President Donald Trump said due to the cost of producing pennies, he instructed the U.S. Treasury Department to stop minting the one-cent piece.
In the 2024 fiscal year, the U.S. Mint reported losing $85.3 million on the nearly 3.2 billion pennies it produced.
WTOP spoke to Garett Jones, a professor of economics and the BB&T Professor for the Study of Capitalism at the Mercatus Center at George Mason University, and asked him if this is penny-pinching, or is the penny just too pricey?
“Strictly as a matter of economics, it’s been time to get rid of the penny for a long time,” Jones said. “It’s a waste.”
Jones said he doesn’t believe the penny serves an economic or social function anymore.
“You can tell in practice, because of the fact that so many people are willing to toss them away, or leave them in little change jars. It jingles around in our pockets. It tears little holes in our clothes,” Jones said.
Not only is the cost of making the one-cent piece an issue, but Jones pointed out pennies are also pricey to business.
“It actually is quite expensive for companies to do cash management. Part of the reason companies are happy to let you use credit cards, even though they know that there’s this interchange fee of, say, 3%, is because keeping paper money and keeping coin money around is expensive for them — hauling it back and forth to the bank,” Jones said.
There are 250 billion pennies in the world, according to Jones, and he said he’s heard proposals from other economists to both keep the pennies we have and make the transition easy.
“To declare that for some period of time, maybe five years, every penny is worth a nickel,” Jones said.
In Jones’ explanation, he said people would be able to take their pennies to the bank, and they would receive a nickel for every penny.
“The bank’s willing to do it because they can go back to the Federal Reserve, and the Federal Reserve will, if they ship them 100 pennies, they’ll ship them back 100 (nickels),” added Jones.
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