Obama Pushes For Cheaper Pennies

Hugh Pickens writes "Time Magazine reports that hidden deep inside in the White House's $3.8 trillion, 2,000-page budget that was sent to Congress this week is a proposal to make pennies and nickels cheaper to produce. Why? Because it currently costs the federal government 2.4 cents to make a penny and 11.2 cents for every nickel. If passed, the budget would allow the Treasury Department to 'change the composition of coins to more cost-effective materials' resulting in changes that could save more than $100 million a year. Since 1982, our copper-looking pennies have been merely coppery. In the 1970s, the price of copper soared, so President Nixon proposed changing the penny's composition to a cheaper aluminum. Today, only 2.5% of a penny is copper (which makes up the coin's coating) while 97.5% is zinc. The mint did make steel pennies for one year — in 1943 — when copper was needed for the war effort and steel might be a cheaper alternative this time. What about the bill introduced in 2006 that the US abandon pennies altogether.? At the time, fifty-five percent of respondents considered the penny useful compared to 43 percent who agreed it should be eliminated. More telling, 76 percent of respondents said they would pick up a penny if they saw it on the ground."

Comments

You can't eliminate them

[netwarerip]

The vast majority if store clerks wouldn't be able to round up or down to the nearest nickel.

Re:You can't eliminate them

[rioki]

Oh no we can't have 9.99$! I am so confused if I see 9.95$...

Re:You can't eliminate them

[ch-chuck]

Round here we have a toll booth with coin baskets thats: 40 cents.
That's right - you need at least a quarter, a dime AND a nickle.
Not 50 cents. Not 25 cents. FOURTY.

I'm sure a lot of out of towners just toss in two quarters and have a chuckle at the local chuckleheaded government's tricks.

Re:You can't eliminate them

[mikael_j]

In other countries this is solved by laws demanding that all prices advertised to individuals (as opposed to companies) or where the target customer is clearly an individual include sales tax. So prices including the sales tax are conveniently set to nice round numbers.

Re:You can't eliminate them

[QuasiSteve]

Actually, there's no problem with having $9.99 .

In Europe we've all but done away with the 1 and 2 eurocent coins - their monetary value vs cost involved in handling them just didn't make sense.

But we do still have e.g. â0.99 type prices. The way it works is that your total gets rounded at most placed and almost certainly if you decide to pay by debit card. So if you buy 3 of those â0.99 items, you get a total of â2.97, rounded to â2.95. If you buy two, it gets rounded up and you pay â2.00 instead of the â1.98.
( this is apparently called 'Swedish rounding' when specifically applied to the situation of currency: http://en.wikipedia.org/wiki/Swedish_rounding )

However, if you want to pay with 1 or 2 eurocent coins to match a price exactly, many places will still accept that - but if you pay 'just over' where your return would technically be 1 or 2 eurocent, you won't be getting those.

The places that accept them bring them to the bank, which bring them to bigger banks, which basically have them destroyed - and gradually the 1 and 2 eurocent coins are removed from circulation.

Re:You can't eliminate them

[bickerdyke]

other countries have nationwide sales tax regulations so that you still could use nationwide ads.

Re:You can't eliminate them

[nedlohs]

In which case you pay $10.75 (if you pay with cash).

The penny is currently worth less (in terms of what it can buy) than the half-cent was when it was junked in 1857, it's worse than useless at the moment.

Re:You can't eliminate them

[Endo13]

Not at all. You do all the math as normal, then round the final value. We already do that and have for decades. There's plenty of times where the price with sales tax doesn't come out to an even cent.

And FWIW, I won't pick up a penny off the floor. Or if I do, it's usually to throw it in the garbage because it's cluttering things up.

Re:You can't eliminate them

[devent]

In Germany we pretty much get 1 and 2 Cent coins. I don't know what countries are try to get rid of them.

Re:You can't eliminate them

[Plunky]

I heard of this before; the chain restaurant doesn't want to take the hit when rounding down, so they just add the fractions to the next bill and hope nobody notices or cares. The US method of listing raw price then adding sales tax after (do they do this in fast food places?) means that this is difficult for customers to detect..

Re:You can't eliminate them

[Anonymous Coward]

I don't understand, maybe it's the cultural chasm between American and Europe, but what's wrong with paying a 40 cent charge with 4 dimes? I'm under the impression that a "dime" is equivalent to 10 cents, right? So 4 dimes would cover the "40 cent" toll charge. Why do you need all kinds of different coins, or even paying more than you're asked ("two quarters")? Are "dime" coins uncommon?

