Death to Pennies
Originally appeared on Grey's Blog and has recently been featured on Marginal Revolution and Greg Mankiw's blog.
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Thursday, December 08, 2011
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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12 Comments:
Australia also had a two cent coin which it ditched not long after.
There are only two pieces of sound money in America: The penny and the nickel. The problem is not the existence of the penny, the problem is that we have a policy of devaluing our currency (2% inflation target).
Our track record of changing the value of money has been poor. The elimination of the half cent and large cent in 1856 was followed by the panic of 1857. The elimination of paper money for land purchases from the government (species circular) led to the panic of 1837. Demonetizing silver in 1873 (Coinage Act of 1873) led to the panic of 1873. The Sherman Silver Purchase Act of 1890 was a contributing factor in the Panic of 1893.
Only the pre-1983 pennies (95% copper). They now cost more than their face or intrinsic values to manufacture.
Or we could revalue the dollar to the point where pennies cn buy something again.
Since the penny and Nickel cost more to produce than they are worth, perhaps the mint needs to make them worth more. For example, the back of a penny would be great advertising space. The mint made 4 billion penies in 2010 ($40 million). How much would advertisers be willing to spend to have their logo on the back of a penny or nickel? Would it be worth $40 million to McDonalds to have the golden arches on the back of a penny? The Wal-mart logo? Exxon?
Want to get rid of the penny?
O.K. then what about sales tax on cash sales?
You think local and state government entities are going to round down to the nearest nickle or dime or round up to the next nickle or dime?
j--
"You think local and state government entities are going to round down to the nearest nickle or dime or round up to the next nickle or dime?"
when i lived in australia, they just round to whichever is closer. it winds up coming out so close to even for a consumer that i doubt anyone could tell the difference.
"when i lived in australia, they just round to whichever is closer"...
Yeah morganovich but that was Australia and I personally don't have faith that that sort of common sense will happen here especially in cities and states carrying large debt loads and are all to willing to foist more taxes onto their citizens...
As far as I'm concerned, we could eliminate everything but the quarter and dime. I'm sure that everyone on this board is like me - I must have hundreds of dollars worth of change in various jars, drawers and my car.
I think I'm losing more money with this worthless junk than if they rounded UP every time.
The bank used to take my change and even they don't take it anymore.
There's no way I'd lose as much by rounding than I do by having this crap sitting all around me with nowhere to go.
"There's no way I'd lose as much by rounding than I do by having this crap sitting all around me with nowhere to go"...
Round it up and take it to one of these machines many of which are located in grocery stores...
Those machines take 10%. Rounding to the dime would be less and I wouldn't spend any time/effort/money taking this junk to a machine.
I think the prevalence of those machines prove rounding to the dime is very doable...people are losing more every time they use one.
Eh, coloring around the edges, there will be no physical currency within a decade or two, when everyone has digital wallets and NFC chips in their smartphones and tablets. Japan has been doing this for years. If you don't want to carry US currency on your smartphone, which isn't even an option right now with physical currency, you will be able to hold your value in bitcoin or e-gold or all manner of new digital stores of value and "pay" with those when you want. The internet and mobile devices are about to radically remake the "currency" market, tweaking the denomination of coins is chump change in the face of the giant changes that are coming. :)
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