Obama wants cheaper pennies and nickels article

boimre1972 · February 15, 2012 2:40AM

Full article at:
CNN Money

NEW YORK (CNNMoney) -- The U.S. Mint is facing a problem -- especially during these penny-pinching times. It turns out it costs more to make pennies and nickels than the coins are worth.

And because of that, the Obama administration this week asked Congress for permission to change the mix of metal that goes to make pennies and nickels, an expensive recipe that has remained unchanged for more than 30 years.

To be precise, it cost 2.4 cents to make one penny in 2011 and about 11.2 cents for each nickel.

Given the number of coins that the mint produces -- 4.3 billion pennies and 914 million nickels last year alone, those costs add up pretty quickly: a little more than $100 million for each coin.

But even though Treasury has been studying new metals since 2010, it has yet to come up with a workable mix that would definitely be cheaper, and it has no details yet as to what metals should be used or how much it would save to do so.

Even if a cheaper metal can be used, it might not take the cost of a penny down to less than a penny.

Just the administrative cost of minting 4.3 billion pennies costs almost a half-cent per coin by itself, leaving precious little room to make a penny for less than a cent, no matter the raw material used.

Coinsponge · February 15, 2012 3:00AM

I guess we are on our way back to trading shells for money. I think I need to take a trip to the beach and get a start on my new coin collection so I can flip them on ebay when the time comes.

epcjimi1 · February 15, 2012 3:21AM

There was a thread last week that linked to the US Mint 2011 annual report. From 5 billion dollars total revenue, the mint only transferred 50 million to the US general fund. The reason given for the reduction to 50 million dollars being transferred was "the Mint held cash in reserve for future potential impacts to our circulating program from continued penny and nickel losses and a decline in the demand for the $1 coin."

2011 mint report

Coinosaurus · February 15, 2012 3:31AM

A hundred million a year to make pennies comes out to 33c per year per capita.

In grand scheme of things it's a drop in the bucket.

PerryHall · February 15, 2012 3:38AM

<< A hundred million a year to make pennies comes out to 33c per year per capita.

In grand scheme of things it's a drop in the bucket. >>

All those drops add up and the bucket will soon overflow. A cent in 1950 had more purchasing power than a dime has today. We should just get rid of the cent and nickel but BO won't do it during an election year.

Baley · February 15, 2012 3:45AM

Yeah, this is a really recent problem, and definitely was caused by current politicians.

After all, the US has never before changed any coin metals or standards in the prior 200+ year history

GaCoinGuy · February 15, 2012 3:46AM

I agree with PerryHall on this one.

Drop the cent from production and switch the nickel to a zinc mixture of some sort. Give it about 2-3 years and then demonetize the cents. Allow people to cash the copper ones for melt value and buy back the zinc ones at face to be melted and used for nickel production.

I think there are probably enough cents in circulation to the point where no more new ones are needed.

EagleEye · February 15, 2012 3:50AM

I think they should allow private individuals to make "pennies". They would have to be made to the same size as the current cent.

You could have slogans or advertisements put on them to offset the cost or about 3c. 100,000 minimum quantity. Private companies (with special authorization from the Govt.) would make them. You would distribute them.

TwoSides2aCoin · February 15, 2012 3:56AM

I think "cheaper" is not a proper adjective for our coinage. RIMM is cheaper.

messydesk · February 15, 2012 4:01AM

<< I think they should allow private individuals to make "pennies". They would have to be made to the same size as the current cent. >>

From the everything 150 years old is new again department?

Can you imagine the uproar on these boards when the submission policies for them is announced? Never mind the logistics of keeping track of all the First Strike™ cut-off dates.

IrishMikey · February 15, 2012 4:03AM

<< I think they should allow private individuals to make "pennies". They would have to be made to the same size as the current cent.

You could have slogans or advertisements put on them to offset the cost or about 3c. 100,000 minimum quantity. Private companies (with special authorization from the Govt.) would make them. You would distribute them. >>

Interesting concept. Think it might work?

coindeuce · February 15, 2012 4:07AM

<< A hundred million a year to make pennies comes out to 33c per year per capita.