Re:You can't eliminate them

[DemoLiter3]

Guys, listen, I have an idea! You won't believe it, guys! Guys?
So, like, what if we just make coins with a value of $0.99? This way, you can directly pay $x.99-type prices and won't need pennies at all!

Re:You can't eliminate them

[ATMAvatar]

Part of that is also carry-over from a past era where taxes were calculated based upon a stair-step-like system (at least in some states), rather than calculated exactly. $9.99 and $10.00 would be in two different brackets, resulting in a greater difference in sales tax than it is now, so it made a meaningful impact to drop the penny.

Of course, it doesn't hurt that there was a psychological effect on the customer as well. That is likely why the practice continues.

Re:You can't eliminate them

[Dogtanian]

The ad says $9.99 plus sales tax which they often say anyway and tags used within the store are printed locally. It is doable but no store would consider it unless it's forced on them which I suspect the government does no want. It's easier to hide sale tax spikes from people when they can see up front that the cost has risen.

In their defence, IMHO they have a legitimate reason to do this- their locally-printed/local-only prices would appear more expensive against nationally-advertised prices that (as mentioned above) don't include sales tax because it varies across the US.

Yes, maybe people should notice that the national price excludes sales tax and the local one doesn't, but in practice enough people won't that it puts the latter at a competitive disadvantage.

(FWIW I live in the UK where consumer-oriented prices *are* usually quoted with VAT (i.e. sales tax) included and prefer it that way- but that's because we have uniform VAT across the country. I understand why the US doesn't include it.)

Re:You can't eliminate them

[Pieroxy]

In Europe we've all but done away with the 1 and 2 eurocent coins - their monetary value vs cost involved in handling them just didn't make sense.

Clearly, you have no clue how things work in Europe. Please talk about what you know - namely your country - but do not try to expand your knowledge by thinking all European countries work the same. They don't.

Re:You can't eliminate them

[hipp5]

not that the staff in the store couldn't put the price inclusive of tax up

They can't. This is a consequence of the need to remain competetive. When we walk into stores we expect to see prices that don't include tax. A well-meaning store that tries to break from this and include tax in the price ends up looking way more expensive than its competetors, even though in reality it is not. Even if you include "taxes included!" on the sign there is a subconscious bias in the customer's mind against these seemingly high prices.

No, until every store is forced to do the same and include taxes it won't work. It's an unfortunate consequence of human nature.

Re:You can't eliminate them

[dragonsomnolent]

True story: There was a Schnuck's (St. Louis area wide grocery store) that was build in such a way that one part of the store was in the city of St. Louis, and the other part was in the county. St. Louis city has it's own sales tax on top of the state's. I felt very sorry for those accounting people...

Re:You can't eliminate them

[similar_name]

Which is ok. Sometimes taxes go out to tenths of a penny but it doesn't cause any issues. Really we should drop the penny and the nickel. Just go the the next tenth; dimes. I believe there used to be mils that were tenths of a penny and we don't fret about it today.

Re:You can't eliminate them

[Bengie]

Buy this car for under $14k! $13,999.99

See, sales people do understand very basic Boolean logic.

They actually wanted to do $13,999.99999999999~, but someone told them it was equal to $14k, so they could no longer claim it was less than. Their heads exploded.

Re:You can't eliminate them

[bennomatic]

Or, as we say in America, "forty". You Brits and your crazy use of the letter "u"! "Colour" indeed!

Re:You can't eliminate them

[darkmeridian]

From Married ... With Children:

Marcy: Steve, don't tell them about your insane quest to create the 99 cent coin.
Steve: Al, I invented the 99 cent coin. Have you ever noticed how things cost $7.99? $14.99? $99.99? My coin will eliminate the messy change that only catches the attention of obnoxious beggars who hassle you on the way to your Mercedes. What do you think of it, Al?
Al: What about tax?

Re:You can't eliminate them

[JDG1980]

The way to do this in the U.S. would be as follows:

• Impose a 7% national sales tax, payable to the federal government. At the same time, prohibit states and localities from collecting their own sales taxes. The result would be largely revenue-neutral, since the total of state and local sales taxes averages about 7% already.
• Have the federal government distribute this money on a regular basis to states (6%) and localities (1%), based on some weighted formula that takes into account population, economic activity, or both.
• Require all merchants doing business in the U.S. to post prices inclusive of tax, so what you see is what you pay.

