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The Almighty Buck News

Obama Pushes For Cheaper Pennies 825

Posted by samzenpus
from the new-money dept.
Hugh Pickens writes "Time Magazine reports that hidden deep inside in the White House's $3.8 trillion, 2,000-page budget that was sent to Congress this week is a proposal to make pennies and nickels cheaper to produce. Why? Because it currently costs the federal government 2.4 cents to make a penny and 11.2 cents for every nickel. If passed, the budget would allow the Treasury Department to 'change the composition of coins to more cost-effective materials' resulting in changes that could save more than $100 million a year. Since 1982, our copper-looking pennies have been merely coppery. In the 1970s, the price of copper soared, so President Nixon proposed changing the penny's composition to a cheaper aluminum. Today, only 2.5% of a penny is copper (which makes up the coin's coating) while 97.5% is zinc. The mint did make steel pennies for one year — in 1943 — when copper was needed for the war effort and steel might be a cheaper alternative this time. What about the bill introduced in 2006 that the US abandon pennies altogether.? At the time, fifty-five percent of respondents considered the penny useful compared to 43 percent who agreed it should be eliminated. More telling, 76 percent of respondents said they would pick up a penny if they saw it on the ground."
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Obama Pushes For Cheaper Pennies

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  • by netwarerip (2221204) on Friday February 17, 2012 @09:09AM (#39072905)
    The vast majority if store clerks wouldn't be able to round up or down to the nearest nickel.
    • by rioki (1328185) on Friday February 17, 2012 @09:13AM (#39072933) Homepage
      Oh no we can't have 9.99$! I am so confused if I see 9.95$...
      • by chromas (1085949)
        Some states have sales tax, so that $9.95 becomes $10.74 (depending on the tax rate, of course).
        • by mikael_j (106439) on Friday February 17, 2012 @09:30AM (#39073101)

          In other countries this is solved by laws demanding that all prices advertised to individuals (as opposed to companies) or where the target customer is clearly an individual include sales tax. So prices including the sales tax are conveniently set to nice round numbers.

          • by bickerdyke (670000) on Friday February 17, 2012 @09:37AM (#39073169)

            other countries have nationwide sales tax regulations so that you still could use nationwide ads.

          • by chromas (1085949)
            We have a lot of $0.99, $1.95, $9.98 bullshit, which I guess is supposed to make the price seem lower ("$0.99? That's not even a dollar!"—I assume that works on people who set their clocks 20 minute ahead so they're on time); rounding would ruin that.
            • Re:$0.95 bullshit (Score:4, Interesting)

              by TaoPhoenix (980487) <TaoPhoenix@yahoo.com> on Friday February 17, 2012 @10:03AM (#39073491) Journal

              Well for the record I set my clock an hour and 45 minutes ahead so that I am on time! : )

              But yes, $0.95 did seem lower because with 5% MA sales tax before they changed it it was still under a buck, so it was good for impulse sales. (Now that Taxachussetts changed it, it's back to being BS - you have to grab the penny from the Take-A-Penny tray to not bust open a second bill and get a handfull of crappy change.)

              But in my opinion the real reason you can't eliminate pennies is that the chaos you'd cause in Accounting would far outstrip the "nicety" of not having pennies. Hell, Nickels are equally silly. Dimes are a close call. I stop my valuation at quarters, which are still good for laundry machines.

              If suddenly there were no pennies the entire world would play the Office Space Game of "which way can I pocket the difference to my own benefit."

            • by ATMAvatar (648864) on Friday February 17, 2012 @10:11AM (#39073593) Journal

              Part of that is also carry-over from a past era where taxes were calculated based upon a stair-step-like system (at least in some states), rather than calculated exactly. $9.99 and $10.00 would be in two different brackets, resulting in a greater difference in sales tax than it is now, so it made a meaningful impact to drop the penny.

              Of course, it doesn't hurt that there was a psychological effect on the customer as well. That is likely why the practice continues.

            • by Bengie (1121981) on Friday February 17, 2012 @10:40AM (#39073967)

              Buy this car for under $14k! $13,999.99

              See, sales people do understand very basic Boolean logic.

