A Penny for Your Thoughts?

Drew Thomas  0:12  
I'm gonna let Jeff introduce this episode, because he had a really good introduction for this episode off the air, and I, so I say on the, I'm this is my radio days coming through. I say on the air, but it says pre-record, yes.

Drew Thomas  0:26  
Introduce the episode.

Jeff Matevish  0:27  
Welcome to 2 Cents, the podcast where we have casual conversations about current events in finance and banking and all of that good stuff. I'm Jeff Matevish, and with me is...

Drew Thomas  0:27  
Drew Thomas, yes. Me, yeah.

Jeff Matevish  0:33  
And today, we want to talk about the one cent on Two Cents.

Drew Thomas  0:42  
That's very clever. Okay, very clever. I like it, yeah, the one cent piece, not a penny. Did you know that? Like, it's not a penny, according to the US Mint.

Jeff Matevish  0:53  
Okay, I was wondering why all of the stuff that I've been researching it was saying one cent pieces.

Drew Thomas  0:58  
Yeah, yeah. The US, the US Mint calls it a one cent piece, and the US Treasury calls it a cent, okay, or maybe it's vice versa, but neither one of them call it a penny.

Jeff Matevish  1:06  
Huh, so where do we get penny from then?

Drew Thomas  1:09  
There were a lot of English people here, and back in the day, there was the pence, right? So, you had, you had the English currency, which you had a pence, so everybody called it a penny, and it just kind of got adapted into US currency that the one cent piece, okay, called it a penny. It's actually not a penny. Everybody calls it a penny, but it is not officially a penny, okay. Which is, I don't know, just one of those random pieces of information that I knew, even before I started researching all this, which is, this is really fascinating stuff, actually, if you think about it. So, we're gonna talk a little bit about the history of the penny, which we've already touched on, obviously. But then we want to talk about, I guess, the whole point of this is, is the penny even worth having? Yeah. I mean, I think that's really what this comes down to.

Jeff Matevish  1:48  
There's been talk in the past of, you know, deprecating the penny. But is that is that feasible, you know, is that realistic? 

Drew Thomas  1:54  
Yeah, so yeah. So, let's talk a little bit about the history of the penny. Okay, we started minting a penny in the 1800s, right? 1857?

Jeff Matevish  2:01  
1793. The first penny was minted in the US, in Philadelphia in 1793.

Drew Thomas  2:08  
Okay, so obviously, back then, a penny was worth a lot more than it is today. You could buy thing. You could, I mean, you could buy penny candy up until the 50s. Yeah.

Jeff Matevish  2:18  
I think they still have penny stores, but yeah, I think they're a little bit more than a penny now.

Drew Thomas  2:21  
I was just, even the dollar stores aren't a dollar anymore, yeah, so true. It's only $1 but it's really $2. Inflation will get you every time. I do remember penny candy, I there was a store, and there was a store on Market Street here in Johnstown that had, you could go and you could buy, you know, I mean, you had to buy it by the pound, so you weren't really, I mean, you couldn't go, if you went in and asked for one penny and handed it, I guess they would have sold it to you, but really, that was the way they were doing it. But it was a penny candy store.

Jeff Matevish  2:46  
I didn't handle the cash back then, my parents did, so I just picked the candy, and they paid for it. So, I don't know how that worked.

Drew Thomas  2:53  
Okay, so 1700s we mint pennies, right? So, what else is interesting about the I mean, how long does a penny last? Let me ask you that. I mean, can you still use a penny from the 1700s? I assume, if you could find one, yeah.

Jeff Matevish  3:05  
I wouldn't spend it.

Drew and Jeff  3:08  
I probably wouldn't spend it. Yeah, yeah, that's worth a pretty penny.

Drew Thomas  3:14  
So, let's look at some pros and cons to the penny. Because what I think, what we really were talking about here is, is the penny worth having, right? I mean, a lot of people don't carry cash anymore. We can kind of touch on that if we want to, but they definitely don't carry coin around a lot. I have this oversized beer bottle, plastic beer bottle in my, in my office at home, and I used to throw all of my spare change in it whenever I would come home for the day. And usually, I would fill that thing about halfway up every year, and then I would take it into the bank, and I would put the coins through the machine, and I'd have, you know, couple $100. I usually have maybe $100-$200 bucks worth of coins in there every year, and I would use it toward the holidays and things like that. Yeah, I can't remember the last time I put coin in it, because I don't use coins that much.

Jeff Matevish  3:58  
Yeah, I did the same thing. Mine was a five-gallon water jug, but yeah, same thing, yeah. And you get $300-$400. Yeah.

Drew Thomas  4:05  
So, we were looking at, there's a website out there, its, what website is it? It's Britannica, Britannica, yeah. And Britannica has these pros and cons of the penny, and the first is preserving the penny helps keep consumer prices down and avoids harming low-income households. I don't know if that's necessarily true. I don't either the alternative to the penny is rounding to the nickel, and that's something that will negatively impact working families every time they buy a gallon of gas or a gallon of milk. You know, it depends. It does depend, because you could round down too.

Jeff Matevish  4:35  
Right kind of evens out.

