Guess it’s time to start making ‘em out of plastic. Transcript, inside…
USMINT: They’re still warm can you feel it?
60MINUTES (VO): Every year, the US Mint turns out 8 billion shiny new pennies. Using high-tech presses that operate faster than the eye can see, stamping out Abe Lincoln on blank pieces of metal.
USMINT: We’re making four pennies per second. We’re making a couple million pennies per day.
60MINUTES (VO): And, says US Mint director Ed McMoy, despite inflation, despite their lowly status, 8 billion pennies still add up to-
USMINT: 80 million dollars. That’s real money.
60MINUTES (VO): Trouble is, to get 80 million in pennies, the government spends 134 million dollars. And, to produce 1.3 billion nickels, as the mint did last year, costs 124 million, even though the coins are worth only about half that much.
60MINUTES: It’s weird economics when it really comes down to it, isn’t it?
USMINT: Well, from our perspective at the United States Mint, it’s unsustainable. You can’t sustain losses on pennies and nickels and expect to be a viable organization that benefits the American people.
60MINUTES: How did we get in this fix?
USMINT: You know, coins are made out of metal, and worldwide demand for copper, nickle, and zinc have dramatically increased over the last three years. That’s what’s primarily driving up the costs of making the penny and nickel.
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they CANNOT get rid of pennies…what would I squish??
[en.wikipedia.org]
@darkened: The reason the penny is here to stay is because of the numerous tax laws in every single state. Try paying a 6% sales tax without pennies.
How is that different to the current situation? e.g, If something costs $1.90 plus 6% tax then it’s $2.014. Try paying that without deci-pennies.
Is there a reason why the U.S. Mint couldn’t spend some $ on a “Put Your Pennies Back in Circulation” campaign? Certainly it would be cheaper than minting new ones.
sounds like they are taking this penny problem very seriously
I doubt retailers will take the time to adjust prices to take advantage of number rounding to the nearest $0.05. 2 cents earned on every transaction would probably amount to a whopping $30/day for a store the size of Walmart.
Eliminate the penny!
@disavow:
Actually, this is a problem, to the degree to which the US had to pass a law. Melting down coins is illegal, as is shipping them (in quantities >$100) out of the country.
I like eliminating the penny. Rounding to the nearest nickel is a good idea.
The dollar coin OTOH, is a nonstarter. Here’s the scenario: You go to the convenience store to buy a candy bar. The clerk has no 10s or 5s, so he gives you back 18 one dollar bills as change. Now imagine it’s 18 one dollar coins. And you have to lug them around the rest of the day, weighing down your pants. Nah Ah.
@KJones: You seem overly alarmed at the prospect of an all plastic economy. Is it possible you have something to hide? I am going to tip off my friends at the IRS to look into your activities!
@DaveTheBrave: I apologize on behalf of The Consumerist for offending you.
It’s not that the cost of metals (gold, copper, silver. zinc) are going up. It’s that the value of the dollar is going down.
Eventually, even the cost of the paper that dollar bills are printed on will cost more than the currency is worth.
All of this is a consequence of our seriously busted monetary system.
As outrageous as this comes across at first, it seems to me the important thing is not how much we lose on the production of pennies and nickels, but the final accounting of ALL money minted, and whether we lose money in the aggregate. Do we lose money on the minting of dimes, quarters, fifty cent pieces, etc.? How about paper money? Do we “make our money back” from the minting of other forms of US currency? What about the effect of “retiring” old bills and coins on the profitability (or lack thereof) of the US Mint? It’s not about a particular aspect of our outgoing monies, it’s about the final outcome: do we, or do we not, make a profit on the value of all money minted in a given year?
Pennies are a waste of space. Its not 1920 anymore, when we can buy stuff for only a penny.
@PeteRR:
From my experience…. places that deal in cash often have more of a shortage of 1 dollars than they do of higher denomination bills. Because they always have to make change for larger bills. On very RARE occasions have I ever been offered all or mostly 1 dollar bills because they didnt have higher denominations.
Yeh, every once in a long while you may have to carry around a bunch of dollar coins for a day, but that is not often enough to really have any effect.
@JustAGuy2:
Does this concern ALL coinage? Or just the modern coins? Because older silver coins (made before about 1964)could be melted down for their silver content. I knew some metal detectorists who would sell all their worn silver coins (that had no real value other than for their silver content) to precious metal buyers. I’d hate to think all my silver coin finds could never be melted down & sold for their silver content.
Why not use a super-cheap metal like aluminum? Aren’t 1-yen coins aluminum?
Added bonus: those fuckers are light as air.
@forgottenpassword:
Looks like its just pennies and nickels. Turns out melting down silver coins was illegal from 67-69…
[www.usmint.gov]
In New Zealand we eliminated 1c and 2c coins and changed $1 and $2 bills to coins long ago. I think the changes went pretty smoothly. If you’re buying several items then only the total is rounded. Now I live in the US and here I tend to accumulate a lot more coins or at least have to work harder to avoid accumulating them. In NZ most prices are labeled inclusive of tax so we tend not to have to pay such awkward amounts. I think since I left NZ they have eliminated the 5c coin too.
I’m still trying to find the $0.001 cent coins that the gas stations owe me for each gallon of gas I pump.
@Randy: bleeding socialist.
@kimsama: oh god we call those fish coins.
@Pixel: You do understand that you’d be rounding off a maximum (assuming you follow standard rounding rules) of +/- two cents per transaction? This isn’t going to make the poor any poorer. In any event, it will only be a short term effect until prices are re-adjusted or merchants just start quoting prices for everything with sales tax included, like almost every other country on the face of this planet.
