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Canadians are killing off their penny
Today, Canada announced it will no longer mint a one-cent coin.
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Kai Ryssdal: I have on the shelf in my office a jar full of pennies. Maybe, what, $20. $25 just sitting there collecting dust. Multiply that by a zillion similar jars across the country, and the fact that the cost to make a penny is now worth more than a penny, and you have to wonder why why the U.S. Mint keeps on crankin' 'em out. But crank we do.
North of the border, though, no longer. Canada has decided enough is enough -- that pennies just aren't worth it anymore.
Marketplace's David Gura reports.
David Gura: Pat Martin has been trying to get rid of the Canadian penny for six years now. He’s a member of Parliament from Manitoba.
Pat Martin: The government of Canada has finally seen fit to give the penny its proper due -- a proper funeral.
Now, it’s going to be a slow death. The government won’t make any new pennies, but it’s still going to recognize them. Martin says making new pennies has cost the Canadian government somewhere between $10-20 million a year, and the coin has become a nuisance.
Martin: People don’t even pick them up off the street anymore in this country. They’ll walk right past them. It outlived its usefulness a long, long time ago, and I’m surprised it has taken us this long.
Thanks to inflation, the penny’s purchasing power is one-twentieth what it used to be. Martin says that, in Canada, cash transactions will change.
Martin: Store owners and customers can round up and round down in a cash purchase to the nearest nickel.
And experts say all that will even out. So now, to the big question, as I break open a roll of American pennies: Is there any chance we’ll follow in Canada’s footsteps? Jeff Gore leads a group called Citizens for Retiring the Penny.
Jeff Gore: Many countries around the world have phased out their equivalent of the one-cent piece, and the sky has not fallen.
Like New Zealand, The Netherlands, and the list goes on. Gore, who is also an MIT physics professor, says he’s done the math, and at a time when the U.S. government is looking for ways to save money, getting rid of the penny, which costs almost two cents to make, would be a no-brainer.
I’m David Gura for Marketplace.
This is exactly the wrong approach. Instead of getting rid of the smaller denominations of our currency, we should be asking why our currency is losing value so fast. We should be increasing the value of money by not allowing the Federal Reserve to create so much of it from thin air. We don't want to end up like one of those third countries where it takes a million sheckles to buy a bottle of coke. Every dollar conjured by the Fed and spent into the economy takes value from the money you and I have in our savings and are paid in our pay checks.
saying that it costs more to make a coin than the coin is worth is irrelevant. A coin can be used as a medium of exchange thousands or even hundreds of thousands of times in its lifetime, which is where its real value is, not the cost to make it. American pennies are practically valueless because there are so many of them newly made each year. Cut back on production to maybe a million a year instead of the 2 billion a year the mints make now and they'll start coming out of jars and people will begin to pick them up.
A girlfriend and I have a running contest to see who can find the most money laying stranded on sidewalks and parking lots and, while she's much better at it than I, we still find a good $3 -$5 a week.
Sometimes the denominations are nickels, dimes and quarters but mostly those are pennies... and I would hate to see them go.
Canada is much better at effecting change in monetary instruments, having long ago abandoned one- and two-dollar bills in favor of coins, changed to harder-to-counterfeit currency (even made out of polymers instead of paper) and now this.
For all our vaunted claims of being an innovative and dynamic economy, this proves how much stuck-in-the-muds we really are.
I believe folks in Canada don't even bother picking up a coin on the ground, I've seen the same thing here in the US. My co-workers and I take a lunch time stroll in D.C. everyday and have a friendly competition to see who can find the most coins on the ground. Nary a day goes by that one of us does not find at least a penny and watch others walk right over them.
