Why We Should Get Rid of Pennies

Why We Should Get Rid of Pennies

By Andrew Welke

Reasons

• Cost more to make• Waste your time• They don’t work as money• They get less valuable as inflation increases.

History

• The penny was made in 1972– Made of 100% pure copper at the time– It was worth what is now a nickel today

• As time went on…– The value of copper went up– Inflation lowered the value of money– Which forced the mint to make the penny 2.5% copper and

97.5% zinc

Impact

• The U.S makes 4 billion pennies each year.• Each penny costs about 1.4 cents to make

each penny• In 2011 it cost the FY $60,200 dollars• So a lot of our hard earned wages goes to

subsidizing the penny.• It would be better to use a different form of

material like steel, plastic or lint

The purpose of pennies

• You don’t want to overpay for anything.• Money exists to facilitate the goods and

exchange of services• YOU CAN’T DO THAT WITH PENNIES!

But there is 1 machine

But there is 1 machine

But there is 1 machine

• IT TAKES 10% AWAY OF THE MONEY YOU ALREADY HAD AND GIVES BACK NOTHING IN RETURN!

They Are a Deadweight to the Economy!

Pennies are worth less than nothing

• There is an idea called Opportunity Cost.– Basically, if you are doing something, you could be

doing something else, like earning money.

Pennies are worth less than nothing

• There is an idea called Opportunity Cost.– Basically, if you are doing something, you could be

doing something else, like earning money.• It is estimated that Americans lose a billion

dollars of money just fiddling with pennies– Especially if you get exact change in the checkout

line.

Visualize

• You go to the bank with 2,000 pennies ($20 weighing eleven pounds)

Visualize

• You go to the bank with 2,000 pennies ($20 weighing eleven pounds)

• You say “I have these pennies here, can I get 24 dollars in return?” AND THEY SAY YES!

Visualize

• You go to the bank with 2,000 pennies ($20 weighing eleven pounds)

• You say “I have these pennies here, can I get 24 dollars in return?” AND THEY SAY YES!

• THAT IS WHAT IS HAPPENING AT THE U.S. MINT!

WHY DO WE STILL HAVE THESE!?

WHY DO WE STILL HAVE THESE!?

• We are sentimentalists

WHY DO WE STILL HAVE THESE!?

• We are sentimentalists– People like the penny– People like Abraham Lincoln (He is the only one

facing right.)

WHY DO WE STILL HAVE THESE!?

• We are sentimentalists– People like the penny– People like Abraham Lincoln (He is the only one

facing right.)• If Lincoln was alive today…

WHY DO WE STILL HAVE THESE!?

• We are sentimentalists– People like the penny– People like Abraham Lincoln (He is the only one

facing right.)• If Lincoln was alive today…• His face will still be on the $5 bill!

WHY DO WE STILL HAVE THESE!?

• We are sentimentalists– People like the penny– People like Abraham Lincoln (He is the only one facing

right.)• If Lincoln was alive today…• His face will still be on the $5 bill!• People are afraid prices will rise and charitable donations

will drop• The only company that benefits is a zinc company in

Tennessee called Jardon Zinc Products

The Solution

• Get rid of the penny and round to the nearest 5 cent for cash transactions.

Rounding

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Rounding

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Rounding

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Rounding

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Rounding

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Rounding

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Drawback

• Cheaters

The Solution

• Get rid of the penny and round to the nearest 5 cent for cash transactions.– People are afraid prices will rise and charitable

donations will drop

The Solution

• Get rid of the penny and round to the nearest 5 cent for cash transactions.– People are afraid prices will rise and charitable

donations will drop• Many countries have done this and there has

been no change in their economy.– Canada, New Zealand, Australia, Finland,

Netherlands• No prices rose or charitable donations dropped

Experience

• We have gone through this process before.– The U.S. mint discontinued the half-cent in 1857

because it was worth too little– No prices rose– (But It had greater buying power than today's

dime!)

Is it Unpatriotic?

• Not exactly, our U.S. military in oversea bases abolished the penny and rounded to the nearest 5 cents.

This is not a political issue

This is not a political issueIt is a rational issue

References• Images

– http://www.kungfuquip.com/wp-content/uploads/2011/02/800622_lg.jpg– http://larry5154.files.wordpress.com/2011/07/vending-machine.jpg– http://getentrepreneurial.com/wp-content/uploads/2012/04/laundromat-

dryers.jpg.

– http://upload.wikimedia.org/wikipedia/commons/0/0c/2010_cent_obverse.png

• Info• http://www.snopes.com/business/money/pennycost.asp• http://www.youtube.com/watch?v=y5UT04p5f7U&list=PLqs5ohhass

_QZtSkX06DmWOaEaadwmw_D&index=10&feature=plcp– http://www.youtube.com/watch?v=77C47XYm_3c&feature=related– http://en.wikipedia.org/wiki/Half_cent_(United_States_coin)– http://en.wikipedia.org/wiki/Penny