For all practical purposes, nobody uses pennies any longer. Even most gumball machines are at least 10-25 cents these days. I say we just eliminate it and save a billion or so dollars over the span of 10 years.
If pennies were only used ONCE, this might be a problem. However, they stay in circulation much longer than one use.
Visit snopes, please!
From The Bureau of Engraving and Printing: During Fiscal Year 2007, it cost approximately 6.2 cents per note to produce 9.1 billion U.S. paper currency notes.
If this is true, the it would cost LESS to print $0.05 Federal Reserve Notes (avg. 6.2 cents per note) than to mint a five-cent coin (approx. 10 cents per nickel coin with current composition, at current metal prices).
It’s still “cheaper” to make pennies into coins than to print paper notes replacements.
Of course, in both cases (pennies and nickels) it probably wouldn’t be practical for the vending machine industry to add a new “recognition imprint” (or whatever the terminology) just for these notes, and notes don’t last nearly as long as coins do (21-89 months for notes, vs. 25 years, on average, for coins).
And remember, even though it’s just a joke, plastic coins will probably melt if left inside your car, truck or SUV for an extended period of time. Maybe if they coat them with the same hard-candy shell like those found on M&M’s…
I doubt America would ever go to a fully plastic-centered currency. Debit/credit cards require working with a bank, and I know there are people out there who wont want to go through a bank to use their money. The fact that card based currency would allow the government to monitor all transactions to prevent tax evasion, while good intending, is just too Big Brothery for my liking.
An unintended side effect of that – what about foreigners who come here wanting to exchange their paper money for US paper money? Would we give them the equivalent of a pre-paid charge card?
And the dollar coin has been brought back recently, although to what extent Im not sure. I got one from a vending machine a few weeks ago and thought it had given me back Canadian money.
@dregina: That is true, but the US Mint still has to buy the raw materials, then sell the pennies and nickels to banks. Therefore, the Mint still loses money on the production of these coins…
@mac-phisto: Wait, so saving $120-180 million on dollar coins is orders of magnitude more important than saving $54 million on pennies? Seems like both are important changes worth making.
I’m sure it’s been said already, but:
1- This is a perfect example of Government being too stupid to live.
2- In WWII, when copper was a vital war resource, the mint minted steel pennies. Why not today.
3- There has been a movement to abolish the penny and just move everything to blocks of five cents, with taxes rounded. If you were worried about the copper industry, you bring back the 50 cent piece, and copper coat it.
4- I went to Vietnam in spring of 2004. They had just resumed minting a coin, a 5000 Dong. They got along okay without coins, why do we need them>
5- An alternate vision is seen in Europe. Coins up to 2 Euro. Smallest bill is 5 Euro. Along with eliminating the penny, let’s redesign all the coins, and drop everything below the nickel and extend up to the $2 coin.
6- Last thing: Did they get into the cost of running limited edition quarters? Considering setup times, new molds, and everything else that comes from stopping production of a standard quarter to run a memorial to North Dakota, and then switching back, and then to South Dakota, and so on, clearly, there is cost there. Cost that can be driven out by just quitting with that nonsense.
@drjayphd: Zing! You may be right.
I calculate that the scrap value of a current penny is about 0.8 cents based on it weighing 3.5 grams, and being 97.5% zinc, which is selling for about $1.10/lb right now.
Only decades old pennies have high copper content, and it is true that with copper selling for $3.5/lb, older pennies could be worth over 2 cents in scrap.
What we need is clearly to elimanate pennies and have taxes included in posted prices. Then the merchant could choose how to do the rounding.
Heck, lets get rid of nickels too.
Another benefit is that merchants might give up their silly $.99 pricing if it became $.90 and they actually lost a dime on the silly prices.
Most of the world is way ahead of us on this front.
@PotKettleBlack:
Regarding #6, the quarters are actually a great deal for the gov’t. Since people save the special quarters, and don’t spend them, they’re, in essence, an interest-free loan to the Federal Gov’t.
@darkened: use a credit card, it’s easy
Ok, I didn’t read through all the comments and this may have been posted already, but why don’t we do what countries all over the world have done for years, change the size and the material of the penny? Are we worried that the ever so common penny gumball machine won’t work any more? Chile decided to keep their 1 peso and 5 peso coins buy making them much smaller and out of a inexpensive metal. I have a lot of coins from Colombia that were very large and are now very small, stores will take both! Why does a penny, or a nickel have to be in their current size, color and shape?
Their fuzzy math is indeed troubling. If the transcript was wrong and it says 12 pennies a second, that still only comes out to 1,036,800.
8 billion pennies a year is a daily output of 21,902,806 or 253 every second. At least their math on 1.3 billion nickels being worth $65,000,000 is right. Although that seems to be the only thing.
@Death:
If we eliminate the penny, it will just become $19.95 style pricing.
If we eliminate the nickel, too, then $19.75 style pricing.
If we eliminate all sub-dollar denominations, then $19 style pricing.
It’s not gonna make a difference. Well, actually it saves consumers 99c for every product priced like that. =P
Then again, the absence of sub-penny currency never stopped gas stations from charging that additional 99/100ths of a cent. =
All this talk of rounding, including the tax, and letting the merchant figure it out is really not what other countries do.
Other countries have a VAT – value added tax. That tax is included at each step of the production process, so there is a clear chain of who paid how much, how much value you are adding, and therefore, how much tax you have to pay.
The reason that the US does not have a VAT tax is basically because fiscal conservatives are deathly afraid of it. Why? Because it is an invisible tax, the temptation to increase it over time is too great for our weak-willed politicians!
Personally, I think it is worth the extra cost of the penny to avoid a VAT. That said, we could just make it out of cheaper materials. Spain had a plastic 1-peseta coin before the Euro…