Canada stopped minting their pennies and is using polymer bills now. Will the United States follow suit by ending US penny minting? US Money Reserve President Philip Diehl discussed the demise of the penny during a CNBC Squawk Box interview.
“Cost of Minting Penny Higher Than One Cent”
During the December 30, 2015 Ispot Tv interview, US Money Reserve President Philip Diehl stated the simple fact: “Nobody uses the penny anymore.” Many pennies are strewn on the road or lost in seat cushions. Mr. Diehl suggested that the time spent picking up a penny is not economically worthwhile because it amounts to less than minimum wage.
As a Former US Mint Director, Mr. Diehl understands the cost of minting pennies. He estimated that $105 million could be saved annually with the elimination of the penny.
“Currency Changes Are Normal”
Mr. Diehl continued – only 25% of modern transactions use physical cash, the other 75% use electronic means. Wise currency reform is conducted a “step at a time.”
Doesn’t ending the penny cause inflation?
On February 4, 2013, Canada stopped minting pennies. Canadian businesses were forced to adjust all their prices to 5 cent increments. Mr. Diehl has argued that some companies might increase prices, others might decrease prices relating the US Reserve.
The most valuable currency reflects the needs of the public. The end of the penny is simply part of the process of finding money that is the most useful for any time period.
“Why has the United States been slow to replace the penny?”
Old habits are tough to change. Already, the US Mint has changed its process for creating pennies – the modern US penny is 97.5% zinc. The parties who mint the pennies naturally resist change.
The State of Illinois has also resisted since native son, Abraham Lincoln is on the cent. Plus, United States currency is used worldwide – it is tough to change such a ubiquitous currency quickly. Still, the days of the US penny may be numbered.