How would it affect the economy if we eliminated the penny?

[Philosoraptor]

When I was a kid, I used to spend these antique plastic coins that were a tenth of a penny, they are all gone now, but there did used to be such a coin.

There is a bill to eliminate the penny on the horizon. What would happen if this became law? Would they declare the penny no longer legal tender? Or would you still be able to spend them, even though they stopped making them?

And if they were no longer legal tender, what happens to all those billions of pennys? Would the economy not lose billions?

And when they round change off to the nickel, will they round it off in our favor or theirs?

I get so confused sometimes.

[HereSince1628]

1. We'd learn to live with a new 50 cent piece.

Afterall, what are ya gonna do with that extra space in all those cash registers?

[Benhurst]

24. More likely, we'd learn to live with a Dollar coin, and the one Dollar

bill will will be discarded to make space in the drawer for the two Dollar bill.

[xultar]

2. It is all about business. If you're buying 20,000 things that cost 19.99

that extra penny to round up is quite an ammount to pay just to round up.

What about gas? Rounded up from 3.27 to 3:30. We count those fuckin pennies...don't we. I know I do.

[Bill McBlueState]

16. they already round gas

Gas always costs $x.xx9 per gallon. If you buy 10 gallons of gas at $3.009 per gallon, it's not $3.01 x 10 = $30.10; it's $3.009 x 10 = $30.09.

Without pennies, that $30.09 would get rounded to $30.10. Or, you might be able to pay the exact amount with a debit or credit card. I'm not sure whether that would be an option, but it could be.

Anyway, the total is rounded, not each individual item or gallon.

[Deja Q]

3. It costs $0.0124 or somoething to make one penny...

So, yeah, get rid of it.

They're making everything plastic-based anyway, so why not nix currency in general? (of course, that makes trackin' people easier... :think: :tinfoilhat: :rofl: )

[Bill McBlueState]

12. I like that idea, actually

There's gotta be a way to make plastic currency that's just as anonymous as cash, and more convenient. What if, when you withdraw $100 from an ATM, instead of five twenties, you got a plastic card instead. It wouldn't have any personal information, so you'd have to protect it the way you'd protect cash, but it would save you from having to deal with a fistful of bills and coins every time you make a purchase.

[MadHound]

48. Going cash based is foolish

After all, over 10 percent of our economy is black market based, drug dealing, paying the baby sitter under the table, etc. etc. Cash based trasactions. Take that ten percent away by going to a plastic economy and voila, instant economic collapse.

As far as the penny goes, keep it. Having to round up to the nearest nickle isn't only quite awkward in a decimel based monetary system, but doing so would lead to inflation.

Rather, we should make the push for people to turn in their pennies, cash them in for dollars. It has been well known for quite awhile that half of each years run of minted pennies winds up being stuck in a piggy bank within months of minting. Encourage people to cash them in and you wouldn't have a penny crisis anymore.

[acmejack]

4. Save money since it costs1.4 cents to make a penny

edit to correct facts, I was victim of misinformation!

the penny now costs 1.4 cents to make, according to the United States Mint.

http://www.signonsandiego.com/news/nation/20060720-0500-life-penny.html

[ThomWV]

5. None What So Ever - Stop Confusing Economy With Finance nt

[Philosoraptor]

9. Stop making Cents!

I stand corrected.

[W_HAMILTON]

6. It would follow the same rules of rounding off

CNN said that if this happened, anything priced $8.01 or $8.02 would be rounded down to $8.00.
Anything that costs $8.03 or $8.04, would be rounded up to $8.05.

Of course, if this goes into effect, you can probably guarantee stores changing their prices around to guarantee that more transactions end up with the .03 or .04, so they can round up and get "free" money.

[Warpy]

7. WE would lose billions

because you can bet that anything that comes to $10.01 would now be $10.05. Businesses can be counted upon to round UP, not down.

Oh, sure, they'll tell you all sorts of feelgood nonsense about how it will work and not cost you anything, but we all KNOW better.