This would have several advantages. It would eliminate the current advantages that online stores have over brick-and-mortar retailers. (Someone buying at Amazon or Newegg would pay a price with the 7% included, just like someone buying at B&N or Fry's.) It would make it easier for consumers to figure out how much something is actually going to cost them out-of-pocket. And you know what? If a business feels that the 99-cent or $4.99 or $9.99 or $99.99 price point is important, they'll figure out a way to reduce the cost of their product so it hits that price point even with tax already included. So, in the long run, it is likely to save consumers money.

Re:You can't eliminate them

[Anonymous Coward]

Sigh.

Article 1, Section 8 of the constitution: Congress has the power to coin money, regulate the value thereof, etc. FEDERAL.
Article 1, Section 8 also contains the Commerce Clause, by which basis the FEDERAL government enacted (15 USC 45, and FTC regulations associated) laws and protections for consumers against false and misleading advertising.

It would be trivial, and WHOLLY within the power of the Congress, to pass a law requiring that advertisements show the TRUE price of an item with associated taxes rather than the misleading pre-tax value.

Maybe you should learn more about your country and government, rather than relying on the lies and misrepresentations that you're getting from Tea Retard pamphlets?

Re:You can't eliminate them

[CrimsonAvenger]

Ever wonder why the country is called "The United States of America"? It's a federation of 50 separate states, like it or not.

It should be noted that before the Civil War, "United States" was plural - "these United States". Afterwards, it was singular - "the United States".

Re:You can't eliminate them

[CrimsonAvenger]

Sorry buddy, you lost this argument 230 years ago. America would not be the #1 world power without the strong federal government. That's why we have the Constitution instead of the Articles of Confederation.

Two things: he lost the argument 150 years ago, when the Civil War was fought.

And we didn't actually create a strong Federal government in order to become the #1 world power. We created it because the Articles of Confederation were essentially non-functional.

Note that the Constitution creates a severely limited form of Federal government, basically preventing the individual States from acting like they were separate countries - the (nearly) all-powerful Federal government of today was never dreamed of by the Founders (well, maybe Hamilton was hoping we'd go that way - he thought we should have a King)....

Re:You can't eliminate them

[mawe]

Here in Germany, we pay the price as displayed, no matter how we pay. I actually expect that!

Everything else seems stupid, not?

Re:You can't eliminate them

[Moryath]

Added bonus: no more counties/states saying "well we'll add an 0.1% sales tax to pay for Mr. Multibillionaire Asshole and his collection of multimillionaire thug asshole ball-tossers to have a stadium and yet still charge $75 a ticket for people to watch them throw a ball around."

Re:You can't eliminate them

[Penguinisto]

Sorry, but some of us (Oregon) have no sales tax, and definitely do not want one.

What I see on the shelf is exactly what I pay.

Re:You can't eliminate them

[Chang]

While this sounds nice and neat, this isn't actually constitutional. The document permits the national government to provide incentives for states to implement federal policy but it can't compel them to give up their power to implement sales taxes where permitted by state constitutions.

Re:You can't eliminate them

[Brobock]

In other countries this is solved by laws demanding that all prices advertised to individuals (as opposed to companies) or where the target customer is clearly an individual include sales tax. So prices including the sales tax are conveniently set to nice round numbers.

Sweden just had an issue where including the tax in the price caused recently reduced taxes to not get passed to the customer.

Restaurants had a tax reduction from 25% to 12.5%. Since the tax was already included in the price, none of the restaurants reduced the prices and just pocketed the profit. If the price shown was pre-tax and the tax added in tally, the customer would have received the tax break.

The only ones that actually reduced their prices was the large food chains. Most likely because watch dog groups were making sure of this.

Re:You can't eliminate them

[Chaos Incarnate]

I don't see this doing anything but increasing prices. Ignoring that I'm already under a lower local sales tax, take that $9.99 item. Add your sales tax, you get $10.69. Retailers will round up to $10.99. Congratulations, you've just created a 10% sales tax.

Re:You can't eliminate them

[Dhalka226]

I don't disagree with you, but companies pitch a fit over it.

There's actually a very comparable situation going on right now. Recently an FCC rule took effect that required airlines to include taxes and fees in the airfare they list. Now Spirit Airlines runs a huge banner at the top of their pages that says: "WARNING: New government regulations require us to HIDE taxes in your fares." And believe me, Slashdot does not permit enough HTML to make it as obnoxious as they do!

