The Existence of The Penny

I am willing to bet you have a few pieces of change in your pocket rattling around as you walk down the street. I will also bet you'll be pretty likely to have a few pennies in there causing that ruckus. But here's the question: how often do those pennies make it out of your pocket to no long be noise makers, and actually go towards purchasing anything? Further, how many of those pennies are just wasted money, either lost or never used?

I doubt its very often. The only time I can actually remember someone paying or using pennies was in this Seinfeld episode where Kramer tries to pay for Calzones in pennies.

There have been many calls for the U.S. Government to dispand the penny. Up north in Canada the calls have been heard. The penny will soon be out of circulation. Due to rising prices of the metals the penny is made of in Canada, it actually costs 1.6 cents to produce the 1 cent penny, a loss of .6 cents. The cost and output is nearly identical back here in the United States. In total the Canadian Government claims to lose nearly $11 million a year producing and distributing the penny, not to mention the costs borne onto business and consumers who deal with pennies.

A 2008 report by a Quebec based bank, Desjardins, suggests the penny's existence had cost the Canadian economy nearly $150 million for year 2006. For example, Canada's big banks handle more than 9 billion pennies a year, which in amount to $20 million annually for processing.

The Bank of Canada also concluded in a 2005 study, that the pennies disbandment would not lead to any showings of inflation. This concept also cites the past examples of Norway, Australia, and New Zealand along with other nations who have not seen any systemic price increases.

Nevertheless, we still have our old friend, the penny. So what do you think? Should the penny stay?


For more:
http://www.freakonomics.com/2012/03/30/canada-kills-its-penny-can-we-please-be-next/