Thursday, March 14, 2019

Should we get rid of the Penny?

Should We Get Rid of the Penny?
Joshua Holzhauer

Have you ever been walking down the street and pick up a penny off the ground? DId you get good luck? I’ll tell you one thing you didn’t get is wealth. Penny’s are quickly becoming more and more useless and many people believe the U.S. should get rid of them entirely including Representative Jim Kolbe from Arizona who introduced bills to remove the penny from circulation multiple times. Even President Obama said in and interview in 2014, “Pennies are obsolete and a symbol of government waste” (moneycrashers.com).

One of the biggest arguments against pennies is that you can’t buy anything with a single penny anymore. Back in the day children would run to the candy shop and buy a piece of candy with a penny but now you can’t buy anything with pennies. Vending machines don’t accept them, not even parking meters take pennies. You can’t even buy a penny with a penny. According to the 2014 Annual Report from the U.S. Mint, “it now costs about $0.017 – or 1.7 cents – to make one cent.” That means that every time the government makes a new penny, they are losing money.

So with all these negatives, why keep the penny? One reason is that it keeps prices lower. The elimination of the penny leads to the “rounding tax.” This means that if there is no penny, the nickel will become the coin with the lowest value and businesses will have to round up to the nearest nickel, thus raising prices. Of course this only affects customers who pay in cash as those who pay with credit will still be able to pay to the cent.

There are many arguments for both sides and it is still and ongoing debate all over the country. With that being said, however, I’m still going to pick up pennies that I find on the sidewalk because a little good luck never hurt anybody.


Works Cited
“The Great Penny Debate: Should We Keep Producing the Penny?” The Spruce Crafts, TheSpruceCrafts, www.thesprucecrafts.com/the-penny-debate-768872.

“Should We Get Rid of the Penny? - 8 Reasons to Keep It vs Eliminate It.” Money Crashers, 17 May 2017, www.moneycrashers.com/get-rid-penny-reasons/.

“What Can You Buy with a Penny?” Citizens to Retire the U.S. Penny, www.retirethepenny.org/.

Images
https://i0.wp.com/coincollectingenterprises.com/wp-content/uploads/2015/07/profit_and_loss_us_making_penny_coincollectingenterprises.png

https://moneyinc.com/wp-content/uploads/2018/09/Pennies-750x408.jpg

49 comments:

  1. I really liked the rounding tax prediction if the penny were to be eliminated. People probably don't go into that much depth of thinking when trying to eliminate the penny. Although it costs more money to make a penny than its actual worth, I believe that the penny is a necessity (right now) in this economy to eliminate the chances of rounding taxes. The value of a penny continues to decrease as years go on, but it still has a place in this economy that would only be noticed if the penny was put to a halt.

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  2. This is a great article. I don't believe the penny should be around anymore either. Whenever I get a penny from anywhere, I usually just donate it because it is a hassle to carry them around when they are basically worthless. By using the nickel as the new lowest coin this may increase the price of some things but nickels are worth keeping so coins will be kept more often and there will be less wasted money. If a penny costs 1.7 cents to make which is more than the actual coin is worth, is this true for all coins or only the penny?

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  3. I think that pennies should still remain a part of our currency. I think this because like you said, there would be rounding tax and that makes the consumer "lose". In our free market economy, everything is geared towards the consumer, and that would be a way to make United States people upset even though it is just a small value. I think that because it has been apart of our currency for so long, it has been apart of our culture. Therefore, I would argue against the opposition, because as they may cost more to make then they are worth, they are a US staple. Also, it is the smallest unit of currency, it isn't like getting rid of the two dollar bill. With the two dollar bill,there was at least currency smaller than it to make up for that cost so without it, the smallest unit of currency would be a nickel. For the nickel, four cents more would make a slight increases in all our prices which may not appear like a big deal, but for people with economic adversity, every penny counts.

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  4. This article makes really good points about getting rid of the penny but, would getting rid of the penny really help the country as a whole? If we were to get rid of the penny now there would be millions of pennies not being able to be used. Not only would this affect the United States, but nearly every country because nearly every country has american currency in their banks. Also what place would want to round down to the nearest nickel and lose 1-2 cents every time they make a sale. This would cause for prices to inflate on almost every item. It might not sound like a lot of money, but if every single thing you buy is 1-2 cents more that can add up.

