For the past several years, it has been a question on whether or not the penny has any real value. Phil Diehl who is the former Director of the U.S. Mint and the current president of coin distributor U.S. Money Reserve, is completely against the production of the penny.
Mr. Diehl explained on CNBC Squawk Box that he believes that the penny costs too much to produce for what it is actually worth. The cost of producing one penny which is one cent is 1.8 cents which equates to millions of dollars that is lost to making pennies annually.
Mr. Diehl has received several protests against eliminating the penny. One argument is the fact that the elimination of the penny could lead to inflation of the United States’ economy. In response to this argument, Mr. Diehl states that this has been a concern for the past 25 years by penny lobbyists to keep the penny.
Mr. Diehl then continues with a counter argument that in present day 75 percent of all transactions are now through electronic devices such as apps and credit cards. The remaining 25 percent of cash transactions would not be hugely affected by raising or lowering the prices of products due to the elimination of the penny.
Mr. Diehl continues by stating that in response to the elimination of the penny companies would likely round the prices down rather than round up. This action would be done to keep the customers happy instead of aggravating them with an increase in the product price.
Those who want to protect the penny include private interest groups that make the penny blanks. Among these private interests groups are the zinc lobbyists that produce 97.5 percent of what the penny is made out of. In addition to this, a private interest group called American’s for Common Cents has continued to protect the idea of the penny.
The argument that this group uses is that organizations such as charities would be negatively affected because there would be less pocket change donated to organizations. In addition to this, the idea of “rounding tax” would negatively affect consumers.