Tuesday, April 10, 2012

Pennies

Canada recently announced that they will stop minting new pennies in about 6 months and slowly remove them from circulation. Naturally this has led to numerous articles and discussions about whether or not we should follow suit.  Obviously, the answer is yes.  Pennies have virtually no buying power and cost more to mint than they are worth.  They are simply a nuisance.  Before I go into greater detail, let me just say that this video explains it much better than I could.



It doesn't make sense to keep making cents.  Australia and New Zealand have both abolished the penny for cash transactions and couldn't be happier about it.  What they have done is eliminate the penny for cash transactions - rounding everything to the nearest nickel - while keeping the smaller denominations intact for electronic transactions (credit cards, payroll, etc).  Detractors claim that the elimination of the penny will result in retailers always rounding up to the nearest nickel, ultimately hurting the poor.  This hasn't been the case in Australia or New Zealand, however, as rounding to the nearest nickel (both up and down) has roughly evened itself out (as it logically should). 

According to this article, the main proponents are the zinc lobby, since pennies are currently primarily made out of zinc.  I have a hard time imagining that the zinc industry really has a very powerful lobby, though.  And is it really worth continuing to mint pennies, essentially amounting to a zinc subsidy, in order to protect a few jobs?  I think that with minimal expense, all of the folks working in the zinc mines could be trained to mine the metals used in dime and quarter construction, which will no doubt increase. 

I just realized that I'm tired of discussing this, so let me finish by saying that I find pennies to be more of a nuisance than anything else.  Were it up to me, I'd get rid of the nickel while we're at it, but one step at a time.  We can start that discussion once the penny is dead.

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