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  5. You did a really good job bringing both positive and negative reasons to keeping the penny. However, besides good luck, I would have liked to hear more of your opinion on keeping the penny. Just out of curiosity, you mentioned the raising of prices without having the penny. So if you were at the store buying a really cool shirt, would you still buy the shirt at a price of $3.45 when its original price was $3.41? I totally see how this is a slight raise in prices and overtime, with lots of people buying the shirt, the business is going to make much more money. But as a consumer, how much of an impact does this have on us? I guess we could make an argument about families incomes and how overtime we would be spending more money. But for day to day tasks, I would not notice much of a difference if I went out for food and had to spend four cents more.

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  6. I think that this is a very well thought out and very well written blog post sir. After reading it, I have come to the conclusion that I agree with you to an extent. I do agree that the penny is almost becoming worthless and isn't really fun to deal with when paying for things, however, I think that if we got rid of the penny, producers would round up the price of their good to the nearest nickel on everything. Take gas for example, if the price is at $2.41, this price would be rounded up to $2.45, thus costing me almost a whole extra dollar (the equivalent of me purchasing a McChicken). Also, one big thing that you missed is that pennies cost a lot of money to make and there are so many of them in circulation, so getting rid of them all together would cost a lot of money and put a lot of work put into making the pennies to waste.

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  7. I feel like the penny has become kind of useless. There has only been a couple of times where I have actually paid with pennies. Every time I pay in cash and get pennies in return I just take them out of my wallet and put them in a bag because I can’t really pay for anything in just pennies and it would take a lot to pay for something in just pennies. Even though getting rid of pennies could raise prices, the penny should be taken away because there is no significant use for it. Additionally more and more people are starting to pay for goods with a credit card and some restaurants only accept the payment to be made with a credit card. I feel like we can get rid of the penny because it has no significant or important use and you cannot really buy anything with just pennies since goods are becoming more expensive and you would need so many pennies to buy a goods with just pennies.

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  8. I never realized how little we use pennies. The one big significance they have, that stands out to me, is for luck, I always hear people saying “only pick it up if it is heads up or it’s not good luck”. I always thought that if we got rid of the penny there would be no impact, however now I am thinking that we shouldn't. If we get rid of the penny there would be rounded tax, leading corporations to round up to the nearest nickel. If they rounded up the tax, it would cause a rise in prices. I feel that we should just keep the penny, because although it has small value, it can keep prices low.

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  9. Before reading this blog post, I have actually done research about if we, as a country, should keep producing the penny or not. So, I do have some prior knowledge as to why it is such heavy consideration. I agree that we should get rid of the penny. While getting rid of the penny would cause for ‘rounding tax’ to occur, we would also run into an excess in all of these small copper coins. If we excise the penny from our form of currency, everyone will now have all of these extra pennies; people have piggy banks, coin purses, and pockets full of these excess coins. Now, they will be deemed worthless, and should now be used for something else. All the extra copper should not simply be thrown away; it could be melted down into useful and more heavily demanded products (alloys, pipes, wires, etc). Turning something undesired into a private good could now see a larger turnover in profit.

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  10. I feel that pennies are unnecessary. As you said in your blog, it costs more to make a penny then what the penny is worth. Getting rid of pennies entirely will lead to price increases; however, in turn, the government will save money because they no longer have to produce pennies for such a dangerous rate. Not only that but pennies are bad for the environment, pennies require copious amounts of energy to produce and are mostly made of the zinc which can contain toxic metals in it. Not producing pennies could help slightly in fixing Americas rising debt problems and would be good for the environment.

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  11. I think the rounding tax could have implications for credit card users as well. If prices had to be rounded to accommodate people who pay with cash, credit card users could also potentially be charged the same, increased price. Although I don't know the exact laws surrounding the issue, businesses would likely be required to increase all prices, not just those for people who use cash.

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  12. We, as consumers, are powerless to stop large scale corporations with political power. The use of the penny is kept by Big Zinc, which lobbies the government to maintain the currency. Pennies are over 95% zinc and have been since 1982. There just isn't enough demand for saxophones and sunscreen, so I propose that we all learn how to play the saxophone to replace the demand for zinc from the penny to brass instruments, thus making the purchases of the government more efficient.

