Redenominate the Cent?

DieClash · August 23, 2006 10:34AM

I've been reading in CoinWorld, Coin related blogs & forums, and other numismatic publications about the excessive costs of producing the current One Cent coin. There's been plenty of discussion about the fate of our lowest denominated coin. I've read much about how it will be discontinued after 2009 and there is also a bill pending on Capital Hill to eliminate it and introduce a rounding formula to the nearest "nickel" for commercial cash transactions. This round-up or round-down has become somewhat of a controversy with many opponents claiming that it will result in inflation because merchants will price items so that most every transaction results in a round-up instead of a round-down.

What if the mint creates a Two Cent denomination to replace the Lincoln Cent? It could be 15-20% heavier than the existing coin and made of the same composition with a larger diameter and similar thickness. We had Two Cent coins in the past. In fact, the motto "In God We Trust" was first introduced on a Two Cent coin! We can still have the One Cent coin after 2009, say for about 3-5 years before making it obsolete and no longer legal tender. Most One Cent coins will be stashed away in hoardes within 5 years of discontinuing produciton anyway.

With a two-cent coin, you don't have a rounding problem. The only change that you would not be able to make would be three cents on commercial transactions. But one could overcome this with creative cash exchanges. Say you buy a 97-cent Item and want to pay with a $1 bill. Why not pay with a $1 and a Nickel and I'll give you 4 Two-cent coins in exchange? Did anyone ever get 99 cents in change on a transaction? You betcha. Ever go into a convenience store and see the cup with the sign "have a penny give a penny, need a penny take a penny".? You betcha! Two cents really doesn't buy much these days and seems to me to be the logical replacement of the 1-cent denomination. It addresses the inflation/rounding problem and the cost of production problem.

That's my Two cents. Do you think we will see a two-cent denomination in the not too distant future?

KC

Aegis3 · August 23, 2006 10:39AM

A two cent coin would not be a good idea. First, with a nickel and a quarter present, it would basically necessitate the continuence of the penny, or else most stores will often have to round. Remember that people do not often carry change around, and so hoping that they'll have a nickel on them when 3c is expected in change is unrealistic. Drop the cent, change the composition/size of the nickel, and that's all is needed. Don't drop the nickel yet, since as long as the quarter is present, the nickel is basically stuck in production. And I don't see us going back to a 20c piece anytime soon.

UncleWiggly · August 23, 2006 10:39AM

It doesn't need to be heavier. It can even be the same size for that matter. It just needs to say 2C on it, costs less or the same as it's face to make, and be backed by the U.S. Government. Size and what's in it have little importance.

Jerry

DieClash · August 23, 2006 10:45AM

<< It doesn't need to be heavier. It can even be the same size for that matter. It just needs to say 2C on it, >>

I was contemplating how one might handle the fact that we would have two coins of the same size and composition with different denominations stamped on the back. I figure a larger diameter would help as we phase out the Lincoln cent. After it is no longer circulating it would be possible to downsize the two-cent piece and achieve furhter cost savings, IMHO

KC

Longacre · August 23, 2006 10:45AM

Unfortunately a two cent coin will quickly become just as useless today as the one cent coin. I like your analysis, though. And Welcome!

MarineEAS1999 · August 23, 2006 10:48AM

<< It doesn't need to be heavier. It can even be the same size for that matter. It just needs to say 2C on it >>

The blind wouldn't appreciate that much.

cladking · August 23, 2006 11:10AM

If you think rounding would generate confusion imagine what would happen the first
time someone tried to buy a 99c item with a one dollar bill. There would be many transactions
that are simply impossible or would require that each party tenders change.

There was a real opportunity in 1981 to revalue the cent into a 2 1/2 cent coin. They could
have simply punched a hole in pennies while redenominating them into half nickels. This
is no longer an option because punching holes in current coins would expose the toxic core.

We don't need pennies. The average American earns nearly four and a half million cents
per year. It's simply too little money to try to track. It costs more to make change than
the money is worth. Pennies, two-cents, and half nickels are all a drain on our economy.

Elimination of the cent would increase the net wealth of the country.

ziggy29 · August 23, 2006 11:12AM

A two-cent coin today would be worth far, far less than the half cent was worth in 1857 when it was discontinued.

