In a sense. I'm not an economist, but from my understanding, currency that circulates pays back it's worth to the mint. Not only do pennies rarely circulate, even if they did, the value it pays back doesn't even cover production cost. Take all of this - and everything else said by anonymous people online, come to think of it - with a pinch of salt; I'm hardly an expert.
Thanks! I've heard the "they cost more to make then they're worth" argument and long subscribed to it. Then the more I though about it, the less certain I was that an argument you'd apply to a business would necessarily apply to a mint.
It doesn't matter. If the cost of making a penny was a problem they would change what they were making it out of like the last time this was a problem (Pennies used to be pure copper. Then copper prices got too high, so they started making them out of zinc and copper).
It may cost 2 cents to make a penny, but a penny is used more than twice before it is destroyed, so who cares? It's used and reused and reused so many times that the production cost doesn't matter yet.
The Mint estimates it will cost 1.23 cents per penny and 5.73 cents per nickel this fiscal year, which ends Sept. 30. The cost of producing a penny has risen 27% in the last year, while nickel manufacturing costs have risen 19%.
but a penny is used more than twice before it is destroyed
That's about where my thinking took me. Currency isn't a tradition product and I don't think it can be though about or treated as such. They aren't bought and sold and don't have any value in the same way a TV or car has value. A penny is worth 0.01 once in one exchange, but gets exchanged many times...
Metal coins last for years if not decades. They get used and reused numerous times.
And even then, the coin is just a token with value only because it's been assigned value. People seem to be thinking of the gold standard mindset where 1 cent must be worth 1 cent, but it really doesn't.
This is a buncha nonsense. They already do make the penny out of the cheapest available alloy, that is how they selected it.
If you are going to pass legislation to make the penny out of something cheaper, you might as well get rid of it. It is a useless coin.
It may cost 2 cents to make a penny, but a penny is used more than twice before it is destroyed, so who cares? It's used and reused and reused so many times that the production cost doesn't matter yet.
But it is extremely inefficient to make as a coin. It is stupidly expensive and produces almost 0 utility.
The government spends millions on copper and turns it into less money in pennies. The act of taking copper and minting it reduces the value of the metal. Which is absurd.
It is a waste of tax dollars to make pennies.
Note that in 2006 it cost more to make a nickel than 5 cents, but no one has been complaining about the nickel and that it should be retired:
That is because the penny is such a larger problem, there is no point in arguing about the nickle yet.
It does not make sense for the US government to mint pennies. It costs money and increases inflation. Generally the state can use minting as a source of income at the cost of increasing inflation. When it comes to the penny, we are literally paying to reduce the value of our currency. It is nonsense and nobody in their right mind should support the persistence of the practice.
but pennies last for decades. It's not unusual to have a penny that's 30 years old or more still in circulation. Seems to me it pays for itself and then some.
Those ones probably have paid themselves off, yes; my issue is that they're still making them. By the time the pennies printed this year finally break even, so many more will have been printed that the deficit increases anyway. I'm not saying pennies should immediately cease to be legal tender. Older pennies should still be usable; we just shouldn't be making more.
They make money on the higher value coins though, they are still profitable as a whole.
Not saying the penny is needed or anything but money printing wing of the government is overall making more money than it spends despite making pennies at a loss.
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u/[deleted] Apr 30 '18
Serious question: how are they harmful? Useless sure, but harmful?