Getting rid of the penny - unintended consequences

slipgate · January 4, 2011 2:43AM

Would getting rid of the penny be a de-facto devaluation of US currency as a whole?

CaptHenway · January 4, 2011 2:48AM

Not in my opinion. The U.S. dollar has already lost a lot of value. Eliminating the low value cent would merely be acknowledging what has already taken place.

SaorAlba · January 4, 2011 2:52AM

The dollar is worth 1/10th as much as it was forty years ago. So relatively speaking every coin has lost 90% of it's 1971 value, so the cent is long since obsolete and has become a veritable joke. The dime is the smallest effective circulating coin, and only barely. The quarter has a nominal value and is the most useful of all current circulating coins. Otherwise we have should have larger denomination coins like a circulating half, dollar, $2 coin, $5 now.

Prethen · January 4, 2011 2:59AM

It wouldn't hurt us a bit. It would make economic sense, too.

PerryHall · January 4, 2011 3:06AM

Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash.

baddogss · January 4, 2011 3:10AM

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

I agree, many, many other counties around the world have already done this and it works out just fine.
While were at let's actually use dollar coins - say $1 & $5. Maybe some nice new designs on them to boot?

Overdate · January 4, 2011 3:11AM

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

In today's credit/debit card economy, rounding wouldn't be necessary except for cash purchases. Even there, only the *total* purchase would need to be rounded (as in grocery shopping). Many stores might want to round down only as an incentive for customers to shop there.

coinbuf · January 4, 2011 3:12AM

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

Dont kid yourself nobody is rounding down!

Batman23 · January 4, 2011 3:15AM

How many years would it take to even be an issue? I am sure that there are billions of cents out there that will continue to circulate for years.

baddogss · January 4, 2011 3:18AM

<< 

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

Dont kid yourself nobody is rounding down! >>

Cash registers would be programed to round down/up based on the sale amount - correct?
Some sales you'd pay a few cents more, others a few cents less - no big deal and it all comes out equal in the end.

ebaytrader · January 4, 2011 3:34AM

<< 

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

In today's credit/debit card economy, rounding wouldn't be necessary except for cash purchases. Even there, only the *total* purchase would need to be rounded (as in grocery shopping). Many stores might want to round down only as an incentive for customers to shop there. >>

I can just see some taxing authority 'rounding down'.

PerryHall · January 4, 2011 3:41AM

<< 

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

Dont kid yourself nobody is rounding down! >>

Your right. Only those merchants that want to remain competative will round down.

PerryHall · January 4, 2011 3:44AM

Don't forget that exchanges involving checks and credit cards would still be made to the exact cent. Rounding would only apply to cash transactions.

Overdate · January 4, 2011 4:39AM

<< 

<< 

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

In today's credit/debit card economy, rounding wouldn't be necessary except for cash purchases. Even there, only the *total* purchase would need to be rounded (as in grocery shopping). Many stores might want to round down only as an incentive for customers to shop there. >>

I can just see some taxing authority 'rounding down'. >>

Taxes would be calculated before rounding occurs, so that wouldn't be an issue.

Some countries have already eliminated the cent or its equivalent. Does anyone know how rounding is done in these countries? This would give us an idea of what would happen in the U.S. after elimination of the one-cent coin.

slipgate · January 4, 2011 4:41AM

I'm not talking about the penny itself. Yes, it is little more than worthless and obsolete as a coin (along with the nickel). What I am talking about is the political ramifications of coming out and actually saying, "The penny is worthless and we are eliminating it". I think politically this would devalue the dollar to some extent. if it happens, watch the currency market and see if the dollar falls.

On another issue brought up here; I don't think many store could get away with rounding up and they keep the extra few cents. There are always those that will complain about losing the cent. These people can come out ahead 99 times in 100 but the one time where the store gets the extra 2 cents, they will raise holy hell. The store might adopt a rounding policy but if someone complains, they just give them a nickel.

When I lived in Europe with the military in the 80s, we had already eliminated the penny in the PX and Commissary and always rounded. You did not get many complaints though due to the captive nature of the audience.

mingot · January 4, 2011 4:42AM

In europe and asia, on american military bases, they have already eliminated the cent. Everything is rounded up or down. When I was there, this did not happen at the register, it was just something the cashier handled. Tills were never dead on at the end of the day, but the variance was always small enough that no one cared.

