Eliminating the penny

Writes Greg Privette:

Hi Lew,

I have been thinking about the current move to eliminate pennies. This discussion was in the news several years ago also. I do not remember the exact time frame but it was another period of commodity price inflation. At that time the MSM was discussing elimination of both the penny and the nickel because the value of the metals involved in their production had begun to exceed the face value of the coins. I remember telling people at the time that after more than a hundred years we finally had some part of our currency that was actually worth its face value and even though it was the lowest denominations it was driving the politicians and media nuts. Certainly the last thing anyone would want is to have currency that is actually worth what the government says it is worth! I think this bothers them because it reveals the effects of the constant devaluation of the currency.

The current discussion on eliminating pennies once again revolves around the “cost to government” of producing them. Since when did the monetary cost of anything matter to government? They only costs they care about are political costs. There would be real cost to many retail businesses though. I am not sure what it would involve, but surely all retail businesses would have to make some type of software changes in order to round every sale up to the nearest 5 cents. It makes me wonder if the real reasoning behind this is to give more retail businesses an excuse to begin refusing cash altogether and push people toward accepting the idea of 100% digital payments. I think it is important to remember the big banks and their subordinates in government hate cash.

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