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  13. I think that your article has some great points. As I am reading the other comments responding to your post, there are also some good points that are brought up. One point that was brought up a couple of times was; what would happen to all of the current pennies that are currently circulating throughout the nation? I think the biggest thing that needs to be understood throughout people tend to be unsure about the penny argument, is that there is a difference between stoping the production of the penny, and excluding the penny from the American currency. If the government chooses to stop producing pennies, due to their cost being almost double their worth it does not mean that the penny can not be used. They will just become more and more rear and decades pass. Look and the two dollar bill for example. Does the government make them anymore? No. But if you have one, you can still go to the store and use it. People can still pay, but the production of pennies would come to an end. I feel as if this point was advertised more, in this way people that do not agree with 'getting rid of the penny' would be much more comfortable with our nation no longer continuing the the production of the essentially worthless coin .

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  14. I do agree that the penny is most likely kept around because of the rounding tax. There would be a substantial menu cost in many businesses to change price tags if a one cent denomination was no longer available. However, one could argue the penny could just be made out of a new material that would be cheaper to use in production. The reason this might not be occurring is because of the zinc industry. It is possible that they are lobbying in the government for the continuation of the zinc penny in order to keep their industry thriving and not lower demand. I believe the smartest course of action is to take the route of the two dollar bill. Stop production of the penny but let them continue in circulation so the effect of menu costs could be more gradual and the zinc industry can attempt to accommodate the loss in demand, thus slowing the acquisition and production of zinc.

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  15. I have heard the pros and cons of eliminating the penny from our currency from various sources. It is true that it costs more to make the penny than it's worth. On the other hand, it makes sense that we are not eliminating the penny becuase of the risk of prices getting higher. Although, an increase in prices due to the elimination of the penny, would affect both cash and card payers.

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  16. I agree with both the positive and negative sides of using the penny. I do understand the cost of making a penny is more than its worth but I believe keeping the penny in circulation is a good idea because it allows for prices to stay how they are buy using those price points.

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  17. Really interesting article to read. I had heard of the discussion to eliminate the penny, but I didn't know how much money the US was actually losing by producing them: -52 million dollars! It's really interesting to see how much the penny profitability has changed in the past 18 years. In 2002, the penny was creating a profit for the US but it started to rapidly decline in 2005. I guess the thing that might have caused this change is the increase in technology. Because of the higher productivity levels caused by better tech, the LRAS increased, which increased the price levels of most goods and services. Because of this, the penny wasn't really worth as much as before, because all products were more expensive.

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  18. This was very interesting to read. I have not ever heard of all the information you included but I did know that money in general is loosing its value. The facts you included about how much it costs to make pennies is interesting as well. I wonder if the penny was actually taken away if it would change much in the economy.

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  19. That is very interesting that without the penny, tax would have to be rounded up to the nickle for cash. I wonder how many pennies are in circulation as well as the typical lifespan? Would the government be able to get away with not producing any more pennies to eliminate the loss associated with producing pennies as well as temporarily prevent the tax from increasing? Also, wouldn't eliminating the penny be a sign that the society and government has grown tolerant of inflation?

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  20. I don't think that the government should get rid of the penny. I am thinking about this in terms of a sales exchange. How are people going to get exact change if we don't have something within our currency that has a value one 1? In some cases, the penny is not used when spending or receiving change, but eventually it will need to be used. Because of that, I don't think the penny should be gotten rid of.

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  21. This is something that I have heard being talking about for a while now. The penny's low value creates a minimized importance, as it is only used when receiving change, but rarely re used to pay for something. Usually, as a customer, when I receive change, I throw it in the coin compartment in my car, and never look at it again. So if people just receive it and don't give back, that means the government has to keep producing.

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  22. This was very interesting to read, to be honest I agree, I believe if the stat is true that it takes the government 1.7 cents to make a penny then they should get rid of it. But, on the other hand if you get rid of the penny what are you going to have as a coin that'll be worth $0.01 because there's no way that we'll be able to shift all the economy where we don't have any prices that are anything besides $0.05, $0.10, $0.25, etc.

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  23. I think that we should keep the penny because I personally use the penny a lot. I always have extra change on me because I like to pay the cents for things that I buy. This way I don't get a lot of annoying change back to carry. Also, if we get rid of the penny, how are people supposed to pay for things in full. For example, if you buy an item for $8.43, with tax the item will probably $8.86. How are you supposed to pay the 86 cents without a penny? This would just create lots of headaches for consumers or it would cause business to have to to adjust all of their prices to account for the loss of the penny. It just doesn't seem worth it to get rid of the penny.

