The penny doesn’t mean much to Americans anymore. There was a time when finding a penny was a sign of luck or that brighter times were ahead. Pennies were always good things to have around wishing wells or when you passed a gumball machine leaving a grocery store, but all those machines take quarters now. The penny has become a burden to the government, and a thing we throw in a jar when we empty our pockets and purses every night.
The government mints more pennies every year than any other coin, but pennies don’t circulate like other coins. Last year the government produced 7 billion pennies. The Mint produces more pennies than nickels, dimes and quarters combined. The big question is why? They don’t circulate, and they cost the government more money than they are worth. The answer, according to the U.S. Mint, is banks continue to ask for them.
Last year the Mint spent more than $114 million to produce pennies. Each penny costs more than 2 cents to make. Even nickels cost more than their face value. Nickels cost the Mint more than 11 cents to make, but nickels represent more value in the eyes of most consumers, so they are apt to spend them rather than collect them. Quarters are the only profit generating coin in circulation. A quarter only costs a little more than 11 cents to make.
The Philip Diehl, the President of U.S. Money Reserve, thinks it’s time to retire the penny, and he makes a good argument in an interview with CNBC Squawk Box. Diehl said more than 75 percent of the money transactions that take place in the United States are electronic transactions. The penny has become a dinosaur in the technological age, according to Diehl. Countries like Canada, Australia, and New Zealand have already put the penny to rest.
There are concerns about throwing penny production out the window. The Zinc Industry and other groups are against it. Some economists say, get rid of the nickel and the quarter too since consumers are using credit cards and other methods of buying, but the penny is the only candidate on the chopping block, and the grim reaper is getting closer.