It Costs $134 Million To Make $80 Million In Pennies

60 Minutes went on to a field trip to the US Mint and found out that to make $80 million worth of pennies, it costs the government $134 million. And to make around $60 million in nickels costs $124 million. The US Mint says this is because the prices for nickel, zinc, and copper have shot up a lot in the past few years.

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.

Comments

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  1. DrGirlfriend says:

    I just watched this last night. A lot more interesting than I would have thought. Like the part where it’s revealed that a prominent advocate for keeping the penny, who argues that this would only hurt the poor, actually owns the company that maufactures the die cast that the US Mint used to make the penny. Scandalous!

  2. Randy says:

    Just another reason to go to a cashless society – it would be cheaper. ;)

  3. there goes my plan of holding the world’s supply of pennies for a monopoly

  4. karerer says:

    This is why I melt all my pennies and extract the metals.

  5. Randy says:

    Oh, and thank you for posting the transcript, Ben. It helps those of us with lousy hearing to understand what they’re talking about. Kudos to you! :)

  6. BloggyMcBlogBlog says:

    Just think how much worse it would if they were still using almost pure copper for the pennies.

  7. dregina says:

    Y’all realize that nickels and pennies are used hundreds and hundreds and hundreds of times each, therefore making this story absolutely pointless, right?

  8. darkened says:

    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.

    • Galium says:

      You should contact your state, I am sure they would be more then glad to raise the tax to 10% and do away with the penny.

  9. Aladdyn says:

    what i dont get is why it would be bad for it to cost more to make an amount of currency then the currency is worth. Its not like the government sells it. Or am I wrong? I can see though its kind of silly to spend that much money on pennies, something most ppl wouldnt miss.

  10. ??v???ë???v? says:

    It’s called a cent. A penny is British. [en.wikipedia.org]

  11. Quellman says:

    Back to the wooden nickel it is then. No wait, not eco friendly. Back to the recycled paper, wooden nickel sponsored by IKEA.

  12. DeeJayQueue says:

    @dregina: Yeah but they’re making the pennies that replace the ones that go out of circulation because they’re lost or destroyed or in water jugs propping doors open. And just because a penny, or a nickel or a dollar gets used over and over again doesn’t change its worth. Each time it gets used it’s traded for something that’s equal in worth, so the value of the currency just gets shifted around a lot, but it never changes. (this is of course not taking into account inflation).

  13. thewriteguy says:

    You know the saying: It takes money to make money.

  14. Death says:

    @darkened:
    No problem, I use my debit/credit card.

  15. InThrees says:

    @darkened:

    For starters I would suggest a law being passed that begins the phaseout of pennies – merchants aren’t required to provide penny change, only nickel change, and a bill for goods after tax is rounded up to the nearest nickel for cash purchases, with the difference going to whichever local entity is charging that sales tax.

    In other words, a loaf of bread, a gallon of milk, and a carton of eggs would cost $11.35 instead of $11.31, with the 4 cent difference going to the state.

    Of course, if you pay your bill with a check, check card, credit card, WIC card or whathaveyou, the exact amount can be debited.

  16. Rusted says:

    @darkened: Why not mandate that the price marked on an item include all taxes? We are so backward here.

  17. n/a says:

    I see 2 options: move to paperless currency (credit/debt cards) or get rid of all small change and simply round everything to the nearest dollar. You can’t buy anything for less than a buck anyway so we make the dollar our smallest unit of currency. Hell, with inflation (Thanks, W!) we’ll soon need a $500 and %1000 bill just to buy a loaf of bread.

  18. Pupster says:

    What does it matter what it costs? They just print up more money to pay for it. That’s the advantage of being the mint.

  19. coan_net says:

    “60 Minutes went on to a field trip to the US Mint and found out that to make $80 million worth of pennies, it costs the government $134 million.”

    Does anyone know if that figure of $134 million is just the metal price, or the price of both metal & manufacturing cost (cost of machine, energy to run machine, cost of human to watch machine, etc…)

    Also I would be for getting rid of the penny. All cash transactions to be rounded to nearest $.05 – all electronic activity can still be to the nearest cent.

    Also, does anyone know if it would be cheaper if they changed they type of metal used. Is there a cheaper metal that can be used & still hold up like copper and such?

  20. Haha, now the gov’t realizes that they are paying more for raw materials than they can sell them for, just like every other business. Suckers.