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  24. I agree that the penny should be eliminated because it doesn't really do much and it is a waste of government funds. Eliminating it will cost the people more money with the rounding tax and the little amount would add up over time making the government more tax revenue.

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  25. I believe that the penny should not be removed from the U.S. currency because it still serves a purpose. People can transfer pennies and other coins they have into dollar amounts. Also there can be tax on some items that you purchase and the cents can come out to have a penny. And some people use all of their change because it is still worth something.

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  26. I believe the penny shouldn't be removed. Although it has little value and is rarely used unless being given as change, it serves a purpose. It is also used as history and can easily be traded in for more money. For example, there are those coinstar machines at walmart that take all your change and give your money back to you in cash/ gift cards with a small fee taken away.

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  27. Whenever I see a penny on the ground, I just leave it. It has become so worthless, not to an individual, but to the government. I agree that the penny should be taken out of circulation because the government literally is wasting money on making money, specifically the penny. It is putting them in more debt while just eliminating it altogether would just solve the problem easily. While it may be good luck to those who pick up a penny off the ground, it sure isn’t for the government, and it gives them a headache as well.

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  28. I think that we should get rid of pennies because no one really uses them anymore and they don’t have much worth to them anyways. I personally never use pennies and they just keep piling up in my car. With this being said I think that the companies that produce pennies could use that money and time to go towards something else. Producing pennies is one of their opportunity cost that isn’t really benficting anyone. Yes, there are the people hear and there that like to pay the exact amount using change, and that’s when they use pennies, but that’s very few pennies. If we got rid of pennies then the demand for them would decrease causing the demand curve to shift to left. This would occur because people wouldn’t want to use pennies anymore if they got rid of them completely. For the goodluck aspect I’ve picked up multiple pennies off the ground and I never get goodluck from that, so that’s just a saying and I don’t think it really benefits anyone. Overall, if we get rid of pennies that don’t really help any of us then the companies producing pennies can use that money towards something that is more beneficial like quarters perhaps.


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  29. You did a really good job of convincing that pennies are useless. Before reading this I liked pennies and thought we needed them. But now after reading this I realized there is no point in having pennies. I do not like the rounding taxes part though. I feel like it would bring a lot of controversy if we had to round up or down. I do think it would be a good idea to get rid of pennies but I do not see it happening anytime soon.

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  30. This article brings up some really good point. Having the penny does not make much sense because the only time personally I use/get them is when I receive change. Then I just put it in a little jar in my car and don't use it again, or one the jar gets full i'll take it to the bank and turn it to cash. I do see how pennies are becoming useless and if I remove them from my jar, there will not be much impact. However, I do see your point about getting rid of the penny we would have to raise prices to round to the nickel, which may not seem like a lot, but as time goes on, it will become much more. I do think your article is interesting and I am not set on a side, but I agree with your points and then also your counter arguments.

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  31. This is a very interesting question, and many people of thought once in their life why do we still have this penny. It is interesting to read about how much it cost to make just one penny. After reading this, I thought more about how many times I have used a penny and was it really worth it. Did it help me in the end, yes it did. I helped me pay for the one cent i was off by and yes of course that is expected because we still have the penny. The thought of getting rid of the penny brings a thought to me, what will happen once that penny is gone. Will we get rid of the nickel a few years down the road because not many people are using it. Then will more and more coins go away, and soon we will just be left with dollars. It is clear and important to keep in mind that once those pennies are gone, the prices are going to go up. I believe that we should keep the penny, and also keep picking them up for good luck.

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  32. Honestly I agree with you that pennies are becoming completely obsolete. Most people don't pay with cash anymore and producing pennies is starting to become useless, especially if it costs more than a cent to produce one. I honestly wouldn't mind if they taxed up to the nearest 5 cents though, because it would mean we wouldn't have to deal with as much loose change, and most of the time when I have extra change, I try to get rid of it as soon as possible, because it just becomes annoying and is honestly not worth it to carry around a few extra cents that won't even get you anything in the long run, and just slow you down when you are trying to pay for things.