PinkFloyd · January 4, 2011 5:03AM

Perhaps we are waffling on getting rid of the penny because it would recognize the acceptance of our falling currency. However' it has happened before. They got rid of the 1/2 cent long before it was devalued to the point that the 1c piece is now.

It might also have something to do with Lincoln being on it. But we can find something else for him to go onto.

RichieURich · January 4, 2011 6:52AM

The penny is the only thing you can get free in many stores. It is worth so little that there is a jar next to the register with a "Leave a penny, take a penny" note. It takes approximately 2c to manufacture a penny, so the Mint is losing one penny for each penny produced (except for the ones that they sell at a premium). Yes, there is a historical precedent - - the MInt has been making pennies for over 200 years. But it is in my opinion foolish to spend 2 cents to make 1 cent that no one wants, so it ends up in a penny jar or thrown away. That the Mint's production, by volume, is nearly 50% pennies, is ridiculous. And if you don't believe pennies are worthless, try giving one to someone. In summary, we should stop making pennies!

ricko · January 4, 2011 7:01AM

It makes sense.... I believe the politicians are afraid to tackle this one though. Cheers, RickO

ebaybuyer · January 4, 2011 7:05AM

why not mint them every other year ?? or at half of the current volume ? the zinc pennies alone will continue to circulate until they ALL find thier way under the floor mats of our cars. the dumbest decision by the mint is to continue producing them when the ones in circulation arent even used, ditto for the dollar coin, stop wasting money making a coin that no one wants, and no one uses.

StubbyMcNumbthumbs · January 4, 2011 7:13AM

<< 

<< 

<< 

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

In today's credit/debit card economy, rounding wouldn't be necessary except for cash purchases. Even there, only the *total* purchase would need to be rounded (as in grocery shopping). Many stores might want to round down only as an incentive for customers to shop there. >>

I can just see some taxing authority 'rounding down'. >>

Taxes would be calculated before rounding occurs, so that wouldn't be an issue.

Some countries have already eliminated the cent or its equivalent. Does anyone know how rounding is done in these countries? This would give us an idea of what would happen in the U.S. after elimination of the one-cent coin. >>

Australia does exactly this. They eliminated their 1 and 2 cent coins in the early 90s. Now, all CASH purchases are rounded to the nearest 5 cents as stated above. Only the total amount is rounded. All electronic/card purchases remain the same, with no rounding necessary. I have not heard of a single instance of ANY vendor not rounding down when required to. I don't believe stores have the option to "only round down as an incentive". It is all very strictly dictated how it will work and everyone complies. There is no real incentive not to. It's a wash.

One and 2 cent coins are no longer legal tender for purchases, but quantities can still be turned in at a bank for trade for larger currency.

The use of $1 and $2 coins is quite prevelant and the $1 and $2 notes were eliminated about the time the coins were introduced, so now the $5 note is the smallest.

It all seems to work ok.

JamesMurray · January 4, 2011 7:17AM

<< 

<< 

<< 

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

In today's credit/debit card economy, rounding wouldn't be necessary except for cash purchases. Even there, only the *total* purchase would need to be rounded (as in grocery shopping). Many stores might want to round down only as an incentive for customers to shop there. >>

I can just see some taxing authority 'rounding down'. >>

Taxes would be calculated before rounding occurs, so that wouldn't be an issue.

Some countries have already eliminated the cent or its equivalent. Does anyone know how rounding is done in these countries? This would give us an idea of what would happen in the U.S. after elimination of the one-cent coin. >>

I was in the UK before and during as well as after decimalisation.The general feeling was that we had been ripped off , shorted.We knew we had been,but as always nothing to be done about it and it's somewhat forgotten in time.It's not exactly rounding down but it is in a way as for example before decimalisation there were 12 pennies to a shilling , only 5 after.240 pennies to a pound as opposed to 100.
A half penny was re introduced in the 80's i think it was , possibly 70's and swiftly done away with , merchants charging 24 1/2 p for a bag of spuds or whatever rounded it out , sure , but always up.
It's like the old saying goes , never give a sucker an even break.We the public being the suckers.

itsnotjustme · January 4, 2011 8:27AM

Eliminating the cent makes no difference to the value of a dollar. It reflects the reality that the purchasing power has declined to the extent the low value makes it more drag on our economy than fuel for it. Cost to mint. Time to count out 1, 2, 3, or 4 more coins in change, fuel to transport the raw materials to the mints, and the product to Federal Reserves and on to commercial banks and merchants. It's been our lowest denomination since half cents were ended over 150 years ago.