    Maybe now they’ll report a little more honestly on inflation rates??

  21. nequam says:

    @DaveTheBrave: Apparently the US Mint never got your memo. They use cent and penny interchangeably.

  22. ChimpWithACar says:
  23. Papi Bear says:

    We MUST keep the penny for two critical reasons:

    (1) if we switched to nickels as lowest monetary unit it would, believe it or not, significantly increase inflation, because the price of many goods and services are increased over time in pennies and now would have to switch to nickels; and

    (2) foreign exchange would have to increase by nickels instead of cents which would also make markets less fluid!

  24. Bucketochicken says:

    We should all be using Pickle’s Nickles anyway.

  25. Papi Bear says:

    One other obvious point that they completely missed in the Sixty Minutes show (much to my horror as a macroeconomist):

    while it costs more than a penny to create a penny that same penny is used hundreds (or perhaps even thousands) of times before it goes out of circulation or gets misplaced. same thing with nickels and quarters. just look at the dates on your coins! so it still makes economic sense to create pennies and nickels. it is just for purposes of creating a market of exchange.

  26. Papi Bear says:

    I remember when I grew up in England we had half pennies.

    My grandma who lives in the Scottish isles still calls me a “silly hapeth”. I will not be able to call my grandkids sillty hapeths!

  27. just_paranoid says:

    i like the penny! so all of you who are too good for your pennies, give them to me. or i guess you could just keep throwing them on the ground. i’m not above picking a penny off the ground.

  28. JustAGuy2 says:

    @Papi Bear:

    As a macroeconomist, you should know that, from the gov’ts point of view, that initial transaction is the only one that matters, as it is using that new currency to purchase (even if indirectly) goods and services.

  29. just_paranoid says:

    and btw, there are pennies out there that are worth thousands!!!!

  30. forgottenpassword says:

    How about this….. we get rid of the dollar bill & replace it with the dollar coin. The money saved from not having to print new dollar bills could be used to offset the costs of making the penny & nickel.

    I think I read once that a dollar bill lasts for approx. two years in circulation before it becomes ragged & worn so much that it needs to be replaced, while a dollar coin will last approx twenty years in circulation (if not lost or destroyed). THAT is a BIG difference!

    Also… as a guy who is in the metal detecting hobby, I’d LOVE the opportunity to find dollar coins at almost the same frequency that I find quarters. :D

  31. Blueskylaw says:

    @InThrees:
    Instead of the 4 cents going to the state, they can use those wonderful boxes called “computers”, and compute a refund check, or put on a savings card for me all of the pennies they owe me. Rounded down to the nearest nickel of course, thereby starting the process all over again.

  32. laserjobs says:

    Why not just make money worth something again. I am really sick of this inflation tax.

  33. AceKicker says:

    I don’t see pennys going away anytime soon, but the story comment about making them out of plastic… maybe not literally but maybe we should start looking at alternative materials. I’m pretty sure most vending machines don’t take them anyways, so relatively little harm to swap out the materials.

    [obvious] Though preferably not a petroleum product, as we know how the material worth of that has a tendancy to shoot up for no particular reason as well. [/obvious]

  34. backbroken says:

    Is this Microsoft’s fault or Best Buy’s fault? I’m getting my threads mixed up.

  35. mac-phisto says:

    i love when they take these tiny little numbers AND MAKE THEM GIGANTIC SO PEOPLE NOTICE THEM!

    do the math: 8 billion pennies costing $134 million equals a per unit cost of 1.675 cents. that’s right: it costs a little over 1 1/2 cents to make 1 cent. wow! thanks for that smoking gun!

    if you really want to get serious about saving money in terms of currency, abolish the dollar bill. cost savings of $120 – $180 million per year if dollar notes were switched to dollar coins.

  36. MCGeest says:

    It’s the evil FED and NAFTA and the CFR all in their evil plans of controlling the world trough inflation! Somehow…

  37. Papi Bear says:

    @JustAGuy2: I think the Obamaniacs are going to demand his face on the one dollar bill if he is elected.

  38. thejives says:

    The best part: “Oooh, they’re still warm!”
    Failing monetary policy is so tantalizing!

  39. snoop-blog says:

    @laserjobs: lol. amen! after reading many of your witty, humorus comments, i’m putting you in my friends and following your comments!

