If you have been out to a retail store lately, then surely you have seen signs warning of a national coin shortage, asking that you pay in exact change if you are paying in cash. You may have then asked yourself: how is there a national coin shortage? Did the greatest coin heist of the century somehow slip by under our noses? Are those ever-rambunctious coin collectors really out-doing themselves this time? Unfortunately, none of those comical and zany answers are the case. The real reason is a lot less fun, but it is still important to understand. That is not the most important part of this shortage. No, this supposed curse is actually a blessing in disguise and should be used to fix a long-standing issue this nation is facing. But first, the causes for the national coin shortage must be explained.
The national coin shortage is technically a misnomer, as coins have not just disappeared into thin air. Rather, the so-called shortage is the lack of coins circulating throughout the economy at the moment. This has been caused by three main factors. First, business and bank closures caused by lockdowns have disrupted the usual supply chain of coins, preventing them from adequately making their way to the public. Second, less people have been going out to businesses, either due to lockdowns or fear of the virus, and, as simple math shows, the less people that are spending money, the less money there is to go around. Finally, those who have been patronizing businesses during this pandemic have been far more likely to use credit and debit cards instead of cash, let alone exact change payments, as physical cash exchange can more easily facilitate the spread of germs. Stores get their coins either from local banks or from the customers who pay with change, and as we’ve seen, neither banks nor consumers are getting the coins to give to stores, and this is only further reducing the amount of coins in circulation. In a nutshell, that is the explanation for the national coin shortage.
Pardon the monetary pun, but this is a golden opportunity to resolve one of the most easily solvable currency issues in the United States: getting rid of the accursed pennies. Pennies, as a form of currency, have one purpose: to facilitate the trade of goods and services. So long as the two negotiating parties agree that the currency involved, be it dollars, pounds, euros or anything else, has value, then they trade their goods or services for that currency instead of bartering like savages. Instead of hoping that the city-slicking haberdasher from Boston with the fabulous ascot is looking for two delicious scrod to feed himself, the rough-and-tumble Gloucester fisherman can instead sell his catch for cash and use the cash to pay for the flamboyant ascot he craves like dry land when he’s out at sea. To make this simple economics lesson even simpler: cash is used as a medium of exchange, and it must be able to divide into smaller pieces to prevent overpaying. This, of course, has its limits, as it cannot be broken down infinitely, and eventually the amount represented by the currency will be too small to have any real purchasing power. That is where pennies come in.
Back in ye olden days of about 60 years ago, a penny could actually buy something, like candy, for example. At the ever-so-quaint and adorable penny candy shops we love here in Massachusetts so much (shoutout to the 1856 Country Store in Centerville), they once sold caramels for a penny. Nowadays however, no such deal can be found. Pennies are simply more trouble than they’re worth, and there are many reasons why besides the aforementioned fact that their purchasing power is worthless in today’s economy. First, they are simply impractical to carry around in large enough quantities as to make a purchase with them viable. To use an example, for our beloved, grizzled New England sea captain, carrying two scrods to trade is easier than carrying twenty dollars worth of pennies. Those 2,000 pennies, weighing in at a little more than eleven pounds, would certainly make any wallet that he is carrying them in a little bulky to say the least.
This goes without mentioning that messing around with pennies as exact change in line at stores is literally worth less than the value of not only your time but the time of the customers behind you in line. How is this the case? It’s simple. Given the median wage in the U.S., it takes on average less than 2 seconds for the average American to earn one cent, and coincidentally, it has been estimated that handling pennies takes, on average, between 2-3 seconds per transaction. This means that in the time someone takes to find the exact change, they effectively lost that money with the time they could have been earning. To put this on a macro scale, this costs the economy $2 billion dollars every year. What can be done with the pennies then? Perhaps they can be used in a machine? No, unfortunately not. Toll booths, parking meters, laundry machines, vending machines, train ticket machines and almost all other kinds of coin operated machines do not accept pennies, as they are not worth the effort to store and transport. The only machines that take pennies are the souvenir penny machines, which take your penny and flatten it into a fun little trinket with no real value, and Coinstar machines, which are a worthless leech on the economy. All Coinstar does is accept all the change dumped into it, take an 11.9% cut and then give back a voucher to the sucker dumb enough to use it to get the money they already owned, but now less of it, to be cashed in at a register. Then, there is the final nail in the coffin that makes pennies completely worthless. If you haven’t been convinced yet, you will be now. It costs the U.S. Mint approximately 2.06 cents to manufacture one penny. Yes, the United States government is paying two pennies for every one penny it makes. This is because the copper and zinc used to make the pennies are worth more in raw materials than the face value of the coin itself, and this results in an annual loss of $90 million. Pennies are, quite literally, worthless. Because of this, they very often end up in jars or piggy banks and sit there for years, completely dead to the economy, after serving their brief and useless existences, just for the Mint to make over 8 billion more every year and continue this idiotic cycle.