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  33. Personally, I have never thought of the penny in this way. It's very interesting the way you out it. Yes, businesses will round up to the nickel as the lowest currency, but if people are wanting to save those few precious cents, then will people shift to credit and debit cards? This is a hard topic because although people are slowly shifting to online currency, physical currency will always be available to us. A downfall to this could also be inflation on goods. Especially if you are increasing the price of everyday goods that people need to survive.

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  34. I understand your point of view and you have a valid understanding of reasons why you think the U.S. should get rid of the penny. However, there are some flaws in this process. This would not benefit consumers because since there are no pennies, sellers would not be able to provide exact change. This would mean every product will have to be rounded up to the nearest 5 cents because the nickel is now the smallest valued coin - essentially costing more for a consumer. In addition, you mentioned in your article “it now costs about $0.017 – or 1.7 cents – to make one cent.” This is not an effective point because, for example, it costs 8 cents to make a nickel. In other words, it costs more for every coin to be made than the coin is worth; pennies are no exception. It is a valid argument that the government is losing money to make pennies, however this is the case with all coins. Therefore, discontinuing the penny would not be an effective solution to this issue.

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  35. I hadn’t heard anything about the possibility of getting rid of the penny but I think about it alot. I’ve always not been a fan of coins and I think they are quite annoying and useless. I do agree with the side that it keeps prices down, but overall the penny is pretty useless. Every person either in their wallet, a coin purse in their car, or in a coin jar has a million pennies just sitting there with no use. Because of this, people are not using those pennies to pay for anything meaning the government has to produce more.I did not know that it costs more than the worth of the penny to make one, which as you said means the government loses money, which makes no sense. Overall, I agree with you and think the government should get rid of pennies.

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  36. We should not get rid of pennies. Although pennies aren’t the most valuable form of change, we should not get rid of pennies. Pennies still help pay for items, while today there is nothing worth a penny, this form of change helps add and lead up to a larger price; every penny counts. In today’s economy things are more expensive, although things need a larger amount of cash, that penny could help you out in the long run. Saving pennies overtime leads more and more money, those pennies could turn into $20. While pennies aren’t worth that much, they still can lead to a larger quantity of money over time.

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  37. I am very intrigued by this topic as I believe the correct move is to stop producing the penny. The coin itself is a waste of money and materials as I have seen a countless number of pennies on the ground in my life. It provides value to the small number of people who do truly pay in exact change. I believe it is time to move on from the costly coin.

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  38. Although I can see the problem some people see when it comes to rounding up to the nickel if the penny is eliminated, I do not think this reason alone is good enough to justify the continuation of penny production. Because they cost nearly double their worth to produce, it simply doesn't make logical sense to keep making them. It's not like they would disappear either--they would still be in circulation. Going back to consumers losing money over this, I don't think it would really be as much of a concern as people make it out to be--especially in the future. I say this because with technology advancing at the rate it is today, I think tangible currency will be even further replaced by people choosing to buy things with credit or some other form of payment that does not include a hand-to-hand transaction of coins and paper money

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  39. I agree that pennies are basically useless. Although I like the penny I just don't so any real reason to justify the continued use of it. In addition to costing the government money. Pennies are now being made out of zinc. Zinc takes a lot of energy to mine and produce. So we also have to take into account the negative externalities such as pollution. It is no longer efficient, costly to make, and costly to the environment. The penny does more harm than good.

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  40. Getting rid of the penny wouldn’t affect much because most places round up anyways, like $20.99 gets rounded to $21 at my work, and it’s not uncommon. Pennies also cost more to make than they’re worth. So, getting rid of pennies would actually make pricing more truthful and end up cheaper than if we were to keep them.

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  41. I thought it was interesting you said that kids used to buy candy with pennies and now that's not even possible. This, of course, is due to inflation over the years. One cent then, was worth much more than one cent now. This inflation is what has made the penny not useful. An increase in the aggregate price level will therefore cause the US currency's store of value to increase.

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  42. In addition to the penny, the nickel also costs 8 cents to produce for a value of 5 cents. US money is not a store of intrinsic value like commodity money so in order for it to act as a medium of exchange it does not have to be made of specific materials. In essence what it comes down to is a waste of taxpayer money that could be avoided. A scheme like Canada's (who recently eliminated their penny) where all cash purchases are rounded to the nearest 5 cents, would not have much meaningful effect and has not for Canada. The reason for this is that due to the rounding, the average purchase will either be rounded up or down and due to the averages of the large numbers, it means that on the whole prices are the same. Every other purchase would still be down to the cent.

