Thursday, February 21, 2013

Culture Shock 02.21.13: A penny ain't worth what it used to be

Killing Lincoln.

The film "Pennies from Heaven" starring Steve Martin, Bernadette Peters and Jessica Harper opened in 1981.

Since then, the titular penny has lost more than one-third of its value, according to the inflation calculator at Yet the movie is set in the 1930s. So, take the TARDIS farther back, to the dark days of the Great Depression, and a penny from today suddenly has the purchasing power of 14 cents.

It's like when baby Kal-El journeys from Krypton to Earth, gets super powers and becomes Superman. In the past, the penny becomes the Superpenny, able to buy the stuff of 14 ordinary pennies.

But here in 2013, the penny is just the lowly penny. People drop them on the sidewalk and can't be bothered even to bend over and pick them up. A penny just isn't worth that much time and effort, and besides, my back hurts. From a monetary point of view, the penny is now a bigger wimp than Clark Kent ever was.

That's why there is a movement afoot, once again, to do in the penny once and for all.

Some groups like Citizens to Retire the Penny have campaigned to eliminate the penny from circulation for years, and President Barack Obama recently added his voice to those calling for change in our change. But so far they have been no match against the feared zinc lobby, or, as I like to call it, Big Zinc.

Yogi Berra once quipped, "A nickel ain't worth a dime anymore." That isn't just a truism; it's economics. About 100 years ago, a penny was worth roughly a quarter, adjusted for inflation. But after a century of Federal Reserve-backed monetary expansion, a penny ain't worth a quarter anymore. It ain't even worth a penny.

Other governments have already killed their pennies. Canada ended production of its 1-cent coin earlier this month. As governments inflate their currencies, lower-denomination coins cease to be worth minting, or even face value. It costs the U.S. government 2.41 cents for every penny it mints.

By that standard, the penny is worth more dead than alive. You're better off melting them down and selling the zinc back to the U.S. government to make more pennies. If "Seinfeld" were still on the air, this would be a great get-rich-quick scheme for Kramer and Newman.

The only economic case to be made for the penny is without it businesses would round up their prices and we'd all end up paying more. But that argument is probably overstated, and as the penny continues to lose value, less and less persuasive. You might as well complain that businesses have to round up to the nearest cent because there are no half-cent coins. (Yes, there used to be half-cent coins in the U.S., from 1793 to 1857.)

Add to all that the hidden cost of keeping up with pennies, counting them out, storing them, sorting them, driving them to the nearest Coinstar machine to get rid of them and the time spent wrapping them to take them to the bank, and pennies are surprisingly expensive for something so worthless.

The penny's only remaining value is cultural.

We name daughters Penny. We don't name them Nickel or Dime. It's "a penny for your thoughts," not a quarter because, face it, no one cares that much about what's on anyone's mind. And if you're really poor, you "don't have two pennies to rub together" because not even really poor people will bend over to pick them up.

The only known form of communism to work are the "take a penny, leave a penny" trays you find in convenience stores and restaurants. When they are gone, it'll be the worst day for communism since the fall of the Berlin Wall. It gives new meaning to "red cent."

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