Tuesday, April 10, 2012

Pennies - The Financial 99%

Twice in the last week I have heard a radio blurb about how Canada has gotten rid of the penny and that the US should do so also, because of the cost to produce a penny.

I can’t help but think – to those who have money a penny means little.
To those who literally “have to pinch pennies” to live, the penny is an important part of our monetary system.

But then for business – it’s an easy way to automatically increase profits from  1 – 5% and the average citizen gets screwed – again.

The cost of living, for the average citizen, will automatically go up 1 - 5%.

If you think retailers will continue to use cents in their prices – you are bigger fool than I can imagine.  If there are no pennies – prices will NOT contain cents in them.  Prices automatically will go UP!

Those who think we should keep the U.S. penny cite the following arguments to support their position:

Prices will increase - If we eliminate the penny, everything will have to be rounded to the nickel. Merchants will probably round everything up in their favor, costing us more for everything we buy.

The poor pay the most - A corollary to the above argument says that the poor will be affected the most, because they are most likely to make more frequent, smaller purchases, thus suffering the rounding up more often.

Charities need pennies - There are thousands of small charities that depend on penny drives to bring in donations. People think nothing of pouring out their old penny jars to support these drives, but they won't part with nickels so easily.

Nickels cost even more to make - If we eliminate the penny, we will need more nickels in circulation. Nickels cost 7.7 cents to make, (2.7 cents over face value, as opposed to 0.26 cents over face value to make a penny,) so making each nickel costs 1.44 cents more than making each penny. Since the penny costs 0.26 more than face value to make, the Mint can make 5 pennies and still lose less money than making 1 nickel. And, of course, if we eliminate the penny, we'll need a lot more nickels, which will offset the savings of stopping penny manufacture.

 Another way to screw the lower and middle class citizens
– an automatic increase in prices at a time that we can’t afford it.
Screwed financially, over and over and over again - is becoming the story of our life.

A penny for your thoughts?  Hell no.
Want to give your two cents?  Hell no.

Your counter-argument – you won’t even notice it.
My counterpoint – you evidently have more money that I do.

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