A conversation about the end of a penny for decades among state officials and economists. However, the conversation became a policy when President Donald Trump ordered the treasury on the weekend Stop making fun of new pennies.
“For too long, the United States destroyed pennies, which literally cost us over 2 cents. It is so waste! ” Trump wrote on Sunday evening on his social network. “I instructed my Secretary of the US Treasury to stop producing new pennies.”
Trump's attack on a penny occurred after Elona Muska's dog had already directed a coin for elimination. Of all the controversial battles in which Trump's and musk administration are over government expenditure, it seems that most economists and others seem to be necessary in a monosystem.
According to the federal reserve, there are $ 114 billion in circulation, i.e. $ 1.14 billion, i.e. 0.006% of money in circulation. Production of pennies costs USD 192 million, about 4% of the MINT operating budget, but only 0.00003% of the US Federal Budget. According to economists, this cost makes a penny possible to spend.
David Gulley, a professor of economics at the University of Bentley, said that the estimated cost of making a penny, about three cents, is an economic burden, “because millions disappear in pillows on the couch each year, the US mint must produce a permanent stream of substitutes. “
Rounding prices
But exile of a penny can change the prices of many small goods.
“Prices would have to be rounded to the next five cents to enable cash payments and correct changes received – this will be the end of USD 6.99 meals like fast food,” said Gulley, adding that it is not clear whether companies would tend to round up or down.
This decision on prices is important, and some cite the influence of the penny on inflation, but even it seems minimal.
“Companies can gather more often than down, which leads to a small inflation effect,” said David Smith, a professor of economics at Graziadio Business School at Pepperdine University. He added, however, that studies have shown that rounding prices to the nearest nickel did not lead to significant inflation.
In Canada, which eliminated the penny in 2013, cash transactions were rounded to the next five cents, based on the total amount of transactions, and not on every element.
In terms of rounding up, it takes place more often than rounding down, cash consumers pay the price for the cost effectiveness that Trump and Musk are looking for, said Ayay Patel, a finance professor at Wake Forest University School of Business.
Canada's experience in a penny's elimination shows that consumers have additional costs. The article from 2017 of the Canadian economist Christina Cheung stated that the bold of a penny in food transactions imposed a “rounded tax” of about $ 3.27 million, from Canadian consumers to food suppliers. However, in the case of a typical grocery store, this amounted to an estimated additional income of USD 157, which indicates a minimum impact on individual consumers.
Other American cash consumers are hit
The pan points out that the elimination of the penny will only eliminate the penny itself, not necessarily something that costs $ 5.16. “Everyone who writes a check or uses a debit card or credit card could have the right amount, because no real changes in cash change their hands, and pennies would not have to be paid by the buyer or returned by the seller,” he said.
There are still people who use cash for many payments, and these consumers would be most affected, but according to Gulley the effect would be modest, because more payments are departing from the physical currency. In 2015, a third of the US transactions were cash, but now it fell to less than 20%, and it is expected to continue.
But this means that people at the bottom of the economic ladder will probably feel that every penny is the most.
“Persons paying for this benefit will be those who buy products and services using cash and will continue to work because they are either incomparable or cannot access debit or credit cards or a digital portfolio,” said Patel.
Gates Little, general director of Southern Bank based in Alabama, said that the financial service sector would not miss pennies.
“Eliminating an American penny would not matter in the economy,” said Little. “I can't think about how it can hurt.”
Patel noticed that President Trump only ordered to stop the creation of new pennies, not their purges from use in the currency system. In order for people to continue using pennies until they are slowly absorbed into the banking system and eventually melted to recycled zinc and copper. The pan claims that the actual elimination of a penny is a decades in the future.
Your saved penny can increase the value
Despite this, Little said that Gazillion noses gathered in Banks Piggy, socks drawers and hiding under car seats gradually increased value.
“Peniny would become smaller over time and eventually increased. In the near future they can become useless, depending on how their treasure treats. I think that it would have to be in phases so that people can convert them to other determinations, thus removing them from the system – said Little.
There are pockets of people throughout the country in which both of these results matter. Laura Maike from Burton, Ohio notes that Amisz will now feel a pinch.
“Here, in the north-eastern country of Amisz, we still use pennies regularly,” said Maike about their area, including thousands of in general cash amisz. “How would this work in the case of only cash transactions? There was no thorough change as a buyer or seller. ”
Maike, however, is more stubborn in a world where the end of a penny means an increase in the value of an existing penny.
“I have a penny of wheat sitting in my jewelry box because I knew that when I found it almost 20 years ago that they were becoming more and more difficult to find,” said Maike.
Peniny depicting two wheat circles was interrupted in favor of today's Lincoln versions in 1958.
Smith said getting rid of heavy pennies.
“Eliminating a penny would save money to taxpayers a year. In addition, the production of pennies has environmental costs, including extraction of zinc and copper, eliminating a penny can have a positive impact on the environment, “he said.
Some Americans react at the end of a penny with a sense of humor. “How will people give their two centers?” Eileen Kailholz, a pensioner at Bright, Indiana said.
But this is not entirely a joke. Nate Throckmorton, a professor of economics in William & Mary, claims that it's time to start watching another coin at your bank Piggy: The Nickel.
“This is a nickel we should worry about,” said Throckmorton.
Making a penny requires three cents, but 11 cents to make a nickel.