actions and consequences

that wee penny going extinct

President Trump made an utterly logical choice last night from a business perspective. I cannot imagine the cost of producing those beloved pennies previous generations collected and used (I don’t think the current generations carry cash since I rarely do as an old person) is definitely higher than what they are worth. From a cost-benefit analysis, the U.S. Mint spends more to procure the copper, do its magic to mint the pennies, then circulate them to banks who in turn circulate them to the world through commerce. Even recycling probably is considerably more expensive. I completely, utterly understand the logic behind the decision.

This move makes me wonder if it will inadvertently increase personal expenses for each of us down the line? I am not expecting this today are we likely to see the effects but over time as fewer pennies are in circulation, if not ultimately banned as legal tender (a seemingly logical step in this process), then businesses will have fewer options for assigning costs.

Wait, but why would that be the case if the federal government saves money by ending production of something like the penny, something we don’t really use much any more? I mean, how many of us carry pennies willingly? I don’t even carry a purse, long ago abandoning that for a phone with a wallet at the back for convenience (I do have pockets that occasionally have pennies). You and I probably frequently shop in establishments only accepting plastic to reinforce my point. If you do carry pennies, you may well drop them into the “penny (tip) jar” conveniently located within many a checkout area.

I have a hypothesis that businesses will prefer pricing products in denominations of $._0 or or $._5 because to do otherwise might cost them money. Sure, a business could decide to charge $2.03 for a single Bic pen but would they allow you to pay only $2.00 since we are no longer minting pennies, thus costing them $.03 per pen sold? Over a huge volume of sales, such as for pens, $.03 will actually accumulate to quite a loss. Businesses, whether that dying gem of a local family pharmacy in Bolivar, Missouri, or a clothing chain with stores from coast to coast, need to make money to stay alive. That’s capitalism, baby, as cash either goes to investors who provide capital to an entity or it the capital itself increases by the company reinvesting profits into the business. But that assumes profits. Without that $.03 in my hypothetical, the business would lose on every transaction. That is not a sustainable model for anyone but vanity businesses not really interested in profits for sustainability or to satisfy investors. Just reality, folks (although I neither slept at a Holiday Inn nor went to business school). It’s easy to get angry at costs we pay for every bloody thing we procure but they have costs, too, even if they seem to pad their costs. And clearly many businesses also exploit opportunities to expand profits because they can.

Britain used to have “hay pennies”, aka half pennies, when I lived there eons ago. Eventually, for the same reason (cost of production), the coinage ended that denomination.

Britain was pretty extreme, however, in a way we haven’t yet broached: they actually mandated that paper Pound Sterling notes become coins. Mon Dieu! The audacity of it. I can’t fathom us going there since we hated the Susan B. Anthony coins introduced—you guessed it—to save money on paper currency which doesn’t circulate all that long with its relatively fragile, vulnerable state as paper. According to the Federal Reserve, the $5 bill only circulates for 4.7 years before we must replace it; that is an average, remember. With such a large economy, that’s much replacing.

Instead, I expect psychology likely will draw prices upward over the long haul for convenience, for opportunity, for lots of reasons. Some economist likely won the Nobel Prize for discussing this but I personally expect it will play out that way.

The problem is I am not sure any of us have any power over the phenomenon nor will we remember amid the multitude of other issues in our lives.

Replacement costs and so many other aspects of U.S. federal spending and income were illustrated at the macro level this morning at “This chart tells you everything you want to know about government spending” at USAFacts.org, rather a nifty cheat sheet on the biggest categories of what we take in and what goes back out.

340+ million folks simply consume lots of resources of any and all types, including copper pennies. Perhaps businesses can find reasons not to raise prices but I am doubtful. I do expect the move away from pennies, as inevitable with minting fewer of them, would seem to make things more expensive in the long run.

Convincing me otherwise would be welcome.

My point here is not to attack the Chief Executive; it really is not in any way. Instead, it’s a reality check to illustrate that even the most logical and relatively of easy decisions has effects. Is it cosmic? Probably not but it illustrates that actions create consequences for us day in and day out.

Thank you for the consideration today. I welcome any feedback you have on this or any other column. Please chime in with questions, rebuttals, comments, or anything further as you may have much more nuanced appreciation of the effects than I do. Thank you for your time. Thanks to those who are paid subscribers as your contributions, whether a monthly amount or an annual subscription, make this possible.

Another big sky morning greeted us today as we look out on another week.

Be well and be safe. FIN

The Fed, “How long is the lifespan of U.S. paper money?“, FederalReserve.gov, 10 February 2025, retrieved at https://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-paper-money.htm

“This chart tells you everything you want to know about government spending”, USAFacts.org, 10 February 2025, retrieved at https://usafacts.org/articles/this-chart-tells-you-everything-you-want-to-know-about-government-spending/?utm_source=join1440&utm_medium=email&utm_placement=newsletter&user_id=66efde4936f14e60dd71ce73