In some ways they have a point. At least when you order a $1 item and end up paying $1.08 you know to be mad at the government about that 8 cents. In other ways you have a point. I want to know how much something actually costs, not how much it should cost in some mythical tax-free situation. That's especially true of something like airfare, where that extra amount could easily be over $100. Spirit is a low-cost carrier, but for example last time I visited friends in Australia (3 years ago I believe) the airfare was around $2200 -- the taxes and fees brought it up something over $2400 if I remember right. That's a significant difference and certainly something that needs to be budgeted for. Knowing that in advance is helpful since it's not like I can opt not to pay those taxes and fees.

Of course the simple compromise is to show the actual costs including taxes and fees and then require that it be broken down somewhere else: On your receipt, confirmation email, before you type in your payment information -- whatever suits the particular situation. But compromise is a dirty word in American culture these days, so it will all depend on which faction can steamroll the other into doing it their way.

Re:You can't eliminate them

[slew]

If you get rid of the nickel, you essentially need to get rid of the quarter. You need to have all larger denomination coins divisible by at least one of the smaller denomination coins. Unless, of course, you are a sadist. Getting rid of the nickel seems like a non-starter. However, dumping the dime w/o getting rid of the nickel would probably work.

Re:You can't eliminate them

[SMoynihan]

Exactly!

"One, two, three, for..."

Re:You can't eliminate them

[bennomatic]

Apparently, at least some of you Brits make up for your extraneous U's with a profound lack of humour.

Re:You can't eliminate them

[Calydor]

What I see on the shelf is exactly what I pay.

That is kind of the point of a nationwide identical tax on things, allowing stores to write out price stickers showing exactly what you're paying without having to calculate which part is tax etc.

Hence the comment further up about stores being forced to write out what you have to pay, not what the base price is, when targeting 'civilian' customers.

This whole thing America has with having to manually add taxes and tips at restaurants is a real head-shaker for many Europeans. We only give a tip if we've been treated above and beyond the ordinary, since the serving staff at a given restaurant actually collects a paycheck. You should try that system sometime. :-)

Re:You can't eliminate them

[KingMotley]

I'm sure it's simple, so please enlighten me. If I order powdered vitamin water packets, and I have them delivered to my work address in Chicago, but I'm ordering from my house in Oakbrook, DuPage county, please tell me the tax that should get applied since it's simple.

Please remember:
Illinois base Sales Tax is 6.25%.
Dupage County Sales Tax is 1%.
Oakbrook Sales tax is .5%
Cook County Sales tax is 2%.
The Chicago Municipal Tax is 1.5%.
The use tax in Chicago is 1% for anything bought from a retailer.
There is a 2.25% tax applied to drugs and groceries in Chicago.
There is an additional 3% tax on soft drinks.
There is a 1% tax on prepared foods and beverages.

Is Amazon a retailer? Do they need to apply the 1% use tax?
Is powdered vitamin water considered a prepared beverage? Or is it a soft drink? Does the grocery tax apply? Or all of the above?
Does the sales tax get applied to my shipping address, my residence address, or my ordering address? What if I have the package is rerouted, or if I pick the package up at the local UPS depot which is in a different city or a different county? Does UPS then charge me the difference in sales tax?

And sadly, this is a simplified example. I didn't even get into whether I shipped it to a specific district in the city of Chicago which can/often does have different sales taxes, and I haven't tried to outline all the Oakbrook specific exceptions.

Re:You can't eliminate them

[ultramk]

Of course, there's a trade-off to not tipping, such as the astonishingly poor service that Europeans seem to take for granted at anything less than very high-end dining establishments. Now, it doesn't seem to bother you all so you might as keep it the way it is. Americans, on the other hand, seem to place a much higher value on careful and conscientious service, and that's why our pay structure for servers is the way it is--to promote that good service.

The habit is so ingrained in us that it's very difficult to _not_ tip when traveling abroad. It just seems terribly rude. I wish however that Europeans were more willing to adopt to local norms when coming to the US. I have several friends and family members who either do now or or have worked as servers, and when a visiting European declines to conform to local custom and stiffs a server even when he or she received good service... well you've just done the equivalent of taking money out of that server's paycheck for the night.

I realize how strange it is to visitors, but this is just the way our society is. It's a social contract, and it is taken very seriously. If one feels that strongly about it, you should either stick to fast food or buy food from the grocery and prepare it yourself, or better yet, stay home and don't travel to places where the customs bother you so much.

Re:You can't eliminate them

[AuMatar]

I've never received poor service in Europe. I receive different service due to cultural differences- they don't try to turn tables as fast as possible, they wait until asked to bring a check- because the other way is considered rude to them. But the quality of service I receive is on par with what I get in the US, without tip. If I could trade our system for theirs I would in a heartbeat.