DieClash · August 23, 2006 11:12AM

<< Elimination of the cent would increase the net wealth of the country. >>

Interesting observation. Do Tell!

DieClash · August 23, 2006 11:15AM

<< A two-cent coin today would be worth far, far less than the half cent was worth in 1857 when it was discontinued. >>

Which means the one-cent coin is worth half as much

I think there is a consensus on these boards that something must happen.

The question remains what? If not a two-cent piece or two and half cent piece or some complex rounding formula with the nickel as the lowest ciruculating denominated coin then what?

cladking · August 23, 2006 11:21AM

<< 

<< A two-cent coin today would be worth far, far less than the half cent was worth in 1857 when it was discontinued. >>

Which means the one-cent coin is worth half as much

I think there is a consensus on these boards that something must happen.

The question remains what? If not a two-cent piece or two and half cent piece or some complex rounding formula with the nickel as the lowest ciruculating denominated coin then what? >>

Nothing complex needs to be done. Simply round the total of a transaction to the
nearest nickel instead of to the nearest cent as we do already all the time. Instead
of taxes kicking in in one cent increments they kick in in five cent increments. In every
transaction you might gain half a nickel or lose half a nickel but at the end of the year
it all works out even. As time goes by retailers and others will tend to price their pro-
ducts in multiples of five cents instead of one cent.

You'll be able to shut the gas pump off right before the next nickel kicks in instead of
the next penny. It's getting too hard to hit the penny anyway.

JoesMaName · August 23, 2006 11:34AM

We're hardly the first country to have this problem. Can't we just see what worked best for the countless counties that have lost their fractional coinage before us?
Mexico and Japan come quickly to mind. What did they do?

cladking · August 23, 2006 11:44AM

<< We're hardly the first country to have this problem. Can't we just see what worked best for the countless counties that have lost their fractional coinage before us?
Mexico and Japan come quickly to mind. What did they do? >>

Without exception they simply eliminated the smallest coins. Often they continued in mint and proof sets for a while but few of these are very valuable to collectors even when they're older. This might change since some are low mintage.

cladking · August 23, 2006 11:48AM

India is trying to keep a half rupee in circulation and are arresting people who try to
melt this small stainless steel coin. There is also protection for the older aluminum coins
but these don't circulate anyway. The Rupee is worth a little more than 2c.

JoesMaName · August 23, 2006 11:48AM

<< 

<< We're hardly the first country to have this problem. Can't we just see what worked best for the countless counties that have lost their fractional coinage before us?
Mexico and Japan come quickly to mind. What did they do? >>

Without exception they simply eliminated the smallest coins. Often they continued in mint and proof sets for a while but few of these are very valuable to collectors even when they're older. This might change since some are low mintage. >>

That's what I thought - no rounding laws required, just stopped making them.

cladking · August 23, 2006 11:53AM

<< 

<< 

<< We're hardly the first country to have this problem. Can't we just see what worked best for the countless counties that have lost their fractional coinage before us?
Mexico and Japan come quickly to mind. What did they do? >>

Without exception they simply eliminated the smallest coins. Often they continued in mint and proof sets for a while but few of these are very valuable to collectors even when they're older. This might change since some are low mintage. >>

That's what I thought - no rounding laws required, just stopped making them. >>

They do sometimes have very formal laws for rounding. Finland comes to mind as a country
that enacted specific laws to deal with this. I believe Greece has in the past as well.

DieClash · August 23, 2006 11:58AM

<< That's what I thought - no rounding laws required, just stopped making them. >>

hmmmm

OK. I go to the local gas station whose prices are always escalating but are ALWAYS expressed to the nearest 1/1000 of a dollar [currently 2.95 and 9/10 in my neighborhood]. So if goods are currently priced in fractions that do NOT correspond to our circulating fractional currency then there is definitley rounding goin' on here. In countries that have eliminated the lowest fractional currencies, they must have rounding rules.

One may argue that we could round to the nearest 5 cents as proposed in new legislation pending before Congress. Some oppose this legislation because they fear artificial price inflation because every item for sale will be rounded up to the nearest nickel.

If we adopt a two-cent piece, then perhaps the only rounding will be to the nearest even number, making that 99-cent item an even dollar. Given that, the local gas station will never drop the 1/1000 in their prices. 2.959 a gallon is still 2.96 a gallon to me. Even if I save a penny after pumping every tenth gallon.