              They actually wanted to do $13,999.99999999999~, but someone told them it was equal to $14k, so they could no longer claim it was less than. Their heads exploded.

          • by Brobock (226116) on Friday February 17, 2012 @11:15AM (#39074479) Homepage

            In other countries this is solved by laws demanding that all prices advertised to individuals (as opposed to companies) or where the target customer is clearly an individual include sales tax. So prices including the sales tax are conveniently set to nice round numbers.

            Sweden just had an issue where including the tax in the price caused recently reduced taxes to not get passed to the customer.

            Restaurants had a tax reduction from 25% to 12.5%. Since the tax was already included in the price, none of the restaurants reduced the prices and just pocketed the profit. If the price shown was pre-tax and the tax added in tally, the customer would have received the tax break.

            The only ones that actually reduced their prices was the large food chains. Most likely because watch dog groups were making sure of this.

          • by Brobock (226116)

            The country I am in now (Sweden) does not round the prices. They still use the obsolete öre (in physical form) in the prices. What they do is round it to the nearest krone. Some times you benefit if less than 50 öre and they round down, otherwise they round up.

        • by nedlohs (1335013) on Friday February 17, 2012 @09:41AM (#39073199)

          In which case you pay $10.75 (if you pay with cash).

          The penny is currently worth less (in terms of what it can buy) than the half-cent was when it was junked in 1857, it's worse than useless at the moment.

          • So is the Nickel. We should just round to the nearest dime instead.

            • by slew (2918) on Friday February 17, 2012 @11:39AM (#39074789)

              If you get rid of the nickel, you essentially need to get rid of the quarter. You need to have all larger denomination coins divisible by at least one of the smaller denomination coins. Unless, of course, you are a sadist. Getting rid of the nickel seems like a non-starter. However, dumping the dime w/o getting rid of the nickel would probably work.

        • by Endo13 (1000782) on Friday February 17, 2012 @09:43AM (#39073227)

          Not at all. You do all the math as normal, then round the final value. We already do that and have for decades. There's plenty of times where the price with sales tax doesn't come out to an even cent.

          And FWIW, I won't pick up a penny off the floor. Or if I do, it's usually to throw it in the garbage because it's cluttering things up.

          • by unrtst (777550) on Friday February 17, 2012 @07:29PM (#39080683)

            True story...

            On returning from a lunch break, my coworkers and I were talking about if anyone would pick up a penny in the parking lot. Most would not, some would. So the question - how much would someone have to pay you to pick up a penny (for those that normally would not). We worked in IT at a call center. We came up with an testing idea...

            The bathroom was filthy - it's a call center. We put a two quarters in each urinal. Then we went back to check on it 30 minutes later. How long would it take for those piss covered quarters to be picked out of the urinals?

            First check (30min), they were all gone.

            So we just put a single quarter in there, and re-checked in 15 minutes. It was gone already.

            So we put a dime in one, a nickle and 2 pennies in another, and a penny in another. In 15 minutes, the dime and nickle were gone, but the pennies remained. We checked again about 20minutes later, and the group of pennies was gone, but the lone penny remained. We were working too, and if memory serves, we missed the next scheduled check, but the all change was gone on the next check.

            We continued playing with amounts throughout the following days. Quarters went very very quickly, as if no one had any reservations on fishing them out of a well used urinal. We had been thinking that, just maybe, we got unlucky with the timing, and the cleaning staff was grabbing them... but we were all eventually 100% convinced that was not the case - they went to fast, and too often, and cleaning staff didn't make rounds anywhere near that much.

            We spent about 2 weeks of randomly tossing loose change in urinals and cracking up about how it vanished so quickly into the hands of call takers - all using shared phones, keyboards, mice, etc. We were having a swell old time with it.

            Then one day, we were in the common breakroom, and one of us bought a soda with a dollar. They got back 30 cents in change (a quarter and a nickle), and readily picked it up and pocketed it. Two and two became four in my head.... I asked my coworker where he thought that change came from.

            We stopped putting change in the urinal that day, and took a long hiatus from grabbing the change from the vending machine.