Rounding already occurs. Let me repeat.... rounding already occurs. Sales tax is rounded. Items sold by weight/volume are rounded.... even gasoline is priced to the 1/10th of a cent per gallon. We have the technology to round to the nearest cent... we can also do it to the nearest 5 cents. It is a wash.

Cents are minted to demand. Demand is high because they do not remain in circulation long. They don't remain in circulation because the value is low...... so the low value drive the large mintage.

ELIMINATE THE 1 CENT COIN & THE $1 FRN. Dollar coins will then circulate, and the cash register space problem will be solved!

WaterSport · January 4, 2011 8:45AM

Once again we debate what the rest of the major currencies have done years ago. The politicians simply have too many special interest in their pocket on this issue. While consumers unions say it should not be done as it would cost "consumers" billions in increased cost, so does loosing your pocket change every year when added to all those who lost their change but no one seems to care about that. Truth of the matter is the factory owners who make money and more specifically coin handling equipment have pitched a tizzy along with the copper planchet manufacture vendor for the mint.

WS

Musky1011 · January 4, 2011 8:50AM

Since the USA doesn't make the penny it doesn't matter.... We make cents here

lkeigwin · January 4, 2011 10:04AM

The Mint should stop manufacturing cents. The gov't should then declare those already minted to be worth 2c or 2 1/2c. Billions will emerge from the dark, people will enjoy the new found "wealth", and collectors will have a field day.
Lance.

henson4 · January 4, 2011 10:07AM

Perhaps it's not the penny that will solve our problems, it is really the infinite bailouts and printing presses printing useless paper that are of concern

CarlWohlforth · January 4, 2011 10:12AM

Devaluing our currency makes us look bad. But we should do it. Either that or eliminate the cent and stop printing dollar bills. The fact is the dollar ain't worth what it used to be.

ebaybuyer · January 4, 2011 11:26AM

the dollar bill should NOT be eliminated, it should be made to last longer than 18 months, it is proven that no one wants to use the bulky dollar coins, that has been proven time and time again.

mrpotatoheadd · January 4, 2011 11:30AM

<< it is proven that no one wants to use the bulky dollar coins, that has been proven time and time again. >>

How has it been proven?

thebeav · January 4, 2011 11:34AM

<< 

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

Don't kid yourself nobody is rounding down! >>

I agree......This would be tantamount to a possible 4 percent increase in price. That is, on a dollar item.

mrpotatoheadd · January 4, 2011 11:39AM

<< 

<< 

<< Prices would be rounded up (3 or 4 cents) or down (1 or 2 cents) to an even 5 cents so it would be a wash. >>

Don't kid yourself nobody is rounding down! >>

I agree......This would be tantamount to a possible 4 percent increase in price. That is, on a dollar item. >>

I disagree.

Many businesses are currently rounding down with no requirement that they do so. What makes it likely they'll start rounding up in the future, especially when they'd face the threat of their competitors not going along with them, and publicizing the fact?

pendragon1998 · January 4, 2011 12:17PM

What happens to the states that have a non-divisible by 0.05 sales tax (e.g., 6%) when someone makes a small purchase, say $1.00?

ProofArtworkonCircs · January 4, 2011 3:15PM

Chinese restaurants in this state have rounded their bills up (and only) to the nearest nickel the 50 years I have lived here. There are some that round up to the nearest dime. I used to get upset over this, but it is dangerous to make a fuss over it.

DBSTrader2 · January 4, 2011 3:27PM

Time for an experiment regarding the "worthless" cent! ...........

I would like for everyone here to gather up their pennies from their change jars, sofa cushions, ashtrays, car floors, etc and send them all to me. I will report back to members of the Forum how many I eventually get, and if it is enough to put either of my sons thru college (or even a semester).....

- - Dave

atarian · January 4, 2011 3:43PM

Everyone can mail their unwanted pennies to me and Ill be happy to take them all in.

Overdate · January 4, 2011 3:48PM

What happens to the states that have a non-divisible by 0.05 sales tax (e.g., 6%) when someone makes a small purchase, say $1.00?

The merchant would round the total up or down, but the state would get its 6 cents either way.