JoesMaName · August 23, 2006 12:07PM

I would think all credit and electronic transaction wouldn't be rounded so it would just be cash deals - and who really cares? I don't even pick up a cent anymore. Well, unless it looks pre 82 or my back is feeling good that day....

Gemineye · August 23, 2006 12:09PM

What are you trying to do.....???
Have you ever made a purchase and paid with exact change..??
Todays society Cannot count........!!...Get rid of the confusion.........

rich · August 23, 2006 12:14PM

Ben Franklin had proposed a 1/1000th of a cent denomination.

I think he was going to call it a Mil.Imagine counting out those!It quickly was denounced.

I think that a 2 cent piece would only work if you withdrew the cent.Where would you put it in the cash register?

DieClash · August 23, 2006 12:16PM

<< What are you trying to do.....??? >>

Read the first post. In a nutshell trying to reduce the cost of production and at the same time allay fears of inflation. It's an idea. Just one in an ever growing stream of ideas. From amongst which will emerge the future direction that the Mint ultimately adopts, albeit through Congressional mandate.

<< Have you ever made a purchase and paid with exact change..?? >>

Hell no! I want to sift through the change for any collectibles. the MORE change the better!

Todays society Cannot count........!!...Get rid of the confusion......... >>

So they won't be upset if take their pennies

telecoin · August 23, 2006 1:01PM

I don't believe there is any need to change the cent.

First of all...even if it cost 1.1c to make a cent, that would only cost the mint about $10 million a year. That is a mere drop in the bucket compared to their overall profit (which is probably in the billions).

Second...after signorage (spelling ?) (because of coins being pulled from circulation by consumers), they probably are still making a profit on the cent.

Third...the American public is highly resistant to any change in their coinage.

Fourth...the cost of establishing a new system of payment for businesses would be in the billions (which would be passed on to the consumer).

There is the possibility of producing a plastic coin. That would be novel.

Regardless...nothing should be done until after the 2009 100 year anniversary of the cent.

cladking · August 23, 2006 1:36PM

It's impossible to make change with a two cent piece in all cases.

This is not a viable option even if it weren't also a waste of time.

DieClash · August 23, 2006 1:41PM

<< It's impossible to make change with a two cent piece in all cases.

This is not a viable option even if it weren't also a waste of time. >>

So please elaborate on how it is so possible to make change with the 5-cent option? The way I see it, there will be rounding regargless of which option is finally adopted. The rounding of course is less severe with the two-cent option than with the 5-cent alternative IMO.

kwmorgan · August 23, 2006 1:55PM

Australia and New Zealand have very effectively demonetized their 1c and 2c coins. All transactions including credit cards are rounded to the nearest 5c value. I loved it when I was down there. It helped to cut down on pocket change with the $1 and $2 coins. We should only have 5c, 10c, 25c $1 and $2 coins in circulation. Get rid of the penny and $1 and $2 notes.

cladking · August 23, 2006 2:12PM

<< 

<< It's impossible to make change with a two cent piece in all cases.

This is not a viable option even if it weren't also a waste of time. >>

So please elaborate on how it is so possible to make change with the 5-cent option? The way I see it, there will be rounding regargless of which option is finally adopted. The rounding of course is less severe with the two-cent option than with the 5-cent alternative IMO.

>>

As suggested earlier in the thread how do you make change for 99c if a dollar is tendered? about
half the time it will require that one party or the other has a wide selection of coins. I'd hate to have
to watch some of the 18 year olds now days try to figure out how to give me $1.01 in change with
no one cent coin.

If there is no cent or two cent than it's just rounding to the nearest nickel.

DieClash · August 23, 2006 2:19PM

<< 
how do you make change for 99c if a dollar is tendered? about
half the time it will require that one party or the other has a wide selection of coins. I'd hate to have
to watch some of the 18 year olds now days try to figure out how to give me $1.01 in change with
no one cent coin.

If there is no cent or two cent than it's just rounding to the nearest nickel. >>

I hear ya' brother.

But the difference between rounding to the nearest even number is less dratstic than rounding to the nearest nickel in terms of the impact on inflation from those who fear the rounding rules will contribute to retail inflation. It's a no-brainer that rounding up or down one cent has far less an impact than rounding up or down 2.5 cents. Or am I missing something?