            If you ever see someone leaving their change in a vending machine, think twice before you judge them :-)

        • by similar_name (1164087) on Friday February 17, 2012 @10:33AM (#39073883)
          Which is ok. Sometimes taxes go out to tenths of a penny but it doesn't cause any issues. Really we should drop the penny and the nickel. Just go the the next tenth; dimes. I believe there used to be mils that were tenths of a penny and we don't fret about it today.
      • by QuasiSteve (2042606) on Friday February 17, 2012 @09:33AM (#39073125)

        Actually, there's no problem with having $9.99 .

        In Europe we've all but done away with the 1 and 2 eurocent coins - their monetary value vs cost involved in handling them just didn't make sense.

        But we do still have e.g. â0.99 type prices. The way it works is that your total gets rounded at most placed and almost certainly if you decide to pay by debit card. So if you buy 3 of those â0.99 items, you get a total of â2.97, rounded to â2.95. If you buy two, it gets rounded up and you pay â2.00 instead of the â1.98.
        ( this is apparently called 'Swedish rounding' when specifically applied to the situation of currency: http://en.wikipedia.org/wiki/Swedish_rounding [wikipedia.org] )

        However, if you want to pay with 1 or 2 eurocent coins to match a price exactly, many places will still accept that - but if you pay 'just over' where your return would technically be 1 or 2 eurocent, you won't be getting those.

        The places that accept them bring them to the bank, which bring them to bigger banks, which basically have them destroyed - and gradually the 1 and 2 eurocent coins are removed from circulation.

      • by Bengie (1121981)

        Gas stations already go out to the 1/10th penny in precision. $3.499/gal. They'll just round up to the nearest smallest unit.

    • by MightyYar (622222)

      The registers could do the math for them.

      I think we should kill everything except the quarter. Everything else is just a nuisance. I can't tell you the last time I bought something that cost less than a quarter in a quantity of one.

    • They already round up or down to the nearest penny thanks to %tax and 99/100ths pennies making most transactions end with fractional penny amounts.

      A nickel wouldn't require any extra though or skill.

      Besides, few clerks operate without a computer that does the rounding calculations for them.
    • The vast majority if store clerks wouldn't be able to round up or down to the nearest nickel.

      Because they had such problems with that when the mill $0.001 and the half cent $0.005 were removed that we learned our lesson and are stuck with a coin worth more in scrap metal if it wasn't illegal to scrap them. As a side note when the Mill and half were taken out of circulation they had more buying power then a nickle

  • 100 to 1 (Score:3, Funny)

    by JoeMerchant (803320) on Friday February 17, 2012 @09:12AM (#39072919) Homepage

    Drop the minimum wage to 8 cents an hour and divide all current cash value by 100.

    Think of it: 1c hamburgers, lunch for a dime and leave a 2c tip, and your average American home for $1000.

    Also, any transaction dealing with a $100 bill or higher will have to be reported....

  • by Anonymous Coward on Friday February 17, 2012 @09:14AM (#39072941)

    In most Euro-countries, prices are rounded to the nearest 5-cent number, 1- and 2-cent coins are quite rare. Why even bother producing coins that are worth more as a material than as a coin?

    • by JoeMerchant (803320) on Friday February 17, 2012 @09:18AM (#39072979) Homepage

      In most Euro-countries, prices are rounded to the nearest 5-cent number, 1- and 2-cent coins are quite rare. Why even bother producing coins that are worth more as a material than as a coin?

      In most Euro-countries, people don't consider mathematical ability a sign of social awkwardness, as opposed to the U.S....

    • by k.a.f. (168896)
      No, all countries that use the Euro have the same set of coins - including 1, 2, and 5 cent coins. IIRC, only the Netherlands and Finland have abandoned the smallest coins in practice. They mint only token amounts, but they still mint them.
  • Fatal flaw (Score:4, Funny)

    by Anonymous Coward on Friday February 17, 2012 @09:15AM (#39072945)

    If it costs 2 pennies to make 1 penny then you have destroyed a penny by making a penny.