  40. Murph1908 says:

    @Papi Bear:
    I disagree. The phase out would be implemented at the sales transaction point, not the pricing point. For example, a pipe company could still charge .21 per foot of PVC. But when the buyer buys 3 feet for a total of .63, he just pays .65.

    The business would round every transaction to the nearest 5 cents. The consumer would benefit for .01 and .02, the business would benefit for .03 .04. It all evens out in the end, and nobody has to carry pennies.

  41. KJones says:

    Plastic pennies? Wouldn’t that be worse for the environment?

    Some are in favour of eliminating pennies, but that will only lead companies to increase prices and by rounding off upward.

    Here’s a better idea: create a two cent coin, a “twenny”, and gradually phase out the penny. Sure, might add short term cost, but it would cost less per coin, and would not measurably change the way change is changed. (I couldn’t resist that bit.)

    As well, the current coin metal could be melted down and recycled into the new coins, offsetting the cost of replacing by not purchasing new metal. After the switch, the glut of metal on the market would mean lower prices for printing new twennies and other coins.

  42. Papi Bear says:

    Isn’t it possible that we could switch to an entirely plastic (debit card) economy and that would prevent people from skipping on their taxes since the government could monitor every transaction? If we replace the federal income tax with a national sales tax I think we would need to switch exclusively to plastic. It would also avoid money laundering.

  43. Crymson_77 says:

    @backbroken: Probably Microsoft, they practically print money anyway…

  44. warf0x0r says:

    @backbroken: It’s actually circut cities fault and they’re taking it very seriously.

  45. mac-phisto says:

    @Papi Bear: how exactly do you pronounce “obamaniacs” anyway? is it like oba-maniacs or is it obama-niacs? that second one’s tough to say, but probably more correct.

  46. JustAGuy2 says:

    @Papi Bear:

    Interestingly enough, it’s Illinois folks (like Obama) who, along with the nickel manufacturers, fight to keep the penny. Land of Lincoln and all that.

  47. polyeaster says:

    You spelled, “nickels,” incorrectly.

  48. wfpearson says:

    Why don’t we just keep manufacturing copper and nickel, 1 and 5 cent pieces, and back the currency with precious metals like we used to. It would solve more problems than just the cost of coinage.

  49. Shadowman615 says:

    It must have been a long weekend. The word “pennies” looks to me a lot like “penises” at first glance. In fact, this whole comment thread is a lot better if you substitute each occurrence that way!

  50. Pixel says:

    I just want to note something for everyone suggesting we round up to the nearest nickel on cash sales and do the exact amount on debit/credit sales.

    This will hurt the poorest people the most. The people least likely to have a checking account or a credit card will have to pay more. The people who are on the ragged edge of poverty and using check-cashing places to get money because they can’t get a bank account will be the ones paying more for goods & services.

    This makes poor economic and social cents.

  51. AceKicker says:

    @Papi Bear: In an ideal world, yes that would be nice. However creating the infrastructure nationwide might be a bit more daunting than you might think.

    Though we’re already moving in that direction. If you think about it, it’s only been a few short years since fast food started to accept plastic at the window. I hardly ever use real cash anymore, and use plastic whenever I can get away with it. The best solution might just be to wait a while longer and let the market slowly continue to make plastic the more convenient choice and phase out material currency in time.

  52. Rectilinear Propagation says:

    @Bucketochicken: Nickels are money too!

    I’m just surprised so many of them go out of circulation that they need to make that many more a year. Take a penny, leave a penny people!

  53. rmontcal says:

    @mac-phisto: What kind of analysis is that? Whether or not you compute the unit price and try to argue that the difference is only “half of a cent”, it is still 50% more. And that 50% equals $50 million per year.

    Am I the only one concerned about the math behind “4 pennies per second” vs “couple of million of pennies per day”?

  54. bukz68 says:

    Now I’m no economist but I would assume that this is bad? Does anyone know how the gov’t puts these into circulation? I would assume that if/when a bank needs pennies they get in touch with the treasury and “purchase” a truck full of pennies? I can’t imagine a bank would pay $13.4 mil for $8 mil in pennies so would this logistically mean that the treasury is operating at a loss? Also I don’t see how phasing out the penny in favor of the nickel would cause inflation as Papi Bear suggests because if you rounded to the nearest .05 the gains of .01-.02 would be offset by the loss of .01-.02.

