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James Bucki

Kill the Penny and the Dollar Bill?

By August 24, 2013

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No more one dollar bill "The United States should stop producing one-dollar bills and one-cent coins," declares award-winning rare coins and precious metals expert and author Mike Fuljenz, President of Universal Coin & Bullion (www.UniversalCoin.com) in Beaumont, Texas. He issued his money-saving message in advance of the World's Fair of Money in Chicago, August 13 - 17, 2013. "We are long overdue in following the lead of many other countries that have successfully eliminated their lowest denomination paper money and coins. It costs about two cents to make each penny. Billions of them were struck last year, so Uncle Sam lost about $58 million just making pennies. It's impractical to keep producing cents," said Fuljenz in a recent press release.

The great debate continues and deepens. Not only does it cost more than a penny to make a penny, the United States has billions and billions of Presidential dollars, Sacajawea dollars and Native American dollars in storage; All the coins that nobody wants. While a coin lasts between 30 and 50 years in circulation, the average one dollar bill only last 18 months. Should we do away with the penny and the paper dollar bill? Post your comments or cast your vote in the poll below.

Image courtesy of: James Bucki

Comments

August 25, 2013 at 2:13 am
(1) Derek says:

And let’s also replace the $2 bill with a coin.

August 27, 2013 at 2:26 am
(2) Max says:

Absolutely. There’s no reason the Mint should be losing money on its coins. Minting is supposed to be a source of seigniorage profit.

August 27, 2013 at 2:26 am
(3) Max says:

Absolutely. The Mint shouldn’t be losing money. Minting coins is supposed to be a source of seigniorage profit.

August 29, 2013 at 1:11 am
(4) Scott says:

First to James: your poll is misleading. How about an option to kill one and not the other. I am for ending the paper note in favor of a coin. I am not for ending the cent.

@Max: The U.S. Mint makes money. No, I am not talking about the manufacturing process, I am talking about the seigniorage. According to the U.S. Mint’s Fiscal Year 2012 Annual Report, made $280 million total seigniorage including the $77 million that was transferred to the general fund. The general fund is used to pay government bills. The rest is used by the U.S. Mint and kept as a reserve.

On circulating coins alone, the U.S. Mint averages 21-cents seigniorage per $1 in coins they issue. Show me a company that can document a 21-percent profit and I’ll show you a company whose stock is on the rise.

Looking at one product amongst all the products an enterprise produces is not good business. You have the look at the business in general. Sure, it would be nice if all the products earned a profit, but that does not happen in the real world, the business world. And don’t people say they want the government to act more like a business?

Loss leaders are a fact of life for most businesses. It is what brings buyers to their products and, in some cases, maintains their regulated statuses. Phone companies know all about this as they are required to provide basic service to the poor at a price less than you and I pay. It’s a fact of their existence as a private utility serving the public.

The fact that the U.S. Mint is losing money on both the cent (note, the US does not have “pennies,” it’s called a cent; the British have a penny) and the nickel (which is a 5-cent coin and contains more copper than nickel) is irrelevant in the light of a 21-percent overall profit! Go ahead… walk down your local main street and ask the businesses, especially the small businesses, if they would be happy with a 21-percent profit. They would probably celebrate!

August 29, 2013 at 3:51 am
(5) Western_Sage says:

I also think the $1 bill should go in favor of a coin, and perhaps the $2 and $5 bills as well. But there is an alternative that is literally never discussed. Since the value of a dollar is far less than it once was, a serious discussion should be had about revaluing the US dollar. One US dollar issued in the year of my birth had the equivalent value of fifteen US dollars issued in 2013. That, more than any other, is the reason it costs more today to produce some of our coins than their face value. If the US dollar were revalued to say ten times the purchasing power of our current dollar, minting costs and searches for new alloys for coins would become moot points for several generations. This would reflect the reality of the damage inflation has done to the value of our money and should be seriously considered.

August 29, 2013 at 8:15 am
(6) deejay says:

Yes, and my home mortgage of $100,000 would look like $1,000,000 with devaluation of the dollar. Not a good solution

August 29, 2013 at 9:02 am
(7) Gold mule says:

Scott’s logic is somewhat flawed! Smart businesses do not continue to offer products that lose them money. I for one would rather have a pocketful of dollar coins than a wad of singles in my wallet. And remind me again why we need a cent coin? Not much can be purchased with one. Not even parking meters accept them. Eliminate them both.

