Bid Farewell to Pennies and Nickels!

[97guns]

Bid Farewell to Pennies and Nickels!


The penny has run out of luck, both in Canada and in the United States. Back in March, the Royal Canadian Mint announced that they were phasing out the penny due to “low purchasing power and rising production costs”, according to CBC News.


The U.S. is following Canada's footsteps regarding the production of pennies and nickels. According to U.S. Treasury Secretary Tim Giethner, our U.S. Mint intends to remove the penny and nickel coins from circulation beginning early in January 2013.


Although the days of pennies and nickels are numbered, they will still be accepted in cash transactions. Meanwhile, merchants are preparing to round all transactions to the nearest ten-cent increment...

[bjl584]

I question the validity of this article. I highly doubt that the penny or nickel will go anywhere if for no other reason than because stocks on the world markets routinely flucuate in price at fractions of a cent.

[Joan.of.the.Arch]

I find this exact article re-published all over on minor websites. But I do not find any confirming "dot gov" information, nor reputable newssite agreement. I think someone mistunderstood something they read about US coins. Sorry but if this were true, it would be in the news.

[disneysteve]

I question the validity of this article. I highly doubt that the penny or nickel will go anywhere if for no other reason than because stocks on the world markets routinely flucuate in price at fractions of a cent.

I agree that the article is bogus, but I don't think the longevity of the penny has anything to do with stock prices. Nobody is paying for stock in cash. It is all done via electronic transactions and the occasional check.

[bjl584]

I agree that the article is bogus, but I don't think the longevity of the penny has anything to do with stock prices. Nobody is paying for stock in cash. It is all done via electronic transactions and the occasional check.

My line of thinking is that is the penny and the nickle were eliminated then everything that is priced (including stocks) would have to be based on tenths (dimes.) If there were no hundreth or twentieth denomination to our currency, then a stock price could only go up and down in ten cent incriments. I guess it could be rounded when you went to buy or sell, but it seems like more trouble than it's worth.

[disneysteve]

My line of thinking is that is the penny and the nickle were eliminated then everything that is priced (including stocks) would have to be based on tenths (dimes.) If there were no hundreth or twentieth denomination to our currency, then a stock price could only go up and down in ten cent incriments. I guess it could be rounded when you went to buy or sell, but it seems like more trouble than it's worth.

Before stocks were priced in pennies, they used to trade in increments of 1/8 of a dollar, so 12.5 cents, 25 cents, 37.5 cents, etc. There were no half-cent coins then but that had no bearing on the pricing structure so I see no reason why the elimination of physical pennies or nickels would affect the pricing structure.

[bjl584]

Before stocks were priced in pennies, they used to trade in increments of 1/8 of a dollar, so 12.5 cents, 25 cents, 37.5 cents, etc. There were no half-cent coins then but that had no bearing on the pricing structure so I see no reason why the elimination of physical pennies or nickels would affect the pricing structure.

There actually was a half cent coin minted between 1793 and 1857.

http://en.wikipedia.org/wiki/Half_ce...ed_States_coin)

I don't know if this tied into the markets during the stock market's inception, but there was in fact a half cent coin in circulation up until the mid to late 1800's.

[MonkeyMama]

They put out these articles every year on April Fools Day.

[kork13]

In a curiously similar vein, this article came out from the Wall Street Journal today, regarding a controversial report from the Government Accountability Office: U.S. Should Replace Dollar Bills With Coins, GAO Says - Real Time Economics - WSJ

As for pennies and nickels, it's not happening. There have been multiple attempts by various groups over the last 20+ years calling for the penny to be removed from circulation. All have failed for various reasons, but in the end, it's simply not a reality, at least for now.

Honestly though, I'd be perfectly happy to see the penny go. It's expensive to produce, and has almost no place in our daily lives. How many pennies do you handle each day, or week, or even each month? As for myself, I probably handle fewer than 5 pennies in a month. Just because the physical coin goes away doesn't mean that it's impossible to denote the denomination anymore. A few examples of why dropping the penny wouldn't be a problem:

1) Since when have we had a coin denoting one-tenth of a cent? And yet, for decades we've been purchasing gas for our cars at prices using tenths of cents -- the price of regular at the gas station down the street is currently $3.099 (not $3.09 or $3.10).
2) Financial markets operate in tenths (and even hundredths) of cents, without ever having the possibility of receiving a coin denoting that value.
3) I've lived on military installations across the globe for all my life, in Germany, Guam, Spain, Japan, and so on. None of them use pennies. If you buy something costing $1.99, you pay $2.00. If it costs $1.97, you pay $1.95. Simple as that. Strangely, a black hole didn't open up at the cash register and swallow up the world. You paid the rounded amount and went about your day. And in a society where so much of our money is transacted electronically (checks, credit/debit cards, ACH transfers, etc.), the rounding wouldn't even be necessary.

Bottom line: Removing the penny wouldn't be the end of the American financial system. It simply wouldn't matter. When you get down to it, our monetary system in its entirety is arbitrary. If we had decided in the beginning that the nickel would be the lowest-denominated coin, then the world would have accepted it and moved on.

[disneysteve]

there was in fact a half cent coin in circulation up until the mid to late 1800's.

True, but stocks were priced in half-cent increments until 2001.

[GrimJack]

Before stocks were priced in pennies, they used to trade in increments of 1/8 of a dollar, so 12.5 cents, 25 cents, 37.5 cents, etc. There were no half-cent coins then but that had no bearing on the pricing structure so I see no reason why the elimination of physical pennies or nickels would affect the pricing structure.

It sometimes was in 1/16ths and I even remember (vaguely, mind you) some prices were reported in 1/32nds. We can blame it on the Spanish and their darned pieces of 8 - also, when the tickers were still rattling in their glass bells there was a character that would strike a '1/8' in a single space where 12.5 would be 4 spaces - and, of course, tradition (read this as 'we make our living on the difference 1/8 and 1/4')