[Ravy]

41. Self delete- posted wrong place

[leveymg]

8. No more $5.99 Specials at Denny's. We'd all starve!

[RC]

30. Heart attack on a plate

How can people eat that stuff?

[leveymg]

32. Think of what we'd save in health care costs.

Any idea how much a hospital stay is following a coronary? Triple-bipass surgery?

It's all the penny's fault.

[TheCowsCameHome]

37. So leave a total of $6 for the meal and tip like a republican

[Frustratedlady]

10. Isn't there something more important to spend valuable time debating?

With all the problems we have on our plate, why can't they spend their time on issues that really matter?

Before you know it, piggy banks will be relegated to the attic since there's nothing to "feed" them.

[Philosoraptor]

11. Sure. A penny for your thoughts.

[TheCowsCameHome]

36. Now that makes cents....................

[rzemanfl]

13. Pennies add up, years ago some computer person figured out

how to add the fractions of pennies from direct deposits to his own account rather than rounding up some people's checks. Got a bunch of jack before he was caught.

Pennies should be eliminated from cash register change only. Should still be used for pricing and plastic or check transactions. Let people cash in the ones they have at banks or those stupid machines that charge you to count your money that are in stores.

[blogslut]

20. Wasn't that Superman III?

Could have been Office Space ;)

[cornermouse]

14. Instant inflation, more or less. Of course, it won't be announced...

But that's the real effect.

If you get rid of the penny, the new lowest coin is the nickle. You're going to lose the four pennies that you would have hung on to and used to help buy something else.

I'd say this is Bush's way of looking for more suckers.

[abluelady]

15. In My Community We Have Wishing Wells

I save pennies and let my grandchild toss them in. The coins are collected and given to various charities in town. Honestly, I doubt I would let him just toss nickels and dimes to his heart's content!

[Bill McBlueState]

18. USA Today ran an article about the penny

And they emphasized that a lot of charities collect pennies, and that eliminating the penny would ruin that strategy.

[abluelady]

26. Exactly. n/t

[ayeshahaqqiqa]

17. Taxes will be raised

they'll round the tax on stuff to the nearest nickle instead of the nearest penny.

[Massacure]

19. Why don't they just make money worth more?

They would only need to take money out of circulation.

[ThomWV]

21. Because They're Too Busy Making It Worth Less

Deflation can be a very hard thing to endure. Witness the burst of the housing market bubble. Immagine owning a home that decreases in value as you continue to make payments - sort of like your car.

[Bill McBlueState]

22. In the UK, this has been done, in practice

Maybe someone who's spent more time in the UK than I have can verify this, but when I was there, I noticed that taxes are generally included in the price. Businesses then set prices at multiples of 5p, or even 25p. Even though pennies are still in circulation, the fact that prices almost always end in "5" makes pennies almost unnecessary.

The downside, if that became common practice in the US, is that a gallon of milk might cost $3.00 instead of $2.99. Consumers would have to decide how much that would bother us.

[Recursion]

33. US businesses *shouldn't* be adding tax to list price

But the government gave up trying to enforce that. Sales tax is supposed to be born by the merchant, not the customer.

[pooja]

23. if you eliminate the penny, you would need to come up with a

baseline tax that is not based on a percentage because eliminating the penny would make a company have to add the nickel, otherwise you would short your own intake and would be paying for your customer's tax. Percentages really mess with the "eliminate the penny" idea. If we didn't make the penny out of copper, then the price to make them would decrease. So why not use something else.

[Skink]

25. The solution is to put Reagan on the penny.

[Tenseiga]

27. they take up space, they use up resources,

they cost more to make than their face value, and they have no use other than handling that odd sales tax number.

Problem is, you'd have to restructure local sales tax rates to work around the removal of said currency. Time better spent taking care of more pressing issues.

