Monday, April 11, 2011

WHY I HATE PENNIES, pt. 1


Pennies should no longer exist. For every citizen in the United States, with the exception of the company that is the primary provider of the zinc used for the pennies, called Jardon Zinc Products, Pennies are incredibly expensive and problematic. Cost more than they are worth, inconvenient as a useful monetary value, and useless for anything practical today.
The cost of a penny is largely dictated by the materials used to make it. Pennies contain 97.5% zinc, with 2.5% copper to give them their distinctive coppery color. Prices of these metals have risen recently in response to inflation, an increase in prices due to more money getting circulated in the economy, and increasing regulation of mining, which has made the cost of metals extraction much higher. As of May 2010, it costs about 1.67¢ to mint a penny, making the face value of a 1¢ penny less than its actual manufacturing value. In addition to the penny, the nickel also has a physical value, which is higher than its face value. Nickels cost around 7.7¢ US to make, which is about 64.9% more than its face value. Other currency, such as dimes and quarters, costs much less to make. The face value of a quarter may be 25¢ US, but it only costs 10¢ US to make one.
It is unlikely that the cost of production will ever fall below one cent, and with more pennies being made each year, and like other government agencies such as the United States Postal Service, the Mint is expected to be financially accountable for their specific tasks, and the business practice of distributing something with a value less than its manufacturing cost is obviously jeopardizing their financial accountability. If creating a penny is costing more than what it is worth, we are technically throwing away money, and the resources to make the penny.
Pennies are extremely inconvenient because they are not accepted in most places that we generally use coins, like vending machines or toll booths, and pennies are generally not accepted in bulk. There are even machines that stretch pennies out for souvenirs. People often do not use cents to pay at all, they are much more likely to simply use larger denominations and get pennies in return. The National Association of Convenience Stores and the Walgreens drugstore chain surveyed transactions throughout multiple stores, and have estimated that handling pennies adds 2 to 2.5 seconds per cash transaction. Assume that the average citizen makes one such transaction every day, and in turn, wastes 730 seconds a year. In 1948, the average wage in America was about $1.20 an hour, or about $2,900, which means if a penny took less than 30 seconds to pick up, save, and continue about your day, it was much worth saving. The average worker today earns just over $36,000 a year, or about 0.5 cents per second, so by this basis, if you find a penny on the ground, it is literally not even worth your time. When accounting for the entire US economy that fits into this category, That's going to add up to about $300 million per year for lost time alone.
The "give a penny, take a penny" trays, dishes of pennies which you can take for free if you want them, or dump off your extra pennies into, at convenience stores and elsewhere reflect the fact that most people realize nowadays, the penny has fallen so much in value, that it is mostly a waste of time to worry about. It's free "money" which nobody bothers to take because it has no value. The trays save the seller time, and the buyer the inconvenience of having them. "When people start leaving a monetary unit at the cash register for the next customer, that unit is too small to be useful," argued Harvard economics professor Gregory Mankiw in a 2006 Wall Street Journal article

Will continue with part 2 later!

49 comments:

  1. I heard awhile ago that they were supposed to stop making pennies. Didn't really realize it costed this much to make one little penny.

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  2. this was really done, and you put up a good argument. Sadly I already agreed with you before reading so my mind hasn't been changed. I kind of think pennies will soon be taken out. at least they are made entirely out of copper like they use to be.

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  3. Nice blog BRO!!

    fallowing


    http://darkbogdanel.blogspot.com

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  4. Yay for not having pennies in Australia!

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  5. Awesome blog style man! Also great post! Definitely supporting!

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  6. I think penises are pretty okay if I may say so

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  7. Great conclusion. Keep up the good work

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  8. Nice post... :) I'm following you

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  9. I don't have a problem with them. Better pick them up when you see them, pennies add up.

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  10. do it like in holland they've bannend the pennies quite long time now.

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  11. hahah u made me hate pennies now.

    following!!

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  12. I always hated pennies. Thought I was crazy. Nice to know there's a proper reason for hating them.

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  13. haha so true, next time i se a swedish enkrona i dont should dont pic it up

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  14. but pennies are still bein made?

    nice to see some details on that rather then just people shouting pennies costs more to produce then its value

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  15. been hearing this for years... wondering if its really going to happen

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  16. nice!
    waiting for part two :D

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  17. yes, the copper involved in making a penny is more expensive than a penny. they should be either wiped out out increased in value

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  18. It is pretty ironic they still make them even though they cost more then they're worth

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  19. Wow alot of hate, the gubbmint sure trolled you hard.

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  20. Totally agree with you. Pennies are just annoying and not worth it to carry. Coins in general are annoying, but at least quarters have value.

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  21. If they made pennies worthless and completely wiped them out, the government itself would lose billions of dollars per year.

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  22. this was really interesting... personally i think pennies are kind of annoying but i think it'd be alottttt of work to get rid of them completely

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  23. to be honest i feel the same way about them :/ nice post! +followed

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  24. Have you seen john green's video about this?

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  25. Great read! I completely agree, who likes pennies?

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  26. It costs more to make a penny then its worth. Following..

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  27. Well I guess I'm lucky for not being american then :D

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  28. pennies... worthless... no more Lincoln???

    screw it lets go digital

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  29. Maybe we should go back to making steel pennies.

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  30. This is the same in most countries, which is why some European countries have stopped producing 1 and 2 cent coins.

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  31. i think pennies should exist, but be made from something cheaper. as long as companies still insist on having prices set to x.99, we need pennies

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  32. In spanish we call pennies centavos.

    If you wanna learn more spanish go to:
    http://learnspanish3000.blogspot.com

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  33. Personally, I still think coins and bills are a waste over all. Plenty of transactions occur digitally now, why not make all of them happen that way?

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  34. I need all the pennies i can get to be honest, after reading all that though I am reconsidering

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  35. I would be surprised if the government admitted that inflation had gone far enough that it actually cost more to make any piece of U.S. currency than it's worth.

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  36. i HATE copper coins. Euros included.

    +followed!

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  37. I don't think anything below 25 cents should matter anymore.

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  38. i hate them too.. the funny thing is, theyre not going anywhere in the near future. keep up the good blog

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  39. have no prob with pennies .. but you've got some nice points here looking forward to part 2 +followed

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  40. good points all around! following!
    http://deisidiamonia.blogspot.com/

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  41. Ahaha, yea here in Canada their starting to think about discontinuing them.

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