  • Our money does not represent actual holdings of the treasury, rather a veritable mortgage on the holdings of the treasury. Why shouldn't our smaller units of currency be converted to paper to reflect this situation and keep costs down, rather than attempting to approximate the actual value of the materials used to produce the currency as we did during the era of the gold standard?

    • by JoeMerchant (803320) on Friday February 17, 2012 @09:27AM (#39073065) Homepage

      Tangible money interacts with the human animal differently than abstract mathematical concepts.

      Coins are the most tangible money, paper is more abstract, especially U.S. paper money that is all basically the same except for the numbers on it. Checks and credit cards are even more abstract - so much so that many people really can't handle them properly.

      Back in the day when a quarter would actually buy something worthwhile, if you tossed a quarter to somebody, they got a different visceral reaction than if they saw a penny coming. Paper, too, caused a different reaction because it was all inherently more valuable than coin. A coin more naturally "feels" like something you can instinctively trade or equate with other tangible objects of value. It takes many years of playing "The Price is Right" before most people get that same relationship with abstract prices, and again, some never really do.

      I don't think that a penny should cost $0.01 to produce, but I do think that there is real value in tangible coins that paper and credit cards lack.

  • Monetary insanity (Score:3, Interesting)

    by MikeRT (947531) on Friday February 17, 2012 @09:18AM (#39072965) Homepage

    Other great civilizations have done this and it always leads to ruin. The more you debase your currency, the less valuable the actual coins and other forms of currency become, the worse the devaluation gets. The only sane thing here to do is begin discussing plans to fundamentally bolster the foundation of the US dollar, not find ways to make producing it cheaper.

    It's not like they're doing the common man any favors. Inflation hits the poor first and hits them hardest. It's a backdoor flat tax.

  • Get rid of them (Score:5, Interesting)

    by OzPeter (195038) on Friday February 17, 2012 @09:18AM (#39072969)

    Australia got rid of 1 and 2c pieces years ago and that didn't kill us at all.

    That doesn't mean you people don't advertise things at 99 cents, just that you total up the bill and then round to the nearest 5 cents. Sometimes you win (all of 2 cents on a single bill) and sometimes you lose (again, all of 2 cents on a single bill).

    We also ditched $1 and $2 paper currency for $1 and $2 coins. That was also a good move in getting rid of those ratty dollar bills. The US cold easily do the same thing as you already have $1 coins in circulation. About the only people who will notice a change are the strippers who will now have use their coin slots.

    • by OzPeter (195038)

      Replying to my own post.

      I forgot to say that the US informally has the mindset to ditch pennies. All those trays of pennies next to the cash registers in shops that allow you to "place a penny/take a penny" are grass roots effort to implement rounding of bills to the closest number.

      You don't need to sell the public on this idea, they already do it!

    • by SirGarlon (845873)
      America has also got rid of pennies insofar as they are not accepted by coin-operated machines such as vending machines and parking meters. This has been true as far as I can remember (into the 1970s). It makes pennies especially useless. Dollar coins have never caught on for the same reason.
    • Re:Get rid of them (Score:5, Insightful)

      by JoeMerchant (803320) on Friday February 17, 2012 @09:52AM (#39073321) Homepage

      We also ditched $1 and $2 paper currency for $1 and $2 coins. That was also a good move in getting rid of those ratty dollar bills. The US cold easily do the same thing as you already have $1 coins in circulation. About the only people who will notice a change are the strippers who will now have use their coin slots.

      The dollar coin in the U.S. has been a red headed bastard stepchild of the currency, rarely used and considered stranger than a $2 bill.

      I think we should put out $2, $5 and even $10 coinage, but most of the U.S. seems to be moving to a plastic-credit based currency, with all the attendant privacy and fraud issues, as well as being managed by the private sector instead of the government. Is that a good thing, or a bad thing? I'd say: yes.

  • In Denmark (Score:5, Informative)

    by VMaN (164134) on Friday February 17, 2012 @09:19AM (#39072985) Homepage

    .. we got rid of the 25 øre in 2008. So now the lowest denomination is 50 øre (around 9 cents). Swedens lowest coin is 1 krone (around 15 cents).

    We've been rounding since 1972, and it omes very natural.