August 29, 2013 at 12:00 pm
(8) vicki says:

I agree with Scott, there should be an either/or option. I would love to get rid of paper dollars, but wouldn’t want to lose the cent.

August 29, 2013 at 4:09 pm
(9) rich says:

at last count, the u.s. had produced 1400 cents for every man, woman and child (who is likely to use money) in the u.s.
enough is enough.
only way to do this transition is to do it. if there is no other option, it will work.

August 29, 2013 at 5:22 pm
(10) Steve Short says:

O.K. with the coin dollar instead of paper. Not ok with them raising sales tax everywhere when they do away with the cent.

August 29, 2013 at 10:10 pm
(11) George Drum says:

Who said anything about changing the sales tax. The rounding of the prices are only on the final tab after taxes and than only on cash transactions. CC and Check transactions would still be to the penny/cent.

So the most any single purchase could very would be .025.

Gas is sold with the per gallon price ending with a tenth cent and we don’t have one mill coins to make up the difference if you only want exactly one gallon.

August 30, 2013 at 11:32 am
(12) Brad says:

Why not reduce the amount of cents made by like a billion, since everyone has 100′s in the piggy banks that can be used. Also keep making the proof and uncirculated cents for the collectors. Do away with the dollar bill completely and make more $2 bills.

August 30, 2013 at 4:16 pm
(13) Steve Riggs says:

Sad to see so many people who fancy themselves as fiscal conservatives want to keep printing a paper one dollar bill even though the savings is enormous. Time magazine said $700 million! That is so wasteful! Be true and call for the dollar coin to replace the paper dollar bill! There will still be paper dollars like the $2 and $5. The $2 will become the paper of choice. But, Eventually it will be replaced by a $2 coin like in Canada.

August 31, 2013 at 11:11 pm
(14) Eadie says:

I use dollar bills when I tip in a restaurant, and I really don’t want to carry around a load of dollar coins in my purse. My pocketbook is heavy enough with the stuff I have to carry now!

September 3, 2013 at 4:47 am
(15) heath says:

We have a 6 cent tax here if we lose a cent they got to change the tax in florida its the same for a dollar bill if we have change for 10 out of 8 dollars how are you going to make change?

September 6, 2013 at 7:59 pm
(16) mike says:

Until the minimum wage is brought in line with the real world economy ‘there will alwAYS BE NEED FOR THESE DENOMINATIONS.

October 31, 2013 at 12:35 am
(17) jason says:

I think we should keep them because if we dont the mint will some how get even farther in debt

December 9, 2013 at 8:01 pm
(18) Tyler says:

The European Union, as well as the United Kingdom have been relatively successful by eliminating 1/£1 and 2/£1 banknotes from their monetary systems. I think a lot of people want to complain, but honestly, it’s not a big deal. You don’t have to carry around 30 $1 coins, simply carry around $5 worth in your change purse or wallet at any time. I also believe that eliminating the penny will be fine too. I honestly hate pennies. Honestly, they could even eliminate the nickel too, hate to say it. The nickel is nearly even to the worth of the metal.

I would like to bring to the table some real-world situations.
Let’s take a restaurant setting into account. For example, 1 person orders a $10 entree with a $2 soda. 15% tip for this bill would be close to $2. Therefore, you should tip 2 $1 coins or 1 $2 coin for gratuity. Say in the same day you decide you want to go shopping, the bill comes to $121.90. You can either pay with credit/debit, or $120 in banknotes+1 $2 coin. Your change will be a dime. You will still have 1 $1 coin left without having received any in change. More than likely if you don’t want to carry them around or you don’t have enough there can be change machines to give you the coins you need.

Overall result: No reason to complain except the fact that it’s out of the norm, but that’s one of the few options we have to eliminate some of the contributors to the deficit. Otherwise, if the government can’t eliminate some of these denominations in order to save money, but because of the public they can’t, they’ll just add another tax in order to pay for it. $20 or $19.99+tax, which will you prefer?

February 23, 2014 at 4:19 pm
(19) Frank Lee says:

The purpose of paper currency is to remove the convenience of carrying around coins. It will always be the case.

To save money, switch to a longer lasting polymer material to produce currency notes, get rid of the penny and get rid of the least used bills, the two and the ten.

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