None of this is secret information, so why on earth are pennies still in circulation, and why do people defend them? There are a few reasons for that, specifically the beliefs that it will hurt charitable donations and raise prices if the penny is eliminated. These however aren’t true. Other nations, such as Australia, New Zealand, Canada, Finland, Italy, Ireland, Belgium and the Netherlands, all abandoned their one cent or one euro cent coins, and instead all round to the nearest five cents (ten cents in the case of the Kiwis). These countries did not see charitable donations fall nor did they see price increases. Robert Whaples, an economist at Wake Forest University, conducted a study on pricing data and concluded that savings from prices rounded down would roughly offset the cost of prices going up, disproving the pro-penny lobbyists’ futile points. The zinc lobby is also a driving force behind keeping pennies around, as pennies are made up of 97.5% zinc and only 2.5% copper. Special interest groups such as the zinc lobby, which only represent a tiny fraction of Americans, should not be forcing the rest of the country to waste millions of dollars every year on wasteful expenditures like pennies. The final reason for keeping the penny, and no I’m not joking, is due to nostalgia and honoring Abe Lincoln. I get it, everyone loves Abraham Lincoln, well, mostly everybody, and I like him a lot too; he’s easily a top-tier president. However, his glorious mug is already on the five dollar bill, along with the Lincoln Memorial on the back, so he is still being honored by being placed on a currency. A currency, might I add, that is far more useful than the worthless penny he also adorns.
There are a few more points that must be made in regards to the penny. First, the former U.S. Mint Director Philip Diehl has advocated getting rid of the penny and tried to do so while he was director, only to be met by the insipid supporters of the useless piece of metal and the rich, zinc industry benefactors supporting them. He isn’t the only one who approves of ditching the penny, as the United States military has done the same. Troops stationed in foreign bases have not used pennies in cash transactions since 1980 in order to avoid the cost of shipping them overseas. In fact, all cash exchanges done by soldiers abroad involve rounding to the nearest five cents. Besides all of that, getting rid of the penny wouldn’t be the first time the U.S. has retired a coin because it didn’t have enough purchasing power. That honor belongs to the half-cent. This coin was worth half a cent, which I know is shocking, positively shocking, as Sean Connery would say. It was discontinued in 1857 because its value was too low, the same problem the pennies of today are facing. But here’s the catch: when the half-cent was discontinued, it had a purchasing power equivalent to around 14 cents in today’s money. This left the new smallest denomination of coin, the penny, at the bottom rung. Back then however, it had a purchasing power equivalent to 30 cents in today’s money, and that leads me to the, dare I say, radical agenda I have for coins. It is not only time to get rid of pennies but also nickels and dimes as well. Much like how it costs two pennies to make one penny, it costs seven cents to make a nickel, and neither nickels or dimes can really be used to purchase much of anything.
This is my proposal: discontinue the penny. That must be the first to go. As discussed, it is worthless in every way and has zero reason to exist in the modern era. Once that is accomplished, then nickels and dimes must go too. Since it is nearly impossible to find anything worth a nickel or dime, they serve no purpose either. That leaves us with the ever-reliable and collectible quarters, the often forgotten about half-dollar and the bane of every public transport rider, the dollar coin. These coins serve their purpose of dividing money into smaller pieces to avoid overpaying without falling into the realm of the smallest three coins by having no purchasing power. It’s still possible to buy gumballs with a quarter, and dividing the already small dollar into fourths or halves is the most reasonable and realistic choice for coinage. As these coins are not a literal money hole that costs taxpayers millions of dollars every year, they are perfectly suitable in their current role, and they are convenient enough to fulfill the role of change. Once we defeat these metallic menaces, our economy will finally start to make cents.