Feds: 1 Penny May Be Worth 5 Cents?

[The Sushi Bandit]

This gives a whole new meaning to that old saying, "A penny saved is a penny earned." Kids, start saving those pennies now because an economist at the Federal Reserve Bank of Chicago says a potential shortage of coins in the United States could mean the penny will have the same worth as a nickel. That's some investment return!

Reuters reports that the idea for changing the penny's valuation is due to sharply rising prices of certain metals, including copper and nickel. Because of this, the face value of a penny and a nickel are actually worth less than the material from which they are made. That increases the risk that speculators will melt the coins and sell the copper and nickel for a profit. That very risk prompted the U.S. Mint to issue new regulations in December that limit the melting and exporting of coins.

Now Francois Velde, senior economist at the Chicago Fed, says in a recent research note these prohibitions by the Mint are unlikely to deter serious speculators who already have piled up the coinage. He claims the best solution is to "rebase" the penny, changing its value from one cent to five cents. This increases the amount of five-cent coins in circulation since both the penny and the nickel would have the same value and eliminates the almost worthless one cent coin. "History shows that when coins are worth melting, they disappear," Velde wrote in his research note. "Rebasing the penny would...debase the five-cent piece and put it safely away from its melting point," he added.

http://channels.isp.netscape.com/whatsnew/default.jsp?story=20070123-1342

[Greyhound]

1. Illinois is the only reason that we still have the penny, and that because it has Lincoln's head

on it. Every attempt to eliminate it through the years has been blocked by powerful Illinois politiwhores, even though it is worse than useless. BTW, Illinois toll-booths are the only place in the nation that mechanical coin collectors accepts pennies.

[damntexdem]

5. Well, this would keep the Lincoln heads in circulation.

It would just make them more valuable.

[Commie Pinko Dirtbag]

11. Why not bump Lincoln onto a dollar coin then? -nt

[dysfunctional press]

14. what about penny slot machines...?

they still have them, they're mechanical, AND they accept pennies.

so do coinstar machines.

[Greyhound]

16. Really? I haven't seen one of those in years. n/t

[The Sushi Bandit]

18. Penny Slots?? Never see them anymore..

in fact not since the 60's in Nevada!
The smallest is the nickle slots - still very popular with many

[ContraBass Black]

15. I use pennies.

[blueinindiana]

2. Zinc Lobby ... NT

[MadHound]

3. Bad idea, it will result in a double debasement

First, the original debasement when they make the penny worth five cents. The second when everybody is then prompted to bring in their penny jars to exchange for dollars. Massive influx of currency, thus debasing the dollar.

Bad, bad idea.

[damntexdem]

6. I don't know.

All those jars that end up at the bank may be worth more than the dollar, soon. ;-)

[damntexdem]

4. Well, I've long said the penny should be done away with.

This would allow the currency to be stretched.

And someone with a lot of pennies could make a killing! Of course, it might not pay for the gas and wear-and-tear on the truck in hauling the pennies to the bank. ;-)

[TlalocW]

7. Groucho Marx was ahead of his time

In Animal Crackers, he suggested the need for the mint to create a 7 cent nickel. That way you could go out, buy a 2 cent newspaper and get the same nickel returned as change. One nickel, properly used, would last a family a lifetime. :)

TlalocW

[roamer65]

8. Do like Australia and New Zealand.

Get rid of the 1 cent piece. Then we can borrow Canada's nickel plated steel design for the 5 cent piece. Most vending mahcines already have the programming loaded to accept nickel plated steel coins, ala Canada.

[brettdale]

9. Yep

Here in New Zealand we have also got rid of the 2 cent piece and just last year the five cent piece.

[roamer65]

10. Good ideas down there.

I found it really helped to cut down on the pocket change when I was in Australia in 2001, especially with $1 and $2 coins. Australia was smart on making the $2 coin a smaller one than the $1. I really was impressed by the polymer notes.

[LostinVA]

17. Yup -- there's no real reason to have the penny anymore

[The Sushi Bandit]

12. It would throw our retail sales tax system into chaos!

imagine going to buy a dollar item with a 4% sales tax (like here on Maui) and having to give them a nickle!!

[Deja Q]

13. I thought it cost only $0.0124 to make one penny... when did its value go up 5x?

And why did I take my big-ass mayo jar filled with pennies to get $15? It'd be worth $60 now. FUCK! :cry: