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