THE PERPETUAL PENNY PARADOX

 
One Hundred Million Pennies, San Francisco Mint, 1950

I was disappointed to learn, recently, that the United States has created for itself a logistical problem so stupendously stupid, one cannot help wondering if it is wise to continue to allow this nation to supervise the design of its own holiday postage stamps, let alone preside over the administration of an extensive Interstate highway system or nuclear arsenal. It's the dumbest thing I ever heard. I have come to think of it as the Perpetual Penny Paradox.

Most pennies produced by the U.S. Mint are given out as change but never spent; this creates an incessant demand for new pennies to replace them, so that cash transactions that necessitate pennies (i.e., any concluding with a sum whose final digit is 1, 2, 3, 4, 6, 7, 8 or 9) can be settled. Because these replacement pennies will themselves not be spent, they will need to be replaced with new pennies that will also not be spent, and so will have to be replaced with new pennies that will not be spent, which will have to be replaced by new pennies (that will not be spent, and so will have to be replaced). In other words, we keep minting pennies because no one uses the pennies we mint.

Five years ago, Mint officials conceded that if even a modest portion of these dormant pennies were suddenly to return to circulation, the resulting flow-back would be "logistically unmanageable." There would be so unbelievably many pennies that there most likely would not be enough room to contain them inside government vaults. Moving them from place to place would be time-consuming, cumbersome and costly. (Just $100 worth of pennies weighs a touch over 55 pounds.) With each new penny minted, this problem becomes slightly more of a problem.

The United States government has willfully ignored this nonsensical math problem for decades. Forty-eight years ago, in letters to Congress, William E. Simon, then the Treasury secretary, begged lawmakers to "give serious consideration" to abandoning 1-cent coins as soon as possible. The frantic tempo at which pennies were plummeting out of circulation, a Treasury report warned, would soon plunge the Mint into "a never-ending spiral" of "ever-increasing production" as it flailed to replace unused pennies with more pennies that would likewise remain unused — a bit like deploying a bucket to combat a dripping ceiling leak, and it turns out the leak is the ocean because the room was built under the sea, and the only way out of this anyone can think of is to engineer increasingly large buckets. The coin should be eradicated, the report reasoned, "no later than 1980."

Twenty-five years ago, Philip Diehl, then the director of the United States Mint, stated that "two-thirds of the pennies produced in the last 30 years" — 1969 to 1999 — had "dropped out of circulation." So even at a time when three-quarters of Americans' payments were still settled with cash, pennies were not being spent. A 2022 Federal Reserve survey found that Americans paid with cash just 18 percent of the time. It's impossible to know how many of those transactions might have involved coins, let alone pennies; the Fed doesn't even try to track this. One thing we know for sure about America's 1-cent coins, however, is that just one of them costs more than 3 cents to produce.

Why, in 2024, does our nation still spew out pennies like a two-liter in eternal agitation, gushing undrinkable fizz? The people I asked (government officials, numismatists, economists, scientists, scrap-metal industrialists, souvenir-elongated-penny machinists, historians, businesspeople, poverty researchers, Canadians) assigned blame widely: to an uninterested Congress; to highly interested lobbyists; to the sentimental; to people bad at math; to a populace willing to provide, in perpetuity, free private storage for pointless copper-plated tokens. (This last group encompasses every person currently possessed of at least one penny.) But the truth about why Americans are doomed to trudge eternally through a blood-scented bog of pennies-as-currency may be simultaneously the most dispiriting and encouraging reason imaginable: We may have forgotten that we don't have to.

Artazn largess has helped secure the URL "pennies.org" and finance the creation of the official webpage of "Americans for Common Cents," a self-styled "organization" that essentially consists of just one man, a Washington lobbyist named Mark Weller. In Weller's capacity as executive director of Americans for Common Cents, he has testified before Congress, been cited in government reports and written nationally circulated editorials. He declined to be interviewed for this article, but the arguments he makes in favor of continued penny production are well represented on the Americans for Common Cents website, an invaluable propaganda armory for penny-manufacture zealots.

Pablo writes:

To read the complete article, see:
America Must Free Itself from the Tyranny of the Penny (https://www.nytimes.com/2024/09/01/magazine/worthless-pennies-united-states-economy.html)

	NBS (coinbooks.org) Web