  • We did it in Holland (Score:5, Informative)

    by SmallFurryCreature (593017) on Friday February 17, 2012 @09:19AM (#39072995) Journal

    The Dutch Guilder (Gulden) had its cent removed years ago and when the Euro was introduced it wasn't long before it was agreed the Euro cent would no longer be used either. The latter is a bit more of a hassle since other countries haven't joined but in Holland it works pretty well.

    Prices are till in cents but the deal is that if you pay in cash, it is rounded off. On the whole it balances out although if you are REALLY cheap, you pay eletronically when the rounding is in the shops favor and cash when it is in your favor. Items that you tend to buy on their own are already at a 5 center round off. So a cola would cost 95 instead of 99 cents.

    It just makes sense, inflation makes prices go up but currency stays the same. So why keep amounts around that just don't make sense anymore? When the euro cent was briefly used everyone here quickly saw how fucking annoying they were, you soon ended up with a huge pile of worthless coins. You have to go pretty far back in time to remember being able to buy anything for a cent. I can barely remember being able to buy a single piece of gum for a nickle. Yes, that meant if you saved up 5 cents you had a piece of gum... but those days are gone. Move on.

    It will be intresting to read the reactions on this subject from Americans. Americans are after all paying for these expensive pennies with their taxes and if there is anything an American hates it is paying taxes. So, what excuses will those people come up with to keep cent/penny around? Nostalgia?

    In a way this shows the failure of democracy. This kind of move should be left to wise men, not people who feel nostalgic for a by gone era when you got a shiny penny from your granddad to buy candy. Maybe if democracy wasn't secret, then those 55% could be made to pay for the costs of making the pennies directly out of their own pocket. Wonder how many would still be nostalgic then?

    • by Hatta (162192)

      This kind of move should be left to wise men

      Where are we going to find those? Democracy is essential because wise men never stay that way once their self interest is involved.

  • Historical precedent (Score:3, Informative)

    by nicomede (1228020) on Friday February 17, 2012 @09:35AM (#39073137)
    Along the history of the Roman Empire, the amount of gold in the Aureus coin consistently decreased as the need for more (cheap) money increased, to fund the military campaigns and buy peace from the barbarians. It could only last so long. http://en.wikipedia.org/wiki/Aureus [wikipedia.org]
  • by dmbasso (1052166) on Friday February 17, 2012 @09:37AM (#39073163)

    I came here only for the penis jokes, but none so far!

  • by Covalent (1001277) on Friday February 17, 2012 @09:48AM (#39073283)
    We used to have half-penny coins (and others). They were done away with for the same reason the penny (and probably nickels and dimes, too) should be: they became essentially worthless.

    But, since this process makes sense, it probably won't happen. This IS America, after all. We have a reputation to maintain.
  • by Overzeetop (214511) on Friday February 17, 2012 @09:51AM (#39073309) Journal

    Most of his supporters are still being paid using them.

    *ducks*

  • Not sympathetic. (Score:5, Insightful)

    by LoyalOpposition (168041) on Friday February 17, 2012 @09:55AM (#39073359)

    Because it currently costs the federal government 2.4 cents to make a penny and 11.2 cents for every nickel.

    I have absolutely no sympathy for the government in this regard. At one point the US was on the gold standard. (That was after it got off the wampum standard and the tobacco standard.) At that time the $20 gold coin cost $20 to make, by definition. (Actually, just a little bit more because of seigniorage.) The dollar was defined as a certain weight of a certain purity of gold. The coin was merely the government's guarantee of the weight and purity. However, the government decided to finance part of its spending through inflation. Since you can't do that while on a gold standard (other than through new gold discoveries or processes) they had to do away with it.

    The government likes inflation because 1) they get to spend it first, 2) they get to pay their debts with worth-less money, and 3) tax bracket creep allowed them to increase tax rates without voting for them. (This last one has since been eliminated by indexing tax brackets to inflation, but it was a major component for many years.) First they inflated the money supply, and the gold in the gold coins became worth more than the face value, and the gold coins had to go. They continued inflating and the silver in the dollar, half-dollar, quarter, and dimes became worth more than their face values, so the government had to find something worth less to make them out of. Now they have continued until the nickel and penny are worth more than their face values.

