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Deleting the penny?@?@?@

glider14

Always a newbie
got this on AOL news
"NEW YORK (June 2) - As the soaring price of zinc going into pennies pushes the cost of production above the coin's value, one congressman is rekindling plans to eliminate it. Representative Jim Kolbe, R-Arizona, told CNNMoney.com he plans to reintroduce legislation to eliminate the penny in the coming weeks.

"Most people still think the penny has no purpose and we should get rid of it," said Rep. Kolbe, who introduced legislation in Congress in 2001 that required the rounding of cash transactions to the nearest 5 cents. Although the Legal Tender Modernization Act did not pass, getting rid of the penny has taken on urgency for Rep. Kolbe, as the average price for zinc has shot up from 35 cents a pound in 2002 to 63 cents a pound in 2005 -- driven in large part by increased demand from China.

The issue "used to be an oddball thing that Kolbe had an obsession about," the congressman said of himself. "Now it will become a necessity. We'll be compelled to change."

Over half of the U.S. Mint's coin production comes in the form of pennies, which are made of 97.5 percent zinc. Since the Mint doesn't stockpile its inventory of materials, it is sensitive to fluctuations in zinc's price.

The cost of producing the coin has risen from .97 cent per penny in 2005 to 1.4 cent per penny. At that rate, the Mint would spend some $44 million producing pennies this year, nearly $14 million more than in 2005.

"When the price goes to 1.5 cents per cent then everybody will figure it out," said Kolbe. "Then everyone will hoard their pennies because the metal will be worth more than the coin." Kolbe, who is set to retire from Congress after this term, joked he should go into the business of buying people's pennies to sell them for their value.

Not everyone shares Kolbe's view, however.

"Kolbe is a good member of Congress but wrong on this issue," said Mark Weller, Executive Director of the pro-penny organization, Americans for Common Cents. "When he did this in 2001, he received no support. Not one co-sponsor. I think we'll see a similar response this time."

"Americans overwhelmingly want the penny," said Weller. "They also hate rounding."

Kolbe's 2001 legislation proposed that cash transactions ending in 1, 2, 6, or 7 cents should be rounded down to the nearest 5 cents, while transactions ending in 3, 4, 8, or 9 cents would round up. Credit and debit card transactions could still be valued to the nearest cent.

Americans for Common Cents (ACC) is an interest group that counts among its supporters coin and numismatic hobby groups, charitable organizations - and companies involved in zinc production.

The organization was formed in 1990 to counter earlier "rounding" legislation in Washington, it briefly went dormant afterwards and re-opened when Congress held hearings on the future of money in the age of electronic banking in the mid-1990s.

If Weller is dismissive of Kolbe's initiative, it should be noted ACC itself has been talking to Congress "about the dramatic increase in metals prices." Weller concedes lawmakers are aware of metals pricing in currency and concedes that if prices remain high for 18 months there could be more discussion of changing the make up of coins.

Although ACC has ties to zinc companies, Kolbe represents Arizona, the largest copper producing state in the nation. Copper is the main material of the nickel coin which, after the elimination of the penny, would benefit by becoming the lowest denomination of currency in circulation.

Is It Even Possible to Eliminate the Penny?

There is, however, some evidence that eliminating the smallest denomination of a nation's currency can be done without too much upheaval.

Australia eliminated its one and two cent pieces in 1992 after a surge in the country's consumer price index twenty years before eliminated their usefulness.

The change affected only cash transactions -- interest is earned and bills are paid to the cent.

At the time of the transition, according to Michael Skully, Professor of Banking at Monash University in Melbourne, the Australian government kept a close watch for profiteering associated with the elimination of the penny, while the nation's major retailers rounded totals down. The elimination of 1 and 2 cent pieces did not "disproportionately hurt the poor" as ACC asserts it would if rounding was imposed in the United States.

"I certainly don't recall any riots in the street when it happened," said Skully.

What's Next?

Due in part to China's growing demand, according to George Vary, executive director of the American Zinc Association, the cost of zinc has doubled on the London Metal's Exchange in the past year.

"Until several years ago, China was a net exporter of zinc," said Vary. In 2001, that country exported a net total of 522,000 metric tons. In 2003, as China's demand for materials surged with its emergence as a global manufacturing giant, it imported a net total of 388,000 tons.

Industry analysts predict zinc prices could ease in 2007 based on improved supply and smelting capacity worldwide. As for China, Lloyd Giles at London-based metals analysis group CRU Group thinks the country could soon be a net exporter again, once its improved smelting capacity allows it to process more zinc supplied both domestically and internationally.