    At the moment the only people I see benefitting from this are those with an Office Space like scheme to steal pennies from transaction calculations.

  55. catskyfire says:

    Keep in mind that being coins, the penny is not as damageable as bills. So even if it took 2 cents to make a 1 cent coin, it will be used again and again.

    It is more wasteful to still make dollar bills, which have a lifespan of like 9 monhs.

  56. failurate says:

    @laserjobs: Yeah, I don’t think people are getting that our money (The Dollar) is worth way less than it was say 8 years ago, and that is why it costs more to produce physical money than the physical money is actually worth.

  57. Mr. Gunn says:

    Papi Bear: I find it hard to believe that inflation will rise due to rounding errors. The indices are all in percentages anyways, and not in dollar and cents.

    Let me see a show of hands by the people who remember the last time they actually gave someone a penny as the BUYER in the transaction.

  58. Papi Bear says:

    @Mr. Gunn: I get turned on by the sound of all my loose change pouring through the change counter at my local bank. It is kind of a personal fetish. I would like to meet a nice lady that has the same interest.

  59. failurate says:

    How about the gov fund an ad campaign to encourage people to quit hoarding pennies? They could have spent $3 mil on a Super Bowl ad, pushed the whole “Be a Patriot, take your pennies to the bank!” and saved the country millions of dollars.

  60. Ghede says:

    You do realize plastic is an oil by-product right? And you want them to make pennies out of them to replace the metals that shot up in price due to increased demand and decreased availability?

    … Makes sense to me.

  61. WIDTAP says:

    Look, we already have a smaller unit of currency than the cent, the mil, which is 1/10 a cent. You may have noticed this little denomination the last time you bough gasoline. We have no coin for the mil. Everyone just round to the nearest cent today.

    Has keeping the mil on the price of gasoline held back rises in gas prices? (Do you even bother to look for difference in gas prices to the mil?)

    Rounding to the nearest nickel would not be significantly different, although I like KJONES’s idea better – introduce a 2 cent coin, round to the nearest even cent (damn you nickels and quarters!)

  62. EmperorOfCanada says:

    USMINT: We’re making four pennies per second. We’re making a couple million pennies per day.

    Am I the only one who thinks that math doesnt add up?

  63. mac-phisto says:

    @bukz68: the united states produces the coins, so their “profit” (or seigniorage) from the production is lower. to illustrate, the u.s. mint produces 8 billion pennies & it costs them $134 million. net revenue = -$54 million. however, the government prints 8 billion $1 bills & it costs them $240 million. net revenue = $7.75 billion. if that is all the government produces this year, they have a net revenue of $7.25 billion.

    bear in mind that only takes into consideration new money that enters into the system. money that is reissued (damaged coins/bills destroyed & reminted/reprinted are not included – these reissued coins/notes would be expensed as a sort of “maintenance” cost within the treasury).

  64. gjdodger says:

    I guess I have been more impressed if Barbara hadn’t beat 60 Minutes to it a week ago.
    [www.snopes.com]

  65. azntg says:

    I’m confident that the Mint can find another metallic mixture that will help keep actual cost of production down and keep coins in our pockets.

    Rounding up the costs? Today, $0.03 is rounded up to $0.05. Tomorrow, $1.50 is rounded up to $2. Next month, $50 is rounded up to $100. I can see the potential right there…

    A Debit Card Society? I think the government will spend more money paying for plastic cards and issuing one to every citizen, permanent resident and visitors plus long term support and maintenance. Minting coins would probably be cheaper. Bank options? Don’t bother, they are building a new balance of ethics vs profits vs customer service.

  66. Veeber says:

    @Gyrus: And then those who are very low wage earners and don’t qualify for debit or credit cards, will essentially be paying additional taxes that higher wage earners could avoid. Not sure if this is practical

  67. taylorich says:

    So “fuzzy math” comes back for the election year. No wonder we’re in such debt.

    “USMINT: We’re making four pennies per second. We’re making a couple million pennies per day.”

    4/second = 240/minute = 14,400/hr = 345,600/day

    So which is true? Sheesh.

  68. @forgottenpassword: I don’t think strippers would like that idea very much.

  69. Veeber says:

    sorry that was suppose to be referring to the rounding to the nearest nickle (inthrees).

    In terms of going to all debit/credit. Those who have problems controlling spending depend on cash to help them limit their excess. Going fully electronic could exacerbate our debt issues.