In grand scheme of things it's a drop in the bucket. >>

Of course, but the rhetoric in an election year provides exponential value in polling for the incumbent as long as the reality numbers are kept in microprint. This is the message for the sheeple.

Julian · February 15, 2012 4:09AM

CNN just left here after interviewing me for the Wolf Blitzer show about this article.

EagleEye · February 15, 2012 4:16AM

Cool! we'll have to catch Julian on TV!

19Lyds · February 15, 2012 4:18AM

<< 

<< A hundred million a year to make pennies comes out to 33c per year per capita.

In grand scheme of things it's a drop in the bucket. >>

All those drops add up and the bucket will soon overflow. A cent in 1950 had more purchasing power than a dime has today. We should just get rid of the cent and nickel but BO won't do it during an election year. >>

according to my calculations, 4,300,000,000 cents at 2.4 cents each comes out to $103,200,000.00 in costs for just the cents.

Nickels add another $103,386,000 in costs.

In reality, if cents cost .005 cents each to produce and nickels .01 cents, then the government is wasting $174,928,000 each year?

Combine this savings with the $186,000,000 saving by eliminating the dollar bill it comes out to a wopping $360,928,000 in savings. Of course the public version of that figure would be more than "a third of a billion" dollars!

Eliminate the cents altogether and the savings jump by $21,500,000!

Moldnut · February 15, 2012 4:27AM

<< 

<< A hundred million a year to make pennies comes out to 33c per year per capita.

In grand scheme of things it's a drop in the bucket. >>

Of course, but the rhetoric in an election year provides exponential value in polling for the incumbent as long as the reality numbers are kept in microprint. This is the message for the sheeple. >>

Well, its a heck of a lot better than the, "We need to come up with new types of loans to get people into homes" like in 2004.

Coinsponge · February 15, 2012 4:51AM

Why not just put a halt on minting new ones and let the old ones circulate a while. Maybe all those pennies sitting in a bottle in the back of the closet will find usefulness again.

MsMorrisine · February 15, 2012 5:39AM

needless request from the Executive Office.

The Mint already has a contractor looking and different metals compositions for them

The wheels are in motion, so why try to skip past the process and dictate some un-studied change?

This Effort from Executive Office == 100% Waste of Time

GoldClause · February 15, 2012 5:48AM

<< I think they should allow private individuals to make "pennies". They would have to be made to the same size as the current cent.

You could have slogans or advertisements put on them to offset the cost or about 3c. 100,000 minimum quantity. Private companies (with special authorization from the Govt.) would make them. You would distribute them. >>

I don't think we need another aspect of government that lobbyists will use to bribe politicians, and that politicians will use as a means to pay back their political favorites. It would turn in to nothing more than another politically driven government program administered for the benefit of the politically connected.

TwoSides2aCoin · February 15, 2012 6:09AM

<< Why not just put a halt on minting new ones and let the old ones circulate a while. Maybe all those pennies sitting in a bottle in the back of the closet will find usefulness again. >>

I agree. How can changing the metal composition in a cent or a nickel reduce costs ? The product still has to be produced.
Solution : Just put a bounty on the old coins. Like Cash for Clunkers. Voila ! Problem solved.

MsMorrisine · February 15, 2012 6:20AM

<< I think they should allow private individuals to make "pennies". They would have to be made to the same size as the current cent.

You could have slogans or advertisements put on them to offset the cost or about 3c. 100,000 minimum quantity. Private companies (with special authorization from the Govt.) would make them. You would distribute them. >>

It is currently illegal to place advertisements on money

Whoever designs, engraves, prints, makes, or executes, or utters, issues, distributes, circulates, or uses any business or professional card, notice, placard, circular, handbill, or advertisement in the likeness or similitude of any obligation or security of the United States issued under or authorized by any Act of Congress or writes, prints, or otherwise impresses upon or attaches to any such instrument, obligation, or security, or any coin of the United States, any business or professional card, notice, or advertisement, or any notice or advertisement whatever, shall be fined under this title. Nothing in this section applies to evidence of postage payment approved by the United States Postal Service.

yellowkid · February 15, 2012 6:23AM

The obvious solution, or at least half of it, doesn't occur to the government.

