Should we Scrap the Penny?

Here we go again. With what seems to be an annual tradition, President Obama remarked on how he would like to see the penny phased out in response to a question he received Thursday during a Google+ hangout.


Putting aside the fact that this is an obvious softball question, Obama does have a point. The penny is nearly worthless as to its purchasing power and it costs more to make than it is worth, costing taxpayer money. Put in the fact that it is an inconvenience (personally this is one reason why I often opt for plastic at the register) and scrapping the penny would seem like a no-brainer right? Well some people have legitimate concerns about what removing the penny from circulation could cause, notably the stability of our currency and a potential rise in the cost of goods.


Concern over increasing prices is probably the biggest fear for those who wish to keep the penny. Without the penny cash transactions would have to be rounded either up or down to the nearest nickel while electronic transactions remain the same. However, the rounding up/down margin is exactly even so in the long run you would pay the same. And even if somehow it would be rounded up all the time, the effect would be inconsequential because this would be applied to overall sales and not single items.


Fears of the stability of American currency because of ditching the penny are completely unfounded. Many countries (most recently Canada) have gotten rid of their one cent coins with no effect on the stability or inflation of their respective currencies. Also, unknown to most people, the US has already undergone a similar change before when the mint halted distribution of the Half-Cent in 1857. The fact that nobody knows about this event speaks volumes to the fact that eliminating obsolete coins is rather painless once you get over the sentimental value.


In conclusion, do I think getting rid of the penny is a good idea? Yes. But will it happen anytime soon? Probably not. Although this may help to streamline transactions and lower deficit spending by a hair, we have much more serious problems to tackle so it looks like the Lincoln will live.... for now.