As for the chances for Kolbe's legislation to pass, Josh Kurtz, politics editor at Washington, DC-based Roll Call said, "It's a noble effort, doomed to defeat. Congress is pretty reluctant to tinker with the nation's monetary system."

And in terms of cost savings, why should they? After all, the national debt stands at $8.3 trillion. The prospect of reaping $13 million in saving in pennies seems like mere pocket change.

But if the cost of zinc does keep rising, the change could really add up

6/02/06"

post you comments on this!
alex
 
why don't they just make them out of something else?

or make them smaller?
 
I hate pennies, I hope they get eliminated.
Plus the government could use the $44 million used to produce pennies for something else, like war propaganda.
 
lol, war propaganda. Yea they should the 44million could go to other things that are needed, like Making it to mars cause thats such a priority!
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Cheers
 
[b said:
Quote[/b] (glider14 @ June 03 2006,1:17)]"Americans overwhelmingly want the penny," said Weller. "They also hate rounding."
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Interesting article though. Its like when people shaved gold off sides of the coins when they were made of gold. The price of the metal > value of coin.
 
Special interwoven fibers are so much cooler any ways!
 
Personally, I can do without a penny and I love to round numbers. Something tells me, though, just as there has been "whitecollar crime" involving fractions of cent in banking transactions, rounding will probably be subject to manipulation for illegal profit. Just my 2 cents worth!
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[b said:
Quote[/b] (Nickz123 @ June 03 2006,2:03)]Plus the government could use the $44 million used to produce pennies for something else, like war propaganda.
That is the craziest thing I've heard. Like they need more to go into bombing Iraq. Or maybe they could use it for something like aid and not tax their citizens so much.
 
I think he was being sarcastic, Jason, it read like he was actually intending to come across as ridiculous to me
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  • #11
i kinda like the interwoven fiber idea ~ 3 parts hemp to 2 parts soybean ~ if all else fails roll a fatty and ash into your gas tank ~
 
  • #12
Considering how long it took the US to modernize paper money, pennies have more job security than the rest of us.  But the current administration would probably agree to give up the penny if the savings could be handed over to Halliburton in a no-bid contract to train Americans to round to the nearest nickel.

When I worked in a hardware store in 1981, pennies were mostly copper and people were hoarding them because the price of copper was rising.  I remember (I think correctly) that there were many more dollar bills than pennies in the cash register.

The same anti-penny talk was stirred up back then, probably by the same people who pushed for the metric system a decade earlier.  But we're not a people comfortable with having to learn something new and the problem was solved by changing pennies to mostly zinc.  So it's deja vu all over again.
 
  • #13
Interesting. Never knew that happened before.
 
  • #14
When I lived overseas they did something similar. I guess the cost of flying the pennies to the military base was more than the actual value of the pennies, so they stopped doing it. They did a rounding thing similar to what is probably described in the article (I guess I would know if I read it). 0.01 and 0.02 rounded down, and 0.03 and 0.04 rounded up.
 
  • #15
So how well was it received? Was it practical or were their abuses / manipulation?
 
  • #16
Well, I think things are a little different on a military base. A lot more "yes sirs" is a polite way to put it.

I thought it was stupid at first, but it ceased to be important quickly. I found it fun to try and "game" the system by always having my totals round up. I'm not sure how buying more stuff to get 0.02 was me "winning," but it seemed fun at the time.
 
  • #17
Should be pretty easy to do that on a military base... no sales tax, so everyone knows exactly what everything is going to cost at the register. And no ".99"s tagged on the end of everything.
 
  • #18
[b said:
Quote[/b] (endparenthesis @ June 06 2006,12:15)]And no ".99"s tagged on the end of everything.
Now there's a concept I'd like to do away with!!!! When we were living in SE PA, we had an opportunity to go to Philly and take a tour. Part of the tour was history and one of the litle known facts was that the $.99 thing was started so that the people making change would be forced to go into their register and make change, preventing some unscrupulousness. This is one of those things that I find to have outlived its usefulness and relevance. I say, call a buck 99 - 2 bucks - and be done with it!!! I mean, who do they think they're fooling with these 99's and 98's and 97's.....?
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  • #19
I figured it was a psychological thing... you'd subconsciously (or consciously) feel that the product was cheaper if you saw a 1 in front of the decimal instead of a 2. Hmm. Maybe the psychology was just a fortunate side effect of the change-making.
 
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