WSJ QUESTIONS NEED FOR CENTS AND NICKELS

The Wall Street Journal ran an article early this week asking should cents and nickels be retired. The pros in favor, of course, was the fact they cost more to produce them than their face value. This is one more voice in the growing chorus in favor of dispensing with these coins.

Reasons on the con side in the WSJ article were rather weak, “they help create demand for more profitable coins in the cash economy.” To support this appeal they quoted experts who stated, among other things, the increasing demand for these denominations by commercial banks reflecting demand by the institutions who need these coins for commercial transactions, primarily retail outlets.

The need for these coins is because prices are quoted in multiples of cents. If cents and nickels were eliminated all prices would be rounded off to multiples of 10 cents. There would be no need for the two coins. Savings would be enormous for all.

Long time readers of The E-Sylum will recall I have been a proponent of eliminating not only the cent and the nickel, but also the quarter as well. Eliminate three coin denominations and replace these with three new coins for circulation, the dollar, $5 and $10 coins.

All fractional prices less than a dollar would be accommodated by the dime and half dollar. The rounding off of prices to a dime multiple would balance out over a period of time, both for the seller and he buyer. The argument this would raise prices is false, as numerous studies have shown.

More than 20 countries have eliminated one or more minor denominations, including Canada and Australia. America should do like wise.

While the U.S. government is not in the business of making profits—it is not in the “business” of anything, some would say—there is increasing political and economic pressure on Congress to do more to balance the government’s books. So is the place to start literally with pennies and nickels?

Henry Aaron, the Bruce and Virginia MacLaury senior fellow in the economic studies program at the Brookings Institution, says we should end the minting of pennies and nickels. Jay L. Zagorsky, an economist and research scientist at Ohio State University and a professor at Boston University’s Questrom School of Business, argues that the small coins still serve a big purpose.

To read the complete article (subscription required), see:
Should the U.S. Retire the Penny and Nickel? (https://www.wsj.com/articles/should-the-u-s-retire-the-penny-and-nickel-1521425100)

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