Coppernicus · August 23, 2006 2:23PM

Solution: Keep the cent but don't make any more (at least for not for quite some time.) Have the Treasury announce a "penny redemption week" during which all banks will accept those hoarded pennies. (Notice I didn't say cents 'cause if you advertise cents, many people won't know what you're talking about!) For every 100 cashed in the person will receive $1.00 cash (of course) and a lottery ticket for a nationwide drawing for 100 prizes of $1,000,000 each.

For $100 million, the Treasury can retrieve enough "pennies" so that none need be produced for quite a while.

Mike

lkenefic · August 23, 2006 2:30PM

I've seen this thread before...perhaps we should get rid of ALL currency and just carry Debit Cards... I'm certain the IRS and the GAO would love this idea. Being able to track every transaction would certainly jazz them...

cladking · August 23, 2006 2:31PM

<< 

I hear ya' brother.

But the difference between rounding to the nearest even number is less dratstic than rounding to the nearest nickel in terms of the impact on inflation from those who fear the rounding rules will contribute to retail inflation. It's a no-brainer that rounding up or down one cent has far less an impact than rounding up or down 2.5 cents. Or am I missing something?

>>

What's the nearest even number? You could always round up but what if
exact change is available? If it's $1.03 and I have 3 25c, 2 10, and four 2c
($1.03) is it still rounded up to $1.04? If I have a dollar and a dime is it rounded
up or down? If there is no arithmetic rule for it then who sets it? The confusion
would be tremendous. You can't just automatically round up to simplify it be-
cause it would mess up some transactions. One party will just have to agree
to give up a cent.

It's not a viable solution.

We don't need smaller coins we need larger coins. The cent is simply obsolete.
The only thing that makes the nickel necessary is to bridge the gap between
the dime and quarter.

The nickel should be made a little smaller or kept the same size but changed
to aluminum.

If you check out the LME default thread you might agree that this
entire discussion is academic anyway.

DieClash · August 23, 2006 2:48PM

<< What's the nearest even number? You could always round up but what if
exact change is available? If it's $1.03 and I have 3 25c, 2 10, and four 2c
($1.03) is it still rounded up to $1.04? If I have a dollar and a dime is it rounded
up or down? If there is no arithmetic rule for it then who sets it? The confusion
would be tremendous. You can't just automatically round up to simplify it be-
cause it would mess up some transactions. One party will just have to agree
to give up a cent.

It's not a viable solution.

We don't need smaller coins we need larger coins. The cent is simply obsolete.
The only thing that makes the nickel necessary is to bridge the gap between
the dime and quarter.

The nickel should be made a little smaller or kept the same size but changed
to aluminum.

If you check out the LME default thread you might agree that this
entire discussion is academic anyway. >>

I will check out the thread. But in the meantime methinks your argument is circular. On the one hand you argue that we don't need smaller coins, but rather larger coins. And on the other hand you argue that we cannot make change for the 99-cent transaction. I posit that this is a good topic of debate in general and I figure you've got alot to contribute to this debate. But it seems to me that your objections to the two-cent piece could just as easily be argued as equal objections to the 5-cent solution. Looks like a stalemate to me. So how do you think we can resolve it? Given the fact that change is inevitiable.

cladking · August 23, 2006 3:01PM

<< 

I will check out the thread. But in the meantime methinks your argument is circular. On the one hand you argue that we don't need smaller coins, but rather larger coins. And on the other hand you argue that we cannot make change for the 99-cent transaction. I posit that this is a good topic of debate in general and I figure you've got alot to contribute to this debate. But it seems to me that your objections to the two-cent piece could just as easily be argued as equal objections to the 5-cent solution. Looks like a stalemate to me. So how do you think we can resolve it? Given the fact that change is inevitiable. >>

You're missing the point. There are simple rules of arithmetic to round off to the
nearest nickel. It works out even for everyone because half the time you round
down and half the time you round up.

There is no rule for rounding odd numbers to even numbers or even numbers to
odd numbers. How do people come to terms? Survival of the fittest?

The solution is not to make a coin for which no one can make change.

