have absolutely no idea whether or not you're being serious...........

On the positive side, since Donald J Trump is such a stickler for saving money, maybe he'll instruct the Treasury Department to STOP producing cent coins and nickels? Maybe he'll instruct the Treasury to STOP ordering paper bills and start producing dollar coins?

 

Also I don't think vending machines work on coding lol. I believe they work on weight and diameter

It was a joke/not joke. Seriously though other then online currency, ie credit cards, nobody could any longer sell things for example for $1.98 How would you pay that? You would have to give them 2 dollars, hence loosing 2 cents. I mean they wont be loosing, the people buying would be. Maybe you're right, trump would be all over this because it would make companies even more money!

 

What's the profit that the Treasury makes on the other coins, and what is the net result?

Also, we DEFINITELY don't want to go to a cashless system, IMHO.

 

Could the US simply stop minting the cent and allow the current supply in circulation to suffice?

 

Lol that wont happen, me, im sure like many others, would hoard every penny they could find if they did that.

 

For Garlicus, here is the big fancy word you're searching for:

Seigniorage /ˈseɪnjərɪdʒ/, also spelled seignorage or seigneurage (from Old French seigneuriage "right of the lord (seigneur) to mint money"), is the difference between the value of money and the cost to produce and distribute it. The term can be applied in the following ways:

[This is the start of a lengthy article in Wikipedia...]

• Seigniorage derived from specie—metal coins—is a tax, added to the total price of a coin (metal content and production costs), that a customer of the mint had to pay to the mint, and that was sent to the sovereign of the political area.
• Seigniorage derived from notes is more indirect, being the difference between interest earned on securities acquired in exchange for bank notes and the costs of producing and distributing those notes.

The term also applies to monetary seignorage, where sovereign-issued securities are exchanged for newly minted bank notes by a central bank, thus allowing the sovereign to 'borrow' without needing to repay. However, monetary seignorage refers to the sovereign revenue obtained through routine debt monetization, including expanding the money supply during GDP growth and meeting yearly inflation targets.

Seigniorage is a convenient source of revenue for some governments. By providing the government with increased purchasing power at the expense of the public's purchasing power, it imposes what is metaphorically known as an inflation tax on the public.

 

Get rid of the cent, half dollar and dollar coins. The second two don't really circulate so why waste money minting them.

 

The main reason half dollars and dollar coins don't circulate, there's no room for them in the cash register drawer, and that's not likely to change. But over the lifetime of a dollar coin, as compared to dollar bills, they are MUCH cheaper to produce.

Same downside again, industry would have to modify vending machines, and that's not likely, either. In coins were moderately familiar with, Canada has taken the lead; dollar coins, yes, and cents, now consigned to the dustbin of history.

 

This is a dumb debate due to the loss incurred by the Government in producing the cent is peanut money relative to the annual budget. The primary function of the Mint is to produce coinage to facilitate exchange of money in commerce. The cent is ingrained in our exchange system. Also a significant amount of cost associated with cent production comes from general allocated expenditures of the Mint which would still remain if cent production was halted. These cost would have to be reassigned to the other denominations making their production more expensive on a cost per unit basis. Then there is the problem of breakage of which many States would certainly take advantage. Already some states when applying sales tax claim breakage to the next highest denomination. In other words the tax is always rounded up to the next highest cent amount. Assuming 6% Sales Tax everything selling from $0.95 to $0.99 (cents) would break to $1.05. The next highest nickel amount.

 

I have saved every cent I received in change for 40 years. 55 gallon drum is nearly full.

 

Actually most conversion schemes have used a round up/down as it's more fair

.x0 stays .x0
.x1 to .x0 (favors consumer by .01)
.x2 to .x0 (favors consumer by .02)
.x3 to .x5 (favors merchant by .02)
.x4 to .x5 (favors merchant by .01)
.x5 stays .x5
.x6 to .x5 (favors consumer by .01)
.x7 to .x5 (favors consumer by .02)
.x8 to .10 (favors merchant by .02)
.x9 to .10 (favors merchant by .01)

and repeat

As long as transactions are evenly distributed, it works out fairly. If transactions are of single items priced at .x8 and .x9 it slightly favors the merchant.

 

Not to be argumentative, Doug, but there is plenty of room in the standard cash register drawer for half dollars, although many businesses use the far left compartment for rolls of coins. Half dollars are too big and bulky, so many people refuse to use them. Years ago I worked at a store and when someone paid with half dollars I had a heck of a time getting rid of them. People flat out refused to take them in change. The large Eisenhower dollar follows the same too large and too heavy argument and never circulated for that very reason. The small dollar size confused people as they were close to the size of a quarter. I agree that our coinage needs changing. Having spent time in Europe I grew to like their coinage and would hope that at some point we fashion ours similarly, keeping in mind that size and appearance are paramount.

 

I would agree about the Ike Dollar, but people used halves for 150 years and never gave it a thought. Blame the U.S. Mint -- they got off on the wrong foot by minting zillions of confusing "gold" Presidential dollars, and now have warehouses full of them, someplace.

 

Weights and diameters won't change at all, and the only thing that would be required is how those weights correlate with the denomination value. A lot of new vending machines are electronic, too, if not most of the ones available today in stadiums, workplaces, etc. Many accept bills and some even accept credit cards!

But it begs the question... coinage can be produced more cost effectively to facilitate the exchange of money in commerce.