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The idea of doing away with the penny misses the point.
The question is why does it cost three cents to produce a penny? Can we make a penny for less? I'm suspecting it could be done.We should try that first because the loss of that denomination will have repercussions.
Who do you think it will cost every time a purchase comes to $0.96? You, the consumer, will be expected to eat the difference; the business never will. This seems like an innocuous loss, but consider how much 337,000,000 of us will leave on the table over the course of a year.
Better to streamline production and reduce costs so everyone's math makes sense.
Other nations that did away with smaller denominations simply round to the nearest denomination of the smallest unit they have available (e.g. $0.05), so $0.96 would come out to $0.95. When using card, prices stay the same, since digital money is easily divisible into smaller amounts without needing to worry about issuance.
There's also the collective cost argument, which essentially means that since this cost to produce currency is a direct inflationary impact on the money we all hold, and is an expense by the government, which represents the populace, then if a penny costs $0.03 to make, if it takes you more than, say, 10 seconds to get pennies out to pay with them, your hourly wage is actually higher than the time you wasted just fiddling around with that penny.
Probably, but what's the point even keeping the penny around if it's fundamentally useless to most transactions? Nobody can buy any individual item with a penny anymore, nobody pays for any items with a combination of just pennies since they're still too tiny to easily amount to a value that's worth your time to count (e.g. counting 25 pennies to buy a lollipop is extraordinarily tedious compared to just pulling out a single quarter, or two dimes and a nickle), and their primary purpose at this point is just to account for businesses pricing their goods at one penny under the nearest dollar amount to trick your brain into thinking it's cheaper. It's a fundamentally hostile currency to store, use, and receive change in.
The question is why does everyone think of this as a single use item? If a penny gets used 4 times it covers its cost.
It does not, because each use does not generate $0.01 in revenue for the government. Let's say it costs $0.05 to make a penny. Every 20 pennies produced collectively costs everybody $1. It doesn't matter how many times that penny is used, because it still costs 5x more to produce than it will provide back to the government, as a result of its existence. Even if it's used 5 times, will the government get $0.05 as a result of that? Of course not.
Let's say each penny costs $1,000 to make. Making 1,000,000 pennies would cost a billion dollars. That means to produce $10,000 in pennies, you'd devalue everybody's money, collectively, by $1B. Obviously, pennies don't cost this much, but at scale, I hope you can see that even the estimated $0.037/penny it costs adds up to significantly larger amounts, and those amounts do have a meaningful effect on the economy.
It's a matter of inflation. If it costs more to produce the money, but you retain the same demand to use money, then you will cause inflation, because you will have to create more currency, to fund the creation of currency.
It's not a matter of cost-per-use, it's a matter of cost-vs-revenue.
Except 99% of people pay with credit/debit cards.
Besides, if it takes you more then 5 seconds to get the penny, count it and use it again, you worked below minimum wage for that penny.
Would it round to the closest denomination? So $1.04 would round to $1, and it would then even out.
Edit: that’s how it works in my country at least.
Edit 2: got it wrong, $0.96 would round to nearest ¢5(assuming it’s the smallest US denomination) so $0.95, and $1.04 would round up to $1.05
No, that's not the point.