Frankcoins · January 4, 2011 7:38PM

<< Would getting rid of the penny be a de-facto devaluation of US currency as a whole? >>

Not at all...But every time getting rid of the cent is
seriously discussed, these fake astroturf organizations appear like "Americans for Common Cents," secretly funded by
the zinc industry, to stir up fears of runaway inflation if the cent goes away.

Check/debit/credit card tranactions would still be rendered in cents. Gosh, other than keeping some quarters in my car
cup-holder for parking meters, I almost never use any coins at all.

droopyd · January 4, 2011 8:42PM

<< I was in the UK before and during as well as after decimalisation.The general feeling was that we had been ripped off , shorted. >>

To this day, my cousin converts back from decimal to LSD when shopping so she will know how much she is "really" paying.

IrishMikey · January 5, 2011 2:52AM

Just this past week I have walked past 4 cents that were lying on the sidewalk or in the
street -- it isn't worth the bother. I might have taken a chance if a Wheat reverse was
showing, but maybe not. That tells me all I need to know about the need for the cent.

I would eliminate the cent, the nickel and the half dollar. In addition to the dime and the
quarter, I would strike a $1, $2 and $5 coin. (A $2 1/2 coin might make more sense, but
the math would drive people crazy.) This would leave just 4 denominations of paper money,
the $10, $20, $50 and $100. Rounding everything to one decimal place makes it much
easier to do, and it addresses the reality of the devaluation of the US $ over the past 50
years.

Who knows, we might even be able to stop the 9/10 pricing by the gas companies!

19Lyds · January 5, 2011 3:48AM

One and Two Pound coins are quite common in England and 1 and 2 Euro coins quite common in Europe.

I think a significant savings would occur if the paper one's were eliminated. Folks WOULD grumble at first but WOULD adapt.

As for the cent, it's neither here nor there IMO.

Folks tend to forget that any change in cash requires the acceptance by small and big commercial businesses as the general population is very adaptable. As such, government needs to jump off their scared panicky stumps and enact change as only then will change occur.

EagleEye · January 5, 2011 9:23AM

Perception and reality.

Perception - It would be easy for talk-radio to stir up controversy over the elimination of the cent. (think tungsten-filled gold bars, no gold in Ft. Knox, etc). This fear mongering for political gain would really rattle the weak-minded. The end result is to blame any inflation on the people who were in power when the cent was eliminated. Remember "The Crime of '73"? No, we don't really, but the populists of the late 1800's blamed the economic conditions on the lack of silver convertibility. The "Crime" was not including the Standard Silver Dollar in the 1873 coinage bill. Whoop-de-doo! There was no real "Crime of '73".

Reality - Most transactions are done electronically, so the cent is a mere token for stores to collect sales tax. Elimination would only effect the collection of sales tax.

My idea would be to eliminate the cent except for collector sales (in 95% copper). Allow states and private individuals to strike cent-sized tokens for the use of making change - no legal tender status, just a convenience. A cent today is like the mil of the 1930's anyway. Mills are 1/10th cent tokens made by the states.

richbeat · January 17, 2011 2:14PM

<< Eliminating the cent makes no difference to the value of a dollar. It reflects the reality that the purchasing power has declined to the extent the low value makes it more drag on our economy than fuel for it. Cost to mint. Time to count out 1, 2, 3, or 4 more coins in change, fuel to transport the raw materials to the mints, and the product to Federal Reserves and on to commercial banks and merchants. It's been our lowest denomination since half cents were ended over 150 years ago.

Rounding already occurs. Let me repeat.... rounding already occurs. Sales tax is rounded. Items sold by weight/volume are rounded.... even gasoline is priced to the 1/10th of a cent per gallon. We have the technology to round to the nearest cent... we can also do it to the nearest 5 cents. It is a wash.

Cents are minted to demand. Demand is high because they do not remain in circulation long. They don't remain in circulation because the value is low...... so the low value drive the large mintage.

ELIMINATE THE 1 CENT COIN & THE $1 FRN. Dollar coins will then circulate, and the cash register space problem will be solved! >>

Exactly, we've been rounding up and down to the nearest cent for many years now.

GrumpyEd · January 17, 2011 2:30PM

In reality it won't matter much, a cent has so little buying power. You need a sack of them to buy anything.
I still pick them off the street just in case I need a cent.

Getting rid of the penny - unintended consequences

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