ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
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It does cost more than one cent to manufacture a penny.
More people should read Rothbard's What Has Government Done to Our Money? and support real commodity-based currency.
NZ eliminated the one and two cent coins years and years ago, and more recently the five cent one. It's great, it amazes me that the UK and the USA haven't already done so.
The penny back in the mid 30s was worth maybe about 15 cents in terms of today's dollar (depending on what inflation index used). I think we should get rid of the nickel too.
Also:
http://economics.ca/cgi/jab?journal=cpp&view=v29n4/CPPv29n4p511.pdf
I wonder how difficult it would be to eliminate all cash. The biggest problem, I think, would be small transactions like vending machines and parking meters. What if quarters and dollar coins were the only units of currency still remaining?
I always thought of a penny found in a parking lot or on the sidewalk as not worth the cost of the illness you might contract from the germs on it.
However even despite the smaller share cash has in all US dollar transactions, to remove the penny as a a unit of currency would be to encourage some inflation, as price increases would have to be given in higher increments, $0.10 as opposed to just $0.07 for example.
Would the cost of this small increase in cash prices be worth reducing the cost of minting money and increasing the seigniorage to the Treasury?
Wait, they were shipping coins by air? Would it not have made much more sense to ship them by ship and rail? That ought to be much cheaper, and it's not as if they're going to spoil en route. What am I missing here?
When I saw the title I assumed the argument would be that the value of peoples' time to handle and count pennies outweighs any possible economic benefit. Back-of-the-envelope: Two people per transaction, three extra seconds to handle the pennies, that's six man-seconds. Say a man-hour is worth $40. Then it costs about 7 cents in labor to handle the pennies. But normally they're not worth that much; they should be worth less than a nickel, right? So even if my numbers are pessimistic, it seems really hard to justify the time.
@Bill Wilkinson: You seem to be saying something interesting here but I'm struggling to understand it. I would have thought that eliminating pennies would just force prices for cash-bought goods to change in five-cent increments, without particularly biasing prices in either direction, except for things that are now sold for less than a nickel which would have their prices pushed up. Am I wrong?
Is this really a serious move? Transportation of penny might be too expensive but how about the comfort in using it? I don't now but maybe I have to be enlightened some more on the purpose of this. Actually, I am confused a bit. Maybe you can post a more brief discussion regarding the issue. I am sorry but I am just an ordinary citizen who cannot understand economy issues in an instant.
David C wrote: The biggest problem, I think, would be small transactions like vending machines and parking meters.
Right now in DC, they have centralized parking kiosks which take credit cards (and bills). But what we should really do is accept cell phone payment, as they do in soda machines in Finland. Not everyone has a cell phone, you say? Well, not everyone has a car, either.
Also in DC, we have a subway ad campaign urging citizens to use dollar coins, to save the government money. Here's an idea: STOP MAKING DOLLAR BILLS. That would get me to use dollar coins quite effectively. Now that the senator from Crane Paper is dead, isn't it time to finally quit printing millions of portraits of George Washington?
Having dollar bills now is roughly equivalent to having twenty-cent bills in 1970. And saying we need pennies now is like saying we needed fifth-cent pieces in 1970. Not having pennies is not the same as not having cents: your electronic bills and payments will work just fine with amounts of $29.79 (and $0.015 apiece, for that matter).
And here we come to what I suspect is the main reason we haven't eliminated dollar bills and pennies: it's very, very hard to point out the stupidity of keeping them without sounding like a ranting loon.