Posted on 01/24/2007 2:47:39 PM PST by presidio9
Talk about pennies from heaven.
A potential shortage of coins in the United States could mean all those pennies in your piggy bank could be worth five times their current value soon, says an economist at the Federal Reserve Bank of Chicago.
Sharply rising prices of metals such as copper and nickel have meant the face value of pennies and nickels are worth less than the material that they are made of, increasing the risk that speculators could melt the coins and sell them for a profit.
Such a risk spurred the U.S. Mint last month to issue regulations limiting melting and exporting of the coins.
But Francois Velde, senior economist at the Chicago Fed, argued in a recent research note that prohibitions by the Mint would unlikely deter serious speculators who already have piled up the coinage.
The best solution, Velde said, would be to "rebase" the penny by making it worth five cents rather than one cent. Doing so would increase the amount of five-cent coins in circulation and do away with the almost worthless one cent coin.
"History shows that when coins are worth melting, they disappear," Velde wrote.
"Rebasing the penny would ... debase the five-cent piece and put it safely away from its melting point," he added.
Raw material prices in general have skyrocketed in the last five years, sending copper prices to record highs of $4.16 a pound in May. Copper pennies number 154 to a pound. Prices have since come down from that peak but could still trek higher, Velde said.
Since 1982, the Mint began making copper-coated zinc pennies to prevent metals speculators from taking advantage of lofty base metal prices. Though the penny is losing its importance -- it is worth only four seconds of the average American's work time, assuming a 40-hour workweek -- the Mint is making more and more pennies.
Velde said that since 1982 the Mint has produced 910 pennies for every American. Last year there were 8.23 billion pennies in circulation, according to the Mint.
"These factors suggest that, sooner or later, the penny will join the farthing (one-quarter of a penny) and the hapenny (one-half of a penny) in coin museums," he said.
There will be a Reagan $1 coin once the series of Presidential $1 coins gets around to him, but it will take a while.
Sounds almost as bad as U.S. Bank.
It is past time to dump the penny. The last time the US got rid of a low value coin was the half-cent in 1857. A half-cent back then would be worth about a dime now. Dumping it then would be like getting rid of the penny, nickel and dime now and saying everything must be in quarters. I think that would be extreme, but I would like to get rid of the penny
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i'll buy them?
"I've often wondered why people don't just round up or down to the nearest 5 cents and stop using pennies anyway."
The states would love it, they would automaticly round up and screw us royally on sales taxes!
I don't know why people say pennies aren't worth the time it takes to wrap them. If I am sitting on my butt at home, I am not getting paid by anyone. If I wrap $5 in pennies rather than thowing them away, I've got $5. Would I throw away a $5 bill every few weeks? Hell no.
Here's a penny webpage: http://www.kokogiak.com/megapenny/
A penny will still buy a kid a ride on a mechanical pony at Michigan Meijer stores.
ping
No offense to Reagan, but money should strictly be for the Founders only.
I think they meant to say that Cu is 3x higher than it was 5 yrs ago.
Not since 1985.
Looks like your memory is a bit better than mine, from Gorzilla:
"So, what is the mass of a penny? Well, an interesting change took place in 1982. Prior to that year, pennies were 95% Copper and 5% zinc. After 1982 the composition became 97.6% zinc and 2.4% copper. (1982 pennies can be either one of these. Oh and in 1943 pennies were made of a steel & zinc combination but we won't concern ourselves with those). So, the point is that pre-1982 pennies will have a different mass than pennies made after 1982."
I wouldn't be terribly surprised if some people use automatic machines to sort them, though. It'd certainly be easy enough to do. Could also sort out silver coins as well.
By the way, Commerce Bank has "Penny Arcades" that count the coins. Kids love them. They charge you a percentage, though, I think.
I, however love it. I pull 75 pennies out of my pocket to pay for the NY Post. The cashiers don't even bother to count. (With only 10 fingers and open toed sandals not allowed, most can't get past 10 with people standing in line!).
My comment was about DEbasing the currency, Emily, DEbasing.
Shh. Many today would call you an economic traitor for saying that money should be worth anything. /sarcasm.
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