Re:You can't eliminate them

[aix tom]

The other thing is, that I haven't seen any *broad* advertising like TV ads, billboards, etc... with *prices* for specific products here in Europe (Germany) for ages. I vaguely remember some from the TV in the 70s or so, but not in the last few decades. (Special offers for special car editions being one exception that just came to mind.)

The only regular advertisement with prices is the weekly flyers from specific stores that clog up the mail box, and then of course the signs in the actual store or shop.

Re:You can't eliminate them

[PhunkySchtuff]

Please remember:
Illinois base Sales Tax is 6.25%.
Dupage County Sales Tax is 1%.
Oakbrook Sales tax is .5%
Cook County Sales tax is 2%.
The Chicago Municipal Tax is 1.5%.
The use tax in Chicago is 1% for anything bought from a retailer.
There is a 2.25% tax applied to drugs and groceries in Chicago.
There is an additional 3% tax on soft drinks.
There is a 1% tax on prepared foods and beverages.

Is Amazon a retailer? Do they need to apply the 1% use tax?

O_O

WTF?

That's crazy. We have a 10% GST that it's required to be included in the sale price of an item. If we want something to sell for $9.99, then the actual ex-GST price of the item is $9.08.

That is all.

Re:You can't eliminate them

[OneMadMuppet]

I'm European and in NYC for the first time this week. It's astounding how many people expect a tip for what is mediocre or poor service (or at least would be back home) because of the "social contract". If people expect me to pay a tip no matter what, it would be easier to just pay them properly, charge a little more, and pay tips to people who actually deserve them.

Re:You can't eliminate them

[unrtst]

True story...

On returning from a lunch break, my coworkers and I were talking about if anyone would pick up a penny in the parking lot. Most would not, some would. So the question - how much would someone have to pay you to pick up a penny (for those that normally would not). We worked in IT at a call center. We came up with an testing idea...

The bathroom was filthy - it's a call center. We put a two quarters in each urinal. Then we went back to check on it 30 minutes later. How long would it take for those piss covered quarters to be picked out of the urinals?

First check (30min), they were all gone.

So we just put a single quarter in there, and re-checked in 15 minutes. It was gone already.

So we put a dime in one, a nickle and 2 pennies in another, and a penny in another. In 15 minutes, the dime and nickle were gone, but the pennies remained. We checked again about 20minutes later, and the group of pennies was gone, but the lone penny remained. We were working too, and if memory serves, we missed the next scheduled check, but the all change was gone on the next check.

We continued playing with amounts throughout the following days. Quarters went very very quickly, as if no one had any reservations on fishing them out of a well used urinal. We had been thinking that, just maybe, we got unlucky with the timing, and the cleaning staff was grabbing them... but we were all eventually 100% convinced that was not the case - they went to fast, and too often, and cleaning staff didn't make rounds anywhere near that much.

We spent about 2 weeks of randomly tossing loose change in urinals and cracking up about how it vanished so quickly into the hands of call takers - all using shared phones, keyboards, mice, etc. We were having a swell old time with it.

Then one day, we were in the common breakroom, and one of us bought a soda with a dollar. They got back 30 cents in change (a quarter and a nickle), and readily picked it up and pocketed it. Two and two became four in my head.... I asked my coworker where he thought that change came from.

We stopped putting change in the urinal that day, and took a long hiatus from grabbing the change from the vending machine.

If you ever see someone leaving their change in a vending machine, think twice before you judge them :-)

what's wrong with rounding

[Anonymous Coward]

In most Euro-countries, prices are rounded to the nearest 5-cent number, 1- and 2-cent coins are quite rare. Why even bother producing coins that are worth more as a material than as a coin?

Re:what's wrong with rounding

[JoeMerchant]

In most Euro-countries, prices are rounded to the nearest 5-cent number, 1- and 2-cent coins are quite rare. Why even bother producing coins that are worth more as a material than as a coin?

In most Euro-countries, people don't consider mathematical ability a sign of social awkwardness, as opposed to the U.S....

Fatal flaw

[Anonymous Coward]

If it costs 2 pennies to make 1 penny then you have destroyed a penny by making a penny.

Get rid of them

[OzPeter]

Australia got rid of 1 and 2c pieces years ago and that didn't kill us at all.

That doesn't mean you people don't advertise things at 99 cents, just that you total up the bill and then round to the nearest 5 cents. Sometimes you win (all of 2 cents on a single bill) and sometimes you lose (again, all of 2 cents on a single bill).

We also ditched $1 and $2 paper currency for $1 and $2 coins. That was also a good move in getting rid of those ratty dollar bills. The US cold easily do the same thing as you already have $1 coins in circulation. About the only people who will notice a change are the strippers who will now have use their coin slots.

Re:Get rid of them

[JoeMerchant]

We also ditched $1 and $2 paper currency for $1 and $2 coins. That was also a good move in getting rid of those ratty dollar bills. The US cold easily do the same thing as you already have $1 coins in circulation. About the only people who will notice a change are the strippers who will now have use their coin slots.

The dollar coin in the U.S. has been a red headed bastard stepchild of the currency, rarely used and considered stranger than a $2 bill.

I think we should put out $2, $5 and even $10 coinage, but most of the U.S. seems to be moving to a plastic-credit based currency, with all the attendant privacy and fraud issues, as well as being managed by the private sector instead of the government. Is that a good thing, or a bad thing? I'd say: yes.

In Denmark

[VMaN]

.. we got rid of the 25 øre in 2008. So now the lowest denomination is 50 øre (around 9 cents). Swedens lowest coin is 1 krone (around 15 cents).

We've been rounding since 1972, and it omes very natural.

We did it in Holland

[SmallFurryCreature]

The Dutch Guilder (Gulden) had its cent removed years ago and when the Euro was introduced it wasn't long before it was agreed the Euro cent would no longer be used either. The latter is a bit more of a hassle since other countries haven't joined but in Holland it works pretty well.

Prices are till in cents but the deal is that if you pay in cash, it is rounded off. On the whole it balances out although if you are REALLY cheap, you pay eletronically when the rounding is in the shops favor and cash when it is in your favor. Items that you tend to buy on their own are already at a 5 center round off. So a cola would cost 95 instead of 99 cents.

It just makes sense, inflation makes prices go up but currency stays the same. So why keep amounts around that just don't make sense anymore? When the euro cent was briefly used everyone here quickly saw how fucking annoying they were, you soon ended up with a huge pile of worthless coins. You have to go pretty far back in time to remember being able to buy anything for a cent. I can barely remember being able to buy a single piece of gum for a nickle. Yes, that meant if you saved up 5 cents you had a piece of gum... but those days are gone. Move on.

It will be intresting to read the reactions on this subject from Americans. Americans are after all paying for these expensive pennies with their taxes and if there is anything an American hates it is paying taxes. So, what excuses will those people come up with to keep cent/penny around? Nostalgia?

In a way this shows the failure of democracy. This kind of move should be left to wise men, not people who feel nostalgic for a by gone era when you got a shiny penny from your granddad to buy candy. Maybe if democracy wasn't secret, then those 55% could be made to pay for the costs of making the pennies directly out of their own pocket. Wonder how many would still be nostalgic then?

Re:Monetary insanity

[VMaN]

That's only a valid point if the currency isn't a fiat currency.

A cent isn't worth a cent because of the copper content...

Re:Get rid of coins altogether

[pegasustonans]

The "annoying pocket change" is the only real currency we still have. You'd be better off scarfing up nickels - as many as you can - while they are still composed of nickel. Think pre-1964 silver dimes/quarters for comparison.

I'd rather just buy sheets of nickel or other metals with my debit card if I feel the need for it, which I don't.

I'm not much of a coin/metal collector.

Re:The problem with actual value of theoretical mo

[JoeMerchant]

Tangible money interacts with the human animal differently than abstract mathematical concepts.

Coins are the most tangible money, paper is more abstract, especially U.S. paper money that is all basically the same except for the numbers on it. Checks and credit cards are even more abstract - so much so that many people really can't handle them properly.

Back in the day when a quarter would actually buy something worthwhile, if you tossed a quarter to somebody, they got a different visceral reaction than if they saw a penny coming. Paper, too, caused a different reaction because it was all inherently more valuable than coin. A coin more naturally "feels" like something you can instinctively trade or equate with other tangible objects of value. It takes many years of playing "The Price is Right" before most people get that same relationship with abstract prices, and again, some never really do.

I don't think that a penny should cost $0.01 to produce, but I do think that there is real value in tangible coins that paper and credit cards lack.

Re:100 to 1

[JoeMerchant]

Except how would that work with the rest of the world?

Prices in the UK would still remain the same as they are now, so they too would have to divide their currency in the same way.

Otherwise a leather jacket in the US might be $1, but £100 in the UK.

I don't see a problem with that, that same leather jacket is 10,000 yen in Japan.

Historical precedent

[nicomede]

Along the history of the Roman Empire, the amount of gold in the Aureus coin consistently decreased as the need for more (cheap) money increased, to fund the military campaigns and buy peace from the barbarians. It could only last so long. http://en.wikipedia.org/wiki/Aureus

Oh Slashdot, you disappointed me!

[dmbasso]

I came here only for the penis jokes, but none so far!

Re:On the subject

[Asic Eng]

You probably got a coin from some other currency, either by mistake because it looked similar to a cent coin, or just because it looked similar. Maybe it was a US half cent coin. The Euro never had such a coin.

Re:Get rid of coins altogether

[SteveFoerster]

I do this with pre-1982 pennies. I have many rolls of them now, I drop all the pennies I get in change into a jar and every once in a while sort them, roll up the copper ones, and bring the zinc ones to the bank to get counted and deposited. It's not like it's a retirement fund or anything, but it takes just a few minutes every few weeks and my kids help me which is fun, so I figure why not?

It's been done before here in the US

[Covalent]

We used to have half-penny coins (and others). They were done away with for the same reason the penny (and probably nickels and dimes, too) should be: they became essentially worthless.

But, since this process makes sense, it probably won't happen. This IS America, after all. We have a reputation to maintain.

Not sympathetic.

[LoyalOpposition]

Because it currently costs the federal government 2.4 cents to make a penny and 11.2 cents for every nickel.

I have absolutely no sympathy for the government in this regard. At one point the US was on the gold standard. (That was after it got off the wampum standard and the tobacco standard.) At that time the $20 gold coin cost $20 to make, by definition. (Actually, just a little bit more because of seigniorage.) The dollar was defined as a certain weight of a certain purity of gold. The coin was merely the government's guarantee of the weight and purity. However, the government decided to finance part of its spending through inflation. Since you can't do that while on a gold standard (other than through new gold discoveries or processes) they had to do away with it.

The government likes inflation because 1) they get to spend it first, 2) they get to pay their debts with worth-less money, and 3) tax bracket creep allowed them to increase tax rates without voting for them. (This last one has since been eliminated by indexing tax brackets to inflation, but it was a major component for many years.) First they inflated the money supply, and the gold in the gold coins became worth more than the face value, and the gold coins had to go. They continued inflating and the silver in the dollar, half-dollar, quarter, and dimes became worth more than their face values, so the government had to find something worth less to make them out of. Now they have continued until the nickel and penny are worth more than their face values.

I, for one, think it's time for the government to stop financing their spending through inflation.

~Loyal

Re:Not sympathetic.

[ihavnoid]

I'm not sure if you understand basic economics, but a world without inflation would be much worse. The main purpose of inflation is to encourage people to spend money, or at least, save it in a bank, rather than keep the money in your closet. Once there is no inflation, or even a small amount of deflation, it acts as a positive feedback - as the value of money increases, people tries to get hold of more cache, and that reduces the total supply of cash within the society, and it further increases the value of cash. Eventually, all spending dries up, jobs will disappear (since there is nobody who's trying to by ANYTHING), and the poor guys will suffer more seriously, since the rich guys (=people with lots of cash) will have their assets' value increase automatically without doing anything, while the poor guys have no job, no cash, and nothing to buy anyway. That is precisely what happened on the great depression.

What we need is a MODERATE amount of inflation - not sure how much is the right amount, but high enough to avoid the deflation spiral, and low enough to avoid hyperinflation.

Plus, what's wrong with government spending? The government is supposed to represent the people, and hence, the spending should be something for the people. If you find government spending to be evil, then you should have a better, more sensible government, and stop blaming the spending itself.

Re:The problem with actual value of theoretical mo

[JoeMerchant]

...if your concern is holdings that won't wax and wane with the money markets, why not purchase commodities like gold or silver?

It's not really my concern, but, looking at the "value" of gold from 1975 to the present, I'd rather keep my savings in an imaginary construct like the U.S. dollar invested in a mix of index funds and bond issues. When that system collapses, everyone scrambles to prop it back up again, when the value of gold stagnates and declines in real terms for decades at a time, the world yawns.

Re:$0.95 bullshit

[TaoPhoenix]

Well for the record I set my clock an hour and 45 minutes ahead so that I am on time! : )

But yes, $0.95 did seem lower because with 5% MA sales tax before they changed it it was still under a buck, so it was good for impulse sales. (Now that Taxachussetts changed it, it's back to being BS - you have to grab the penny from the Take-A-Penny tray to not bust open a second bill and get a handfull of crappy change.)