[newyawker99]

40. Hi Tenseiga!!

Welcome to DU!! :toast:

[sam sarrha]

28. they want the zink so they can sell it to China..

[sam sarrha]

31. in west africa they had aluminum coins for the beggar economy, they gave

you change in aluminum coins, but they wouldn't take the aluminum coins from you, you had to give the beggars the coins as alms.. they bought what they needed to survive.. apparently all they cold buy was rice a rags..and the donkey carts went around early in the morning and collected the dead that passed in the night. Peace Corps 73, dakar Senegal

it is said that the government is printing the colored money for the the 50 states, and will print green dollars for the international business.. they will have different values, we will be subject to Mega inflation and recession but the Multi national Corporations will float with the international values since none of the corporations are actually based in the USA any more..

a 5# bag of potatoes costs $3 now.. was sometimes 60 to a dollar cents before Bu$h.. 300% inflation.

BC...AD...SB--Since Bu$h

[rooboy]

29. In Australia, our lowest denominated coin is 5 cents.

we got rid of 1 and 2 cent coins many years ago (probably at least 10 years). Didn't bother anyone at all.

[Bill McBlueState]

34. but as usual

But as usual, many Americans don't comprehend that certain things have been tried in other countries, and we can look to those other countries to see what might happen.

So how does that work -- are prices always set to a multiple of five cents?

[TheCowsCameHome]

35. The penny is useless and a nuisance. It's time to go.

[lonestarnot]

38. Well I won't be able to put in my 2 cents! It will either be diminished

to zero cents, or inflated to a nickle!

[Buzz Clik]

39. The sale of penny jars would plummet. Economic disaster.

[Ravy]

42. About those plastic 1/10 cent coins...

They were called mills, and they were actually a token for sales tax.

My dad said they used to use them for sales tax on a dollar in "the day".

[Philosoraptor]

44. Right, MILLS.

Thanks for reminding me. My granny had a bunch of them and we'd go down to the local store and buy candy with them. This was in the late fifties, but I'm guessing the mill was from the 40's?

[Bluerthanblue]

43. eliminating the penny is like eliminating the 'little guy'-

yeah, we may not seem like much,, but if you hold one up close to your eye, it can block out the sun-
It is all a matter of perspective-

One penny on its own is rather weak, but a bunch of them can purchase many things-
We get pennies for recycling our cans, and bottles- yet those pennies add up.
Giving one penny in taxes, can sometimes meant the difference in school sports programs, or providing lunches, or new books.

One penny from each person in America would be a sum that could chang the life of many-

Pennies are only a defecit, when the data to evaluate them includes paying chashiers for the time it takes to count our change..... did you realize that??? Pennies have some value at least- Paper money is not worth the paper it is printed on.

I count my pennies, and will take the time to walk down to the next shop to get a quart of milk that saves me only 4 cents- or pull into the gas station that is 4 cents less per gallon.

Pennies add up- especially to those of us who have less of them than others-

Keep the penny- I believe we are heading into a time where the penny will be held in a position of value once more- the bubble is going to burst, someday.

[no_hypocrisy]

45. It would inevitably raise the sale tax as you would no longer be able

to fractionalize the tax by cents, but rather by nickels. Say you bought something for a dollar and you currently have a seven cent tax tax, you pay $1.07 for the purchase. Without pennies, it would probably jump to $1.10. Also sales tax would be applied as thus on purchases less than a dollar: probably 5 cents on purchases 10 to 50 cents and then 10 cents on purchases 51 cents to a dollar. That's raising taxes on the consumer.

[Blue-Jay]

46. Why do we need to make new pennies?

Just encourage people to take all of their billions of pennies to the bank to get them back into circulation. There are probably enough pennies out there already.

[lindisfarne]

47. It would probably help; money saved from kids not swallowing pennies

and getting zinc poisoning would probably off-set any economical cost of getting rid of pennies (I wonder if there would be a cost?? we round up prices (tax) now to the nearest cent, so why not round to the nearest 5 cents?