Once upon a time, there was a common belief here in America that if you found a penny lying on the ground face up it was good luck and by picking it up the rest of your day would go perfectly. Is this still the case? If you were to find a penny on the ground would you take the time to bend over to pick it up? Unfortunately, in this day and age rife with inflation, one penny does not do much so the answer more times than not is to leave Abraham Lincoln lying on the ground. This being the case, there is now an ongoing debate going on at the Federal level on whether or not the 1 cent coin should be discontinued.
In modern America only 25% of all transactions deal with cash. The remainder is completely dominated by the use of electronic currency. With the constant rise in internet usage the data shows that the elimination of the penny will not negatively affect commerce in any way. However, by removing this denomination from the financial system the Federal government will save 105 million dollars a year annually. You may wonder how such a low valued coin could be costing the government so much money? The truth is that penny production has been outsourced resulting in the price per coin to rise to a whopping $2.41 (US).
Add to this the fact that a cashier spends about 730 seconds per year handling pennies and the cost for “Ol’ Abe” rises to about $900 million dollars a year according to Robert M. Whaples, an economics professor at Wake Forest University. I’m sure that I don’t have to go into detail about how this affects the United States economy. In situations where we generally use coins like pay phones, parking meters and vending machines pennies are not acceptable forms of currency. So the question that we must ask ourselves is was Benjamin Franklin wrong when he said, “A penny saved is a penny earned?”
Below you will find the CNBC Squawk Box interview of Philip Diehl, the U.S Money Reserve President, where he speaks candidly about the demise of the penny.