  70. psyop63b says:

    Coins are much more durable than paper money. They last 20x longer. If the mint wants to save on it’s costs, why not stamp more denominations of currency in coin form?

    If our system of currency is based on a system of 1/100ths, don’t we need a unit of currency that represents the smallest fraction of a dollar?

  71. WIDTAP says:

    @mac-phisto: Great summary, but note that it is the US Mint which creates coins and the US Department of Bureau and Engraving that makes the folding money.

    But yes, seigniorage from both goes into the General Fund that our esteemed Congress spends.

  72. WIDTAP says:

    @psyop63b: The Mint is not free to print coins on their own. It literally takes an Act of Congress. Talk to your Representative and leave them poor, hardworking minters alone.

  73. mac-phisto says:

    @WIDTAP: that’s not entirely correct…in consumer transactions, the mil is almost always rounded up. so, $1.361 & $1.369 both equal $1.37.

    the merchant never takes a loss due to rounding, so if 5 units cost $1.96 each & the penny ceases to exist, it will always be $2 & never $1.95.

    gas station’s use of the mil is a simple advertising technique used to confuse customers. $2.999 is $3.00, but to a consumer’s eye, that first number is a huge savings.

  74. taylorich says:

    Error in the transcript, they actually say 12 pennies per second.

    12/second = 720/minute = 43,200/hr = 1,036,800/day

    Still not a “couple million” per day.

    They also say they make 8 billion per year, which would put daily output at 21,917,808 per day.

    “USMINT: Let’s make up some big numbers for 60 Minutes to sound impressive!”

  75. WIDTAP says:

    @WIDTAP: excuse me “Bureau of Printing and Engraving”.

  76. SarcasticDwarf says:

    @taylorich: They are probably talking about four pennies per second per machine.

  77. NotATool says:

    @Rusted: We do for gasoline. Now you don’t know how much tax you pay per gallon and it’s hard to find out. When the tax is “hidden” or “included in the cost”, the taxes will tend to rise because the government will be able to get away with it. That pain you feel each time you look at the “sales tax” line of a receipt is actually helping to hold the taxes in check.

  78. taylorich says:

    @SarcasticDwarf: Could be right. Might just be bad reporting and editing from 60 Minutes.

  79. Tallanvor says:

    @AceKicker: Plus, the government would probably have to nationalize the processing companies to phase out transaction fees for debit transactions (the credit card fees would likely be able to remain). –Companies wouldn’t much like the idea of paying transaction fees for purchases that used to be paid for in cash.

    The U.S. isn’t good at nationalizing things… Look at how the TSA turned out!

  80. joemono says:

    @gjdodger: Actually, longer than that. That article is from 2007.

  81. thefrontpage says:

    In the “Star Trek” world, they don’t use money anymore.

    That is why it is called science fiction.

    The answer seems simple: Seek a cheaper, less expensive material to make those pennies and nickels.

    Has everyone in government just lost their frickin’ minds?

    MAKE……THEM…..FROM….CHEAPTER….MATERIALS.

    It seems pretty simple, doesn’t it?

  82. thefrontpage says:

    That’s “CHEAPER” sted “CHEAPTER.” Typo.

  83. TangDrinker says:

    I’m waiting to see what’ll happen when inflation gets really crazy and the government has to come up with a new currency all together.

    I was in Russia and Ukraine in 1993 when currency valuations changed daily, and erratically. Some days you could use the old rubles, other days, the new. In Russia most of the shop keepers were able to keep up with this, but in Yalta, they handed out sticks of gum to deal with the odd 3 ruble change amount (for a pack of toilet paper that cost K1252 or 50 cents).

    Sticks of gum. Yum.

  84. misteral says:

    I’m surprised no one has mentioned this yet – but many countries have done away with pennies without thrusting themselves into extreme inflation.

    I was in Australia last year, and it took me a few days to realize it, but there are no pennies there. It’s a bit easier, since their taxes are included in most prices, but I had a few bills come up to $XX.21, and they asked for $XX.20. 1 or 2 cents is rounded down, 3 or 4 cents is rounded up. Same with 6 or 7 / 8 or 9 cents.

    Considering they have dollar and 2-dollar coins, I found I had less change in my pocket than when I visit the states. I just came back from 2 weeks in NC, and I was able to dump a rather large handful of pennies into my daughters piggy bank.