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  43. It seems ridiculous that the government has not yet shut down the circulation of the penny if they are incurring loss, and I don't think that many would fight the demise of the penny. This transition would, however, be more costly to the average consumer because all costs would have to be divisible by five cents, instead of one. This transition would be easier if the US used Euros instead of US dollars because the Euro creates 2 cent coins in addition to 1 cent coins, and thus it would be marginally more expensive in contrast to increasing the lowest value coin to 5 cents. In any event, the government should end the circulation of the penny if the marginal cost of circulating the penny right now would be less than the cost of ending the circulation of the penny, and the social cost vs. the social benefit of circulating vs. not circulating the penny must also be calculated.

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  44. Pennies have been the lowest form of currency in the US for the past century. However, as time goes on the government is starting to realize that they aren’t truly needed. The debate is on whether we should keep the penny or just get rid of it all together. Personally I think that the government should eliminate the penny from our pockets and make the nickel the lowest. When cutting out the penny it will be better for our economy because as of now it is costing us more to make the penny than it is actually worth, so in the end we are losing money. Also you can’t use the penny to buy any specific thing, only help pay for the extra sales tax when buying something. The only concern I have about getting rid of pennies is that sales taxes would be rounded up to fit the nickel, so it would cost consumers more. Either way I think it is wise to get rid of this useless coin and start saving some money rather than losing it on the production of pennies.

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  45. Why on earth would we eliminate the penny? I see the points as it can be useless, but if you think about it, how could we ever make exact change? As you mentioned we can round prices to the nearest nickel, and people with charge cards can go down to the penny. How will that work? If you have two prices for one product, saying if you pay with a card it will save you money then why even pay with cash? Is this truly fair? This brings up great controversy and ultimately isn't ethical. Although eliminating the penny will save money, how much more is it going to cost to make more nickels, which are worth more and larger in size? The answer is easy, it’s most likely gonna cost more, therefore why even eliminate the penny, when it makes perfect change. Changing the penny has been talked about forever, but have we ever looked at the meaning behind the penny? For example why Abraham Lincoln is on it? Maybe because it’s a reminder that he benefited in creating our economic system. Before discontinuing the penny people need to look into how this would affect not just prices, the paying process and meaning, but our economic system as a whole.

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  46. When I go to a store and pay in cash, what do I do when I get change? I take the quarters, and leave the pennies at the till. This is because quarters can actually be used to purchase things while pennies can't. There is not much reason to keep pennies in circulation for this reason. If it is true that the government loses money every time they make a new penny, that alone is enough reason to get rid of the penny. The amount of people that pay in exact change is very little, so the penny is not heavily used. The penny has been obsolete for many years and should be removed as noted above.

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  47. Getting rid of the penny wouldn’t affect much in today's world. I thought it was interesting to think about how kids back in the day would go to stores and by candy and other items with the pennies. Now today we don’t do that anymore because of inflation. Looking at the penny 10+ years ago to now the penny is worth more. Also knowing that it cost more to make pennies then than the actual amount is crazy. However when looking at the other side if we did get rid of the penny taxes and etc would be round up to more than they are now. Overall it is hard to say because they are plus but also negatives for having pennies. I think because pennies have came such a long way from where they were that it it cool to collect them.

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  48. This is very interesting and is not a concept I have ever thought about. While it seems the opportunity cost for creating pennies shows that it may be more costly to make them that to not I cannot help but wonder what large changes would take place. Many prices and to the 99 cents and tax is not in perfect fives. Will this make all goods more expensive and create overall inflation to account for the people who pay with all cash? While a penny may not be useful by itself I often will cash in my change, which has many pennies and will end up with at least $80. It shows that with many things they are more powerful in groups than by themselves and I hope the government will keep pennies even if they sometimes seem impractical.

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  49. I am fundamentally against continuing the use of the penny. Way, way past due to get rid of the penny. My wife and bought a small business years ago and the first night at closing when we had to "count the drawer" including counting 15 pennies.. I abruptly came to the decision that pennies are absurd. There are just too many reasons to go into it here.. so I created a whole website @ http://pennyfreebiz.com. You're welcome to wonder through and see if you don't come to agree with me.

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