A two and a half cent piece is a possibility but why bother? 2 1/2c just isn't enough
money to bother making change. The average American earns the equivalent of
about 1,800,000 two and a half cent pieces per year. This is too little money to try to
keep track of but with this denomination we'd always be able to make change and
wouldn't have fist fights to see who loses the penny.

rec78 · August 23, 2006 3:04PM

How about a 2 1/2 cent piece instead? Two for a nickel? Then you could round everything to the nearest 2 1/2 cents? Yep i like the idea of a 2 1/2 cent piece. Simply convert the lincoln cent into a 2 1/2 cent piece. Works for ME !

DieClash · August 23, 2006 3:05PM

<< There are simple rules of arithmetic to round off to the
nearest nickel. It works out even for everyone because half the time you round
down and half the time you round up.

There is no rule for rounding odd numbers to even numbers or even numbers to
odd numbers. How do people come to terms? Survival of the fittest?

The solution is not to make a coin for which no one can make change.

A two and a half cent piece is a possibility but why bother? 2 1/2c just isn't enough
money to bother making change. The average American earns the equivalent of
about 1,800,000 two and a half cent pieces per year. This is too little money to try to
keep track of but with this denomination we'd always be able to make change and
wouldn't have fist fights to see who loses the penny. >>

AgMe · August 23, 2006 11:58PM

I remember a rep of the Gov (Treasury) saying at this rate, it'll only cost the Gov ~23 million to continue the cent... chump change to them, considering they made a profit (Linky) of $730 million last year.

When you factor the coins being melted due to wear, it's not that bad... besides... the current value of the dollar (vs. a basket of currencies) can't stay at this level too long, we've lost something like %60 of the value since '00.

...I wouldn't mind seeing a gold "collector" version of the cent in '09... they could do something really special like limit the qty's to 10,000, fly them to the international space station, have them on display in the white house, Congress (both), Gettysburg, and various other important US locals... a tour of the US if you will & sell them on July 4th.

That plan would work on so many levels...

RichieURich · August 24, 2006 2:18AM

Even Billy Crawford, the variety expert who recently found a 1983 in the old pre-1982 composition, agrees that the cent should be discontinued. A lot of people just throw them away. Many store counters have "give a penny, take a penny" containers - - if they're giving them away, what are they worth? Somehow the country lived through the elimination of the half cent in 1857; we can live through the elimination of the penny. They're not worth making or keeping.

That said, hopefully they'll make a nice "end of the 100-year run" set of Lincolns in 2009 - - such as 2009-SVDB's. Interesting that Brenner is a lot more famous than he ever would have been if they had left his initials there (as on the 1909 VDB's) for the entire run of cents!

Drizzt · August 24, 2006 2:39AM

I still say we need to add a zero to all our coins. 1cent becomes 10cents....quarters become $2.50.....sacs dollars become $10.00

Dimes become dollars. That would be the nicest one. What happened to the five and dime's? They are now Dollar stores. This has GOT to be the way to go....

AgMe · August 24, 2006 2:57AM

<< Even Billy Crawford, the variety expert who recently found a 1983 in the old pre-1982 composition, agrees that the cent should be discontinued. A lot of people just throw them away. Many store counters have "give a penny, take a penny" containers - - if they're giving them away, what are they worth? Somehow the country lived through the elimination of the half cent in 1857; we can live through the elimination of the penny. They're not worth making or keeping.

That said, hopefully they'll make a nice "end of the 100-year run" set of Lincolns in 2009 - - such as 2009-SVDB's. Interesting that Brenner is a lot more famous than he ever would have been if they had left his initials there (as on the 1909 VDB's) for the entire run of cents! >>

It's all relative... while up in the northeast (CT) a while back, I noticed most locals would throw away their change for anything less an $5 USD; so the "give a penny, take a penny" container had more like $20-$30 in dollar bills and various change...

It never ends.

Keep making the cent until there is no more demand... then offer "collector" versions for a while; the mint would make a killing, because you know they would charge $1 for each cent... and we would buy them!

This whole thread is silly, I just got back from the dry cleaners (picking-up & dropping off); after paying my bill, I got 1 cent back in change! It happens probably more than you think.

...what are the odds...

Edit: & what was my first instinct? ...to look at it under a glass! :: sigh :: what it means to be a coin collector...

Redenominate the Cent?

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