But in my opinion the real reason you can't eliminate pennies is that the chaos you'd cause in Accounting would far outstrip the "nicety" of not having pennies. Hell, Nickels are equally silly. Dimes are a close call. I stop my valuation at quarters, which are still good for laundry machines.

If suddenly there were no pennies the entire world would play the Office Space Game of "which way can I pocket the difference to my own benefit."

Re:PLASTIC

[Cimexus]

I hear Canada is moving to the polymer banknotes too. Having lived in both Australia and the US, I can say the polymer bills really are superior in every way. Can't tear em (seriously, try to - you will fail, unless you actually use scissors or something to get it started), goes through the wash without a problem, much harder to fake. The polymer notes were invented in Australia but now a lot of countries are using them.

Not to mention the fact that in all the polymer-note-using countries, the bills are different colors and sizes for each denomination (which has nothing to do with them being polymer admittedly). US currency is really irritating - you look in your wallet and see a ream of greenish paper (well, linen), side on, all the same size. You have no way of telling how much money you have without pulling it out, flicking through it, and looking at the demoninations. In Australia though and because they are different sizes and colors you can peek in your wallet and with a quick glance say "Ah yes, two yellows, an orange and a blue - I have $130". (Two 50s, a 20 and a 10)

Re:Monetary insanity

[Muad'Dave]

What do you think a $5 bill is worth?

About 12.44 BTU theoretical, 4 BTU recoverable.

Re:The problem with actual value of theoretical mo

[fnj]

Your memory is incorrect. I am sick of false fantasies of incredibly low gas prices in history. It never happened. There is this thing called inflation. Gas was not "almost free" in the 1970s. Adjusted to 2004 dollars, it varied between $1.73 and $2.28. The lowest adjusted price for gas EVER was $1.22 in 1998. That compares to the best adjusted price in the 1930s - $2.15 in 1931 - and the best adjusted price in the 1950s - $2.00 in 1952. In 2004 it had only risen to $1.89 from the 1998 low.

OK, the chart stops in 2004, and the current adjusted value is probably around $3.90, but somehow I don't think twice the price is the difference between $2 and $3.90 is "nearly free" compared to agonizingly high.

Ref: Historical Gas Prices, 1919–2004

Why rounding up to a nickel may SUCK.

[assertation]

A number of people outside of the United States have been mentioning that their countries got rid of their equivalent of the penny years ago.......and the world didn't come to an end.

Still......

I remember a number of years ago, there was a true story about a programmer who wrote some kind of banking software. He did something such that he got a fraction of a penny on every transaction that went through the bank, deposited into a secret account.

After a few years he was quite wealthy and the only reason he got caught was he couldn't suppress his desire to brag.

Lesson learned: even little amounts add up.

How would people feel if they were told that because of rounding up to a nickle, they could have had an extra $100, $10 etc at the end of the year, 5 years, etc?

How would they feel knowing that they made a "donation" to corporate America of several thousand dollars over the course of their life time, for which those companies gave them *nothing*?

Re:Why rounding up to a nickel may SUCK.

[Archon-X]

Rounding works both ways, you know.

I-131 The perfect coin

[An dochasac]

Aluminum, plastic and paper pennies might sound like good ideas now, but all are based on resources which are likely to become more valuable in time. What we need is a penny made out of Nuclear waste, specifically the Iodine-131 isotope. Here's why:

• It quite literally 'burns a hole in your pocket' and so would stimulate spending.
• It would discourage hoarding (you don't want to keep gamma emitters under your mattress)
• It would encourage billionaires to quickly spread their wealth amongst the peons.
• Since I-131 has an 8 day half-life, the Fed can keep printing it and giving it to banks and billionaires but by time it trickles down to you or me it will have disappeared!

It is the perfect coin for the economy we've been working towards! Come on Obama, make it so!

P.S. The U.S. and E.U. are in a head to head battle for who can print money the fastest, but I predict that China will win this race to the bottom. I have 2 beautifully designed paper Yuan notes, each worth 0.2 cents. Beat that Mr. Bernanke!

So...

[Charliemopps]

So... let me get this strait, in order to save $100 million our government can either:
A. Build 1 less tank/fighter jet
B. The president could stop using his own private Jet
C. We could delay invading Syria / Iran (whomever's next) by about 4hrs
D. Completely overturn the way our currency has functioned for over 200 years.

and we're choosing D?