April 02, 2008
The case against the penny

Here's an informative article that makes the case for abolishing the penny (and the nickel) based on the cost of minting them and their lack of purchasing power in today's economy. I'm a sentimentalist, I like my pennies and nickels (and we regularly roll coins to bring back to the bank, so we don't lose money through wastage), and even I found this compelling. It won't break my heart if nothing happens, mind you, but I can certainly see the merits of the argument. Of course, I can also see the merits of keeping the penny and dumping the nickel. That's actually a pretty creative suggestion.

Somewhat perversely to me, the countries that have successfully gotten rid of their smaller coins or are on the path to doing so also seem to be converting their small bills into coins. As you know, I am very much not a fan of that, and if that's a corollary of the anti-penny movement here, you can count me as a foe. Given the increase in demand for base metals, and the fact that replacing bills with coins will further exacerbate that, I don't understand why you'd want to invite future problems with negative seigniorage (read the article) like that. Maybe by the time that happened you'd have to consider doing away with all coins, but still. Why borrow trouble? Anyway, it's a good read, so check it out. Link via Yglesias.

Posted by Charles Kuffner on April 02, 2008 to National news

Way past time to get rid of the penny and the nickel. Our currency is plummeting, so just like Mexico does periodically we'll eventually have to knock off a zero to keep the prices meaningful, anyway, and this is a low-impact way to get there. No need at this point to divvy up the dollar, which is worth less than ever, into more than 10 smaller units.

Posted by: Gritsforbreakfast on April 2, 2008 4:09 PM