A PENNY UNSAVED
July 20, 2006
Thanks to rising prices for zinc and copper, every penny now costs slightly more than one cent for the U.S. Mint to produce, says the Wall Street Journal.
The decline of the penny as a storehouse of value is a depressing lesson of the thief of inflation over time:
- A penny now has one-eighth the purchasing power it did in 1950
- 55 years ago the coin was 95 percent copper, versus 3 percent today, thanks to rising prices for the metal
That's one reason Rep. Jim Kolbe (R-Ariz.) is sponsoring a bill that would round all purchases to the nearest nickel, thus making the penny functionally obsolete. Many retail businesses have already taken this step, charging final prices that are rounded to the nearest nickel, dime or quarter.
However, eliminating the penny would wave a symbolic white flag before the forces of inflation, says the Journal.
- Taking coins out of circulation is an act that one associates with nations like Argentina, Bolivia and Mexico.
- Moreover, the market works; if American consumers don't find value in using pennies, they are free to conduct their transactions without them.
Additionally, one social value of pennies is that they help charities collect millions of dollars in donations each year, one red cent at a time, says the Journal.
Source: Editorial, "A Penny Unsaved," the Wall Street Journal, July 20, 2006
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