In a CNBC Squawk Box interview with the U.S. Money Reserve president, Philip Diehl, the question at hand was not whether the U.S. penny was too expensive to continue producing, but whether or not the discontinuation of the coin would distort and perhaps even press inflation further. Diehl states that the aforementioned argument is one that has been made for the last 25 years by penny lobbyists, among whom have private interests in the production of the penny; Zinc manufacturers, since pennies are comprised of 97.5 percent Zinc, and the Illinois Congressional Delegation, for the use of Abraham Lincoln’s image, are the primary lobbyists pushing for the penny to remain in production. The fear of distortion and/or inflation persisting do due the suspension of the penny comes into question mainly in the sale of goods, where consumers feel that companies will choose to round up their prices. Diehl argues that with the state of the current market price, companies are well within their means to raise the prices of goods now. Diehl suggests that companies are more likely to round prices down to avoid “…irritating the customer for a penny” (P. Diehl, CNBC Squawk Box, December 30, 2015). With 75 percent of all transactions being in an electronic format, rounding down prices would only affect a small portion of the 25 percent cash transactions.
Would the American people really mourn the loss of the penny, when millions of them are thrown away on a daily basis? Is it worth producing a coin that pays less than minimum wage to stoop down and pick up off the street? Many hold sentimental value to the penny, but by removing the penny from production, the U.S. Reserve would save 105 million dollars, which is a small savings in capital when compared to the nickel, which costs well over five cents to create. However, Diehl states that there is a better opportunity to reconfigure the composition of the nickel to make it profitable or close to profitable. It is clear that efforts have been made to preserve the coin, but “…the penny is beyond hope…it has outlived its usefulness for over 25 years” (P. Diehl, CNBC Squawk Box, December 30, 2015).
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