Penny Problem

The U.S. penny has been around for a long time. A version of the penny was the first currency ever issued by the United States over two hundred years ago (A Brief History of the U.S. Cent, n.d., para.1). In the past, it was a very important part of the nation’s financial infrastructure. However, its value in today’s economy is highly debatable. In fact, the penny’s very existence could soon be just a footnote in the history books. Why is the penny on the verge of disappearing? The reason is actually pretty simple. The nominal value of a penny is one cent, but it costs taxpayers 2.4 cents to make each one cent penny (Kurtz, 2015, pg. 668). In simple business terms, it costs the U.S. roughly two and a half pennies to mint each individual penny. If the minting was a one-time thing then the loss …show more content…
Do you agree, and why or why not? What would be the effect of such a decision on price? I do not agree with the elimination of the nickel. The nickel still has relevance in the economy. For example, nickels are still able to be used in vending machines when making purchases. I think that losing the nickel would actually have a big effect. Eliminating the nickel would mean that the final price would be rounded to the nearest ten cents. Unlike the penny, the divide to round up or down would be unequal. Anything at four cents or below would be rounded down for a maximum of four cents savings. Anything over five cents would be rounded up for a maximum of five cents deficit of the purchase. In theory, this means even in equal number of rounded up/rounded down purchases a customer would not break even and would lose money. A better solution would be to eliminate the penny and use the penny’s copper plate/zinc core to make up the foundation of the nickel. This could conceivably reduce the cost of making the nickel and eliminate the drain on the U.S.