  85. Paddington says:

    @Papi Bear:

    I did this already.

  86. stacye says:

    @dregina: I think you and I read the same snopes article.

    @Randy: Oh my, I really hope you are not serious about that.

  87. AD8BC says:

    @dregina: What a great point… I never thought of it like that.

  88. Veeber says:

    @taylorich: I couldn’t tell if they meant that they make 12 pennies per second or the machine makes 12 pennies per second. They also have multiple mints (I think three) around the country, and at least two of those make coins for actual circulation instead of collecting. So the final number may be right, we have no idea what was edited in the segment.

  89. TechnoDestructo says:

    @dregina:

    And even if you want to look at it in terms of cost of manufacture vs. total value of every transaction, it isn’t going to be far off (either way) from paper money, because it lasts so much longer.

  90. Starfury says:

    Every time I hear someone say to go cashless it scares me. If every transaction is electronic there will be a record of every transaction you make. Sometimes you may want to buy/sell something and not have a record of the transaction (this could be legal or not).

    Keep the penny, just change the material it’s made out of to something durable/cheaper than what’s being used now.

  91. Papi Bear says:

    @Starfury: I think that if the conservatives Republicans want to follow through with their plan to eliminate the income tax and replace it with a sales tax that would necessitate a fully plastic economy to minimize avoiding the sales tax.

    Of course once all those same conservative Republicans have to pay this sales tax on their next purchase of pork rinds at their local Piggly Wiggly they will all be squealing bloody murder!

  92. Tallanvor says:

    I don’t quite understand the concern about the penny costing more to produce than it is worth, dimes, quarters, half dollars, and dollar coins cost less than their worth, and more than likely even out or even push the mint back into the positive.

  93. disavow says:

    For those who don’t understand the full significance, read up on Gresham’s Law. When currency’s face value is less than the metal it’s stamped in, eventually that currency will disappear as speculators melt it down to sell as scrap.

    Also note that it’s both pennies and NICKELS involved. Rounding everything up to the nearest five cents would be bad enough; imagine if it were all rounded to the nearest ten. I’d like to think it would balance out in the long run, but it’s all too likely merchants would raise prices just enough to make sure each item (sold individually) rounds up.

    @TangDrinker: That may be what happens eventually, unless some cheaper substitute is found for nickel (which I doubt). Even then, any machine that counts or accepts coins would have to be retooled/recalibrated for the new weight levels. If it comes to that, IMO they should just divide everything by 5, so that today’s nickels are tomorrow’s pennies–same sizes and weights, different face values. But that there’s crazy talk.

  94. drjayphd says:

    @Imaginary_Friend: They will when customers start tipping in higher denominations.

  95. nikolai says:

    It’s simple; the penny should be phased out and by law prices would be rounded up or down to the nearest nickel. The most it would ever cost you would be two cents extra (if you owed 3 cents) but you would make the two cents back on your next purchase if you only owed 2 cents and then the total price would be rounded DOWN to the nearest nickel, so it’s basically a wash for the taxpayer AND the government, and the government would save ALL of the money it takes to mint pennies.

    The next thing which needs to be fixed is the dollar bill. A dollar bill goes thru a lot in it’s average lifetime of 6 months, and will need to be replaced after that period of time, which also costs millions every year. The solution? Make the dollar bill, and JUST the dollar bill, no other denominations, out of mattress tag material. The stuff is practically indestructible, and the ink would not rub off because it’s embedded into the material. As a result, a dollar would go from lasting 6 months to probably at least a couple of years resulting in a printing savings of maybe 75% in the long haul. Of course as with the penny, there are people and vendors not to mention the Federal Reserve, who stand to lose if the dollar is designed to last longer than 6 months…

  96. Lazlo Nibble says:

    I like dollar coins too, but I think the mint’s taken enough whacks at that particular piñata over the past forty years or so. If they were going to catch on, they would have done so by now. (Though maybe something smaller and heftier like the UK Pound coin would go over better than the glorified quarters they’ve pitched the last three times around.)

  97. kc2idf says:

    I have actually stopped handling pennies and nickles. I worked out how little they are actually worth, and realised that, in the seven seconds it took me to scoop a small pile of them (6 pennies) off of my kitchen counter and drop them in the bucket across the room where I accumulate them, I had spent more than 6 cents worth of my time.