Coinsponge · February 15, 2012 6:23AM

<< 

<< I think they should allow private individuals to make "pennies". They would have to be made to the same size as the current cent.

You could have slogans or advertisements put on them to offset the cost or about 3c. 100,000 minimum quantity. Private companies (with special authorization from the Govt.) would make them. You would distribute them. >>

It is currently illegal to place advertisements on money

Whoever designs, engraves, prints, makes, or executes, or utters, issues, distributes, circulates, or uses any business or professional card, notice, placard, circular, handbill, or advertisement in the likeness or similitude of any obligation or security of the United States issued under or authorized by any Act of Congress or writes, prints, or otherwise impresses upon or attaches to any such instrument, obligation, or security, or any coin of the United States, any business or professional card, notice, or advertisement, or any notice or advertisement whatever, shall be fined under this title. Nothing in this section applies to evidence of postage payment approved by the United States Postal Service. >>

They might have to arrest themselves. Go for it.

ricko · February 15, 2012 6:28AM

They just continue to dither and spout off platitudes while accomplishing nothing. The solutions are right in front of them, yet they choose to play games and 'pass the hot potato', resulting in no action and further losses. Ignorance abounds in our non-leadership. Cheers, RickO

mixman · February 15, 2012 6:37AM

In the article it said that each cent costs .5 cents in labor overhead. What metal composition could they possibly come up with that would cost less than .5 per coin??? I think even steal pennies would cost close to a cent after all the overhead is added.

fishcooker · February 15, 2012 6:51AM

Change 'em to 10X their current value and be done with it. It's too inefficient to bother with anything small and inflation's only going higher.

Goldbully · February 15, 2012 7:05AM

Good job, Julian!!!! Looking svelte and knowledeable on CNN

boimre1972 · February 15, 2012 7:36AM

Why don't they mint pennies every other year in an effort to reduce costs? Surely there is not that much demand for pennies to need issuing every year. (So says a currency guy).

pocketpiececommems · February 15, 2012 7:48AM

Quit making the pennies for one year for circulation and only have them available in proof sets. The next year do the same for nickels and the following for dimes. Limit the number of sets. Jack up the price. They sell out in 6 hrs. Everybody is either happy they got theirs so they can flip or hacked because on some foul up at the mint. 3 years of pure threads on these boards.

OldEastside · February 15, 2012 8:32AM

Well its kinda offset with Dime's that cost about 6 cents,
Quarters that cost about 13 cents, and Dollar coins that
cost about 20 cents each to mint.

Steve

Coinsponge · February 15, 2012 9:10AM

<< Well its kinda offset with...Dollar coins that
cost about 20 cents each to mint.

Steve >>

Would that be the same dollar coins that are in storage not being used?

EagleEye · February 15, 2012 9:12AM

Another solution,

The mint could offer to buy older cents for 1.25¢ each and then release them back into circulation. No need to make new ones. Maybe if they sorted out the bronze ones it would pay for itself.

They did this back in 1871, although not at 1.25¢. The Mint Act of 1871 gave the Mint the power to purchase cents, 3¢ nickels and 5¢ nickels for face value from banks. However until 1874 they melted the coins and reissued new cents and 5¢ nickels. After that they simply reissued older cents and 5¢ nickels. That's why 1877 cents and 1877 and 1878 5¢ nickels are so low mintage (or none minted). They has too many older ones to need to make more.

scotty1419 · February 15, 2012 9:54AM

I think this is a really good step (although it's been simmering for a while). If after a thorough analysis, the Mint finds there is no viable alternative solution for a cheaper penny, wouldnt the answer gravitate towards stopping new production?

I'd think we could do pretty well recycling all the current supply of pennies back into circulation.

ambro51 · February 15, 2012 1:27PM

Yup privatize them. I'm sure progressive insurance would make ALL the pennies we need and put that Glank FLO on them. Wait a few months and romnie supporters will make all the nickels we need with negative Wobama ads on them

notwilight · February 17, 2012 12:00AM

<< A hundred million a year to make pennies comes out to 33c per year per capita.

In grand scheme of things it's a drop in the bucket. >>

Except the bucket is already full and the floor is covered with water. --Jerry

secondrepublic · February 17, 2012 12:15AM

<< They took our gold away in 1933; took our silver away in 1965. Heck, they even took the copper out of our pennies in 1982....

Pretty soon we'll have cardboard or plastic coins, and then the "intrinsic value" will be the same as FRNs. >>

Great post, very true. The timeline is striking, about every 20-30 years since 1933 they've debased the coinage even more.

TURBO · February 17, 2012 12:24AM

I'm sure obama is thinking of a way to melt all our guns down to make his pennies.

GoldClause · February 17, 2012 12:26AM

<< Why don't they mint pennies every other year in an effort to reduce costs? Surely there is not that much demand for pennies to need issuing every year. (So says a currency guy). >>

Actually, the mintage each year reflects the demand. Most pennies don't circulate. People tend to throw them in jars, so the typical penny gets minted, distributed, given in change, then thrown in a jar, never to be seen again. So the government has to mint billions to replace them each year.

EagleEye · February 17, 2012 12:46AM

"Intrinsic value" - one of the characteristics of "good" money....

Actually the opposite is true. A token currency is the only sure way to keep money in circulation. As soon as the money becomes worth more than what it can buy, it becomes a commodity itself.

The first "token" US coinage was the Three cent silver piece, and when silver coins dropped out of circulation prior to 1853, these were the only US silver coin in circulation.

The bronze cent was copied from the success of the Civil War tokens in the Northern cities.

Gold coins didn't circulate when you had a paper substitute that was backed, at least in part, by gold. It is much more convenient to carry paper.

When they recalled the gold (mostly from banks), and raised the rate, most people saw it was adding liquidity to a broken credit system. It's only after the years of abuse of a non-gold standard (living off the national credit card) that it becomes a campaign issue.

If they kept silver in the coins in in 1965, would we have seen a massive removal from circulation in 1968? That would have been a disaster.

I wouldn't blame the action to keep coins and money in circulation, I would blame the fiscal action of generations of politicians.

EagleEye · February 17, 2012 2:58AM

When Mint Director James Pollock recommended going to a "token" bronze cent in 1863 he said: " It is the Government stamp and convenience that makes them circulate, not metal value."

Also, I think since we are in a global economy, if one country tried to have an intrinsic coinage, or a gold standard based on real convertibility, that currency would soon be redeemed for metal and the coins would be exported and melted, leaving a bigger problem then when it started.

EagleEye · February 17, 2012 7:30AM

I think von Mises has the historical view. Nowadays, we use money as a marker, a chit, a ledger entry. It is an electronic bit traveling from credit card terminal to your bank. In electronic form it has no real substance. When we we want to use a physical form, like a coin or a paper dollar bill, we can exchange it for electronic bits. We all value it nonetheless whether it is in our account or in the form of gold coins that we know we can convert to money any time we want.

As Ludwig von Mises puts it in his Human Action, “[Money is] the most marketable good which people accept because they want to offer it in later acts of impersonal exchange.”

cladking · February 17, 2012 7:38AM

Cheaper pennies and nickels is the epitome of penny wise and pound foolish.

We lose billions of dollars messing around with pennies and trying to run a currency system
that has been obsolete for decades and now they want to waste millions of dollars in studies
to figure out a way to continue to waste billions while maybe saving as much as the cost of the
studies.

In government this is called cost savings and efficiency.

History will be exceedingly unkind.

EagleEye · February 17, 2012 8:05AM

History will be exceedingly unkind.

Yes, we always seem to follow Canada's example.

Obama wants cheaper pennies and nickels article

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