Coin shortage could turn pennies to nickels By Kevin Plumberg
Mon Jan 22, 4:39 PM ET



NEW YORK (Reuters) - Talk about pennies from heaven.

ADVERTISEMENT

A potential shortage of coins in the United States could mean all those pennies in your piggy bank could be worth five times their current value soon, says an economist at the Federal Reserve Bank of Chicago.

Sharply rising prices of metals such as copper and nickel have meant the face value of pennies and nickels are worth less than the material that they are made of, increasing the risk that speculators could melt the coins and sell them for a profit.

Such a risk spurred the U.S. Mint last month to issue regulations limiting melting and exporting of the coins.

But Francois Velde, senior economist at the Chicago Fed, argued in a recent research note that prohibitions by the Mint would unlikely deter serious speculators who already have piled up the coinage.

The best solution, Velde said, would be to "rebase" the penny by making it worth five cents rather than one cent. Doing so would increase the amount of five-cent coins in circulation and do away with the almost worthless one cent coin.

"History shows that when coins are worth melting, they disappear," Velde wrote.

"Rebasing the penny would ... debase the five-cent piece and put it safely away from its melting point," he added.

Raw material prices in general have skyrocketed in the last five years, sending copper prices to record highs of $4.16 a pound in May. Copper pennies number 154 to a pound. Prices have since come down from that peak but could still trek higher, Velde said.

Since 1982, the Mint began making copper-coated zinc pennies to prevent metals speculators from taking advantage of lofty base metal prices. Though the penny is losing its importance -- it is worth only four seconds of the average American's work time, assuming a 40-hour workweek -- the Mint is making more and more pennies.

Velde said that since 1982 the Mint has produced 910 pennies for every American. Last year there were 8.23 billion pennies in circulation, according to the Mint.

"These factors suggest that, sooner or later, the penny will join the farthing (one-quarter of a penny) and the hapenny (one-half of a penny) in coin museums," he said.

a penny is always worth 1 cent...

The penny should have been discontinued long ago.

__________________
These are my principles. If you don't like them I have others. ~Groucho Marx~

So, why exactly should the denomination of 1 cent be gotten rid of ?

To replace it with a denomination of 5 cents ?

Or 10 cents ?

Or 20 cents ?

or 50 cents ?

or 100 cents ?

Or a dollar is then a cent ?

What does redefining currency denominations do for our economy ? Does it really do anything for it or us ?

I guess since we're confused enough to start redefining what we call different human relations, we might as well

Now, we want to call two sexually confused men or women that decide getting naked together and rubbing up on each other "married" and I'm gonna call my mother my father and my father my mother...

Round cash transactions off to the nearest 5¢. Pennies are no longer a necessary medium of exchange. They either end up next to a retail register for people to use or in a jar at home to be redeemed by a machine that charges a fee to convert them. I'd personally like to see everything rounded off to the nearest $1 and eliminate the inconvenience of coinage.

__________________
These are my principles. If you don't like them I have others. ~Groucho Marx~

Why not eliminate cash altogether? Having an entirely electronic or credit based system would help to put a serious dent in many kinds of crime, from the hiring of illegal workers, to drug enforcement, to stick ups. Cash has long since been a symbolic proxy anyway, with the days of it being pegged specifically to a particular commodity long gone. I'm waiting for when I can pay at vending machines with a credit card everywhere I go. We have IPass or EZpass (or whatever), credit card machines are ubiquitous, pay pal and other online services move lots of money. Cash is becoming an anachronism.

BTW, this would also solve the problem of where to cut off denominations. Having tenths or hundredths of pennies would be just as reasonable as having nothing but dollars. The precision becomes irrelevant.

I get a lot done with cash tips to service people. Some form of underground economy will always be present in a taxed society.

__________________
These are my principles. If you don't like them I have others. ~Groucho Marx~

I always laughed when I saw a movie set in the future and they had to pay in "credits." Lets just barcode our wrist and scan it when we make purchases. Personally, I feel that if we do move on to this kind of system; a candy bar being one credit, a car being 20,000 credits, and a house being 200,000 credits lets at least name the unit of payment something rediculous like wing-wang. "That'll be 25 wing-wangs sir."

__________________
Neither am I the means to any end others may wish to accomplish. I am not a tool for their use. I am not a servant of their needs. I am not a bandage for their wounds. I am not a sacrifice on their altars. ... I owe nothing to my brothers, nor do I gather debts from them. I ask no one to live for me, nor do I live for others. I covet no mans soul, nor is my soul theirs to covet.

Ayn Rand, Anthem.

Those stupid ass machines I don't USE.

No, I take and roll the bastards up and deposit them into my kids college funds

I do this with ALL my change actually. But those machine ? What a rip off. I guess it's cool if you're so lazy you don't mind handing a portion of your money to some other knothead

Myself, I'll take the time and roll or deposit SOMEHOW my $$. It's MY f^^$^$ money not some other shitbirds

YET

There aren't enough people that think like this to make going to a "cashless" society a possibility. Probably for a very very long time.

Thank God.

It's a very bad idea in my opinion.