    The value, to you, the consumer, of pennies and nickels, is very low.

    Consider this: At federal minimum wage, a penny is only worth 6.2 seconds of your time; at my state’s minimum wage ($7.25 – New York), it is only worth 5.0 seconds of your time. If you spend more time than this handling a penny, you have just done work for less than minimum wage.

    Consequently, I accumulate them in a bucket and then take them to the local grocery store and run them through the Coinstar machine. It’s true that Coinstar takes a cut, but that cut is less than the time i would waste rolling them.

    For me to have to handle pennies and nickels is currently equivalent to yet another tax.

  98. KJones says:

    @Papi Bear: Isn’t it possible that we could switch to an entirely plastic (debit card) economy and that would prevent people from skipping on their taxes since the government could monitor every transaction?

    To use an ATM card when buying, there is a “service charge”: you are paying money to pay money. Who wants to waste their hard-earned cash on charges?

    As well, have you got something against privacy? I don’t want banks and businesses conspiring to match addresses and purchases to send me more junk mail.

    Don’t ask, “What have you got to hide?” The burden of proof lies with the government, not me. I have never committed a crime, and as long as I don’t, I want the anonymity of paper money. After I pay my taxes, what I do is not the government’s concern.

  99. Death says:

    I’d like to see both the penny and “$19.99″-style pricing eliminated.

  100. mac-phisto says:

    @LazloNibble: & every time they try it, they miss the key step: announcing that they will cease to produce dollar notes.

    back in the early 90′s, when canada first started using the “loonies”, there were signs at seemingly every establishment: NO LOONIES HERE or LOONIES NOT ACCEPTED. the government stopped printing dollar bills & pulled old dollar out of circulation & look at where they are today: $1 COIN & $2 COIN (no notes).

    as to the design – who cares? did people stop using dimes when they put eisenhower on the front? did they stop using new $50 notes when the BEP made them pink (we all know the 5′s should be pink & the 50′s blue!)? do you leave the $1 coins in the slot when they come back as change at the post office/train station/etc.?

    money is money – as long as people have a choice, they will gravitate towards their preference. eliminate the choice & they will use what remains.

  101. legotech says:

    they CANNOT get rid of pennies…what would I squish??
    [en.wikipedia.org]

  102. tetranz says:

    @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.

  103. breny says:

    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.

  104. snazz says:

    sounds like they are taking this penny problem very seriously

  105. bbbici says:

    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!

  106. JustAGuy2 says:

    @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.

  107. PeteRR says:

    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.

  108. Papi Bear says:

    @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!

  109. toddiot says:

    @DaveTheBrave: I apologize on behalf of The Consumerist for offending you.

  110. Apeweek says:

    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.

  111. ClankBoomSteam says:

    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?

  112. rdldr1 says:

    Pennies are a waste of space. Its not 1920 anymore, when we can buy stuff for only a penny.

  113. forgottenpassword says:

    @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.

  114. forgottenpassword says:

    @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.

  115. kimsama says:

    Why not use a super-cheap metal like aluminum? Aren’t 1-yen coins aluminum?

    Added bonus: those fuckers are light as air.

  116. JustAGuy2 says:

    @forgottenpassword:

    Looks like its just pennies and nickels. Turns out melting down silver coins was illegal from 67-69…

    [www.usmint.gov]

  117. tetranz says:

    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.

  118. FLConsumer says:

    I’m still trying to find the $0.001 cent coins that the gas stations owe me for each gallon of gas I pump.

  119. wring says:

    @Randy: bleeding socialist.

  120. wring says:

    @kimsama: oh god we call those fish coins.

  121. barty says:

    @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.

  122. SJActress says:

    If pennies were only used ONCE, this might be a problem. However, they stay in circulation much longer than one use.

    Visit snopes, please!

  123. SayAhh says:

    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…

  124. the lesser of two weevils says:

    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.

  125. Jamie Beckland says:

    @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…

  126. Jamie Beckland says:

    @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.

  127. 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.

  128. @drjayphd: Zing! You may be right.

  129. colamit says:

    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.

  130. JustAGuy2 says:

    @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.

  131. Gann says:

    @darkened: use a credit card, it’s easy

  132. thancr says:

    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?

  133. Guta says:

    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.

  134. yelohbird says:

    @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. =

  135. Jamie Beckland says:

    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…