    I, for one, think it's time for the government to stop financing their spending through inflation.

    ~Loyal

    • by ihavnoid (749312) on Friday February 17, 2012 @11:00AM (#39074233)

      I'm not sure if you understand basic economics, but a world without inflation would be much worse. The main purpose of inflation is to encourage people to spend money, or at least, save it in a bank, rather than keep the money in your closet. Once there is no inflation, or even a small amount of deflation, it acts as a positive feedback - as the value of money increases, people tries to get hold of more cache, and that reduces the total supply of cash within the society, and it further increases the value of cash. Eventually, all spending dries up, jobs will disappear (since there is nobody who's trying to by ANYTHING), and the poor guys will suffer more seriously, since the rich guys (=people with lots of cash) will have their assets' value increase automatically without doing anything, while the poor guys have no job, no cash, and nothing to buy anyway. That is precisely what happened on the great depression.

      What we need is a MODERATE amount of inflation - not sure how much is the right amount, but high enough to avoid the deflation spiral, and low enough to avoid hyperinflation.

      Plus, what's wrong with government spending? The government is supposed to represent the people, and hence, the spending should be something for the people. If you find government spending to be evil, then you should have a better, more sensible government, and stop blaming the spending itself.

  • by cashman73 (855518) on Friday February 17, 2012 @09:58AM (#39073411) Journal
    If Ron Paul is right, we'll eventually be ditching the penny altogether once its completely worthless. In its place, there will be a new $100 gold coin, which will eventually carry the same value as today's penny.
  • by DigiTechGuy (1747636) on Friday February 17, 2012 @09:58AM (#39073415)

    Stop inflating our currency! Inflation is government produced and is effectively a hidden tax on all of us.

  • by assertation (1255714) on Friday February 17, 2012 @11:22AM (#39074571)

    A number of people outside of the United States have been mentioning that their countries got rid of their equivalent of the penny years ago.......and the world didn't come to an end.

    Still......

    I remember a number of years ago, there was a true story about a programmer who wrote some kind of banking software. He did something such that he got a fraction of a penny on every transaction that went through the bank, deposited into a secret account.

    After a few years he was quite wealthy and the only reason he got caught was he couldn't suppress his desire to brag.

    Lesson learned: even little amounts add up.

    How would people feel if they were told that because of rounding up to a nickle, they could have had an extra $100, $10 etc at the end of the year, 5 years, etc?

    How would they feel knowing that they made a "donation" to corporate America of several thousand dollars over the course of their life time, for which those companies gave them *nothing*?

  • by An dochasac (591582) on Friday February 17, 2012 @11:32AM (#39074705)
    Aluminum, plastic and paper pennies might sound like good ideas now, but all are based on resources which are likely to become more valuable in time. What we need is a penny made out of Nuclear waste [wikipedia.org], specifically the Iodine-131 isotope. Here's why:
    • It quite literally 'burns a hole in your pocket' and so would stimulate spending.
    • It would discourage hoarding (you don't want to keep gamma emitters under your mattress)
    • It would encourage billionaires to quickly spread their wealth amongst the peons.
    • Since I-131 has an 8 day half-life, the Fed can keep printing it and giving it to banks and billionaires but by time it trickles down to you or me it will have disappeared!

    It is the perfect coin for the economy we've been working towards! Come on Obama, make it so!

    P.S. The U.S. and E.U. are in a head to head battle for who can print money the fastest, but I predict that China will win this race to the bottom. I have 2 beautifully designed paper Yuan notes, each worth 0.2 cents. Beat that Mr. Bernanke!

  • So... (Score:5, Insightful)

    by Charliemopps (1157495) on Friday February 17, 2012 @01:03PM (#39075951)
    So... let me get this strait, in order to save $100 million our government can either:
    A. Build 1 less tank/fighter jet
    B. The president could stop using his own private Jet
    C. We could delay invading Syria / Iran (whomever's next) by about 4hrs
    D. Completely overturn the way our currency has functioned for over 200 years.

    and we're choosing D?

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