I was looking for an excuse to write about my second favorite subject in the world, government waste…when the calendar cooperated. April Fools Day. Perfect.
I’ll warn you ahead of time, I’m a bit nuts on this subject.
Canada has just announced that they will no longer make the penny. It costs the government 1.6 cents to make a penny and Canada is losing 11 million dollars a year manufacturing the item. In 2011 the US Mint manufactured 4.9 billion pennies and lost a cool $50 million dollars in the process….and we loose money on the nickel too.
The penny has been the lowest denomination coin available since 1858 when the Philadelphia mint quit manufacturing the half penny. Inflation has worked its magic over time and the lowly penny of 1858 would have the equivalent buying power of $2.80 today.
As I think back to 1858, eliminating the half penny was the modern day equivalent or rounding to the nearest $1.40…and cash was the only way to pay.
We haven’t changed the shape or value of coins in over 100 years. Sure we keep trying to get Americans to use a dollar coin…but we do it so stupidly. Message to Uncle Sam…the dollar coin needs to replace the dollar bill not supplement it. People are creatures of habit and we are going to keep using paper dollars as long as they are available.
But no…we make both ….and then run commercials trying to get people to switch….and then when they don’t….we store the coins in vaults…because we don’t have the wherewithal to get rid of the paper dollar. Lucky thing we live in a credit card world. We really don’t need coins…or currency for that matter. Just charge it!
We really need to start over when it comes to coins….and currency too. A good place to start would be to dump the penny and nickel and stop manufacturing the paper dollar. I’d add a $5 coin too if I were king. And a $500 bill. Inflation exists and will continue. If we assume 3% inflation, then the currency loses 50% of its value every 26 years….we might as well get started, it’s only going to get worse.
I’d be the first to admit that in a world of trillion dollar budget deficits, a billion here and a billion there doesn’t add up to much….but little every bit helps.