"This week the cost of the metals in a penny rose above 0.8 cents, more than twice the value of last fall. Because the government spends at least another six-tenths of a cent — above and beyond the cost of the metal — to make each penny, it will lose nearly half a cent on each new one it mints.Sort of a Money and Banking topic, but interesting even if not totally related to class.
The real problem could come if metals prices rise so high that it would be economical to melt down pennies for the metals they contain."
Wednesday, April 26, 2006
A Penny for Your Thoughts, and 1.4 Cents for the Penny - New York Times
A Penny for Your Thoughts, and 1.4 Cents for the Penny - New York Times:
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An interesting question is whether the government should simply eliminate further production of pennies, with the expectation that all prices would eventually be rounded to the nickel.
There are at least two problems I see with this. First, although I cant think of anything off the top of my head, it might be possible to still buy something for less than a nickel. (Perhaps a lone resistor or a gumball or something.) Second, moving prices to the nickel might be inflationary--at least psychologically so.
Still, I see little reason we still have pennies in circulation. It is an artificial unit. Much like subatomic particles that cannot be further subdivided, why shouldn't the smallest economic unit be the nickel? We dont, after all, issue "deci-pennies" as a unit of currency. Why even have them?
Plus, pennies make my hands feel grubby, and they smell funny.
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