Drew Thomas  4:36  
I guess technically, the only one, that's the only part of it that makes it a little biased toward the five is the fact that it's an odd number, so one and two would be rounded down, but three and four would both be rounded up to five. So, I guess it would add up over time, but you'd have to buy a lot of stuff that was in that three, four cent range rounding up, and you're only rounding up two cents realistically speaking, when you're doing that. I don't know that it really makes that big of a difference. Yeah. So, that's the pro to keep, one of the pros to keeping the penny. They said that one study found that the penny rounding in Canada cost grocery store customers and estimated $3.27 million Canadian dollars annually. Wow. How many people are, I mean, I know groceries are expensive, but the penny rounding alone, I guess I can't argue with the numbers, but that, yeah, that seems like a lot to me. 600 million annually. Yeah, I just Yeah. So, pro number two, a penny can be used for decades, and is more cost efficient to produce than a nickel. Most US coins have an expected circulation life of 20 to 30 years, meaning a single penny could be used 1000s or even millions of times. So, what if it costs 1.8 cents to make a one cent penny? That's a bargain for how many times it gets used. Here's the thing, how many of those pennies are sitting in jars? They're not getting used over and over and over again. They're sitting in a jar on somebody's shelf.

Jeff Matevish  5:56  
Yeah, Or, or worse. I think one of the cons later on is, there have been people who have admitted to just throwing pennies away, you know, or, or leaving pennies on a counter when you're buying something at a store, yeah, you know, yeah, penny, or leave a, take a penny. Yeah, what, however it goes, yeah. So, are your pennies really in your pocket?

Drew Thomas  6:15  
I don't think they are. I think they're either in those dishes, they're on the ground, or, like I said, I think there are a lot of people that take their coin, like I did, and throw it in a jar, yeah, right. It's not in circulation. You're effectively taking that out of circulation when you put it in a jar and sit it in your room. Yeah. And so, the US Mint would then have to continue to mint more to offset the fact that people aren't spending them and using them as, as currency. They're just collecting them.

Jeff Matevish  6:39  
The only reason that I keep a couple pennies in my pocket because I'm, as you know, I'm a cash guy.

Drew Thomas  6:43  
You are.

Jeff Matevish  6:44  
I prefer cash over anything else. That's okay. I will keep a couple pennies in my pocket so that when I buy something and I have to pay tax, I get less pennies back.

Drew Thomas  6:53  
So, you keep pennies in order to avoid getting pennies. That's very interesting. That's an interesting thought process.

Jeff Matevish  7:01  
So, if I buy something for $1 and it's $1.06 here in Pennsylvania, yeah, I make sure that I have a nickel and a penny.

Drew Thomas  7:08  
I guess it makes sense. I mean, and you are getting rid of your penny at that point, right? How many people do you confuse with that, though?

Jeff Matevish  7:15  
Oh, the younger generation. Oh, give someone that is younger than, I don't know, 20, a $20 bill and 12 cents, yeah, and their minds blown, like they want to give you your money back, like you gave me too much.

Drew Thomas  7:28  
That's, that's just and plus the cash register, although I guess they're just not used to cash registers. I bet, I bet 90%, I remember when you couldn't go to McDonald's and spend anything other than cash. Now I would probably argue that 80%-90% of their transactions are done on a card. Oh, for sure. So, when you hand them cash, it's probably like a foreign substance to them, they don't know what to do with it. And then you hand them coins, yeah, on top of it all, I think you're just, I think you do it just to see the look on their face. Here's the other, here's the other thing I've seen people would do with pennies too. That has nothing to do. I've seen people literally create flooring out of pennies, oh, yeah. Like, they will take pennies like, because it's, it's actually cheaper than buying, like, the metal like, but they will, they, I've seen people do they. I watched this video. They did this whole, uh, lobby area and hallway in pennies. And they found they cleaned some of them, and then they left some of them dirty, so they had sort of, like a black outline, sort of pattern in it, and then a copper middle, and then they used epoxy over top of it, and everything, and it looked fantastic. But those pennies are not in circulation anymore. No, they are not, yeah, they're not being used for their intended purpose. I don't know if the technically speaking, that's illegal?

Jeff Matevish  7:28  
I was just gonna say, yeah, is that defacing? I mean, you're not like, people make jewelry and stuff out of coins, and that's illegal, you know. But that's destroying a coin. You're not really destroying a coin. You're preserving it. I mean...

Drew Thomas  8:52  
You are preserving if it's an epoxy, you are preserving it pretty well. But what about all those machines when you go to the museum, and you stick a penny in it?

Jeff Matevish  8:58  
You're taking my, you keep taking my points.

Drew Thomas  9:01  
I like, I defer to you, tell the point.

Jeff Matevish  9:03  
That was my last one!

Drew Thomas  9:05  
Oh, okay.

Drew Thomas  9:07  
Welcome back to...

Jeff Matevish  9:08  
How do places get away with smashing pennies? That's right, for a smashed penny machine? Yeah, spend 50 cents on a penny to get a penny back, and you're destroying a penny.

Drew Thomas  9:18  
And it's a defaced penny. That's a good point, or it has a little ship on it.

Jeff Matevish  9:21  
Yeah, those places will go out of business if we get rid of the penny.

Drew Thomas  9:26  
That's true. Those little machines, I don't know what they would do. Okay, so, so, so I guess that's the pro. The penny can be used for decades, but is it really being used? And then the third pro that they have in this article is the existence of pennies helps raise a lot of money for charities. Organizations such as the Leukemia Lymphoma Society, the Salvation Army, Ronald McDonald House ask people to donate pennies to raise funds. In 2009, the Leukemia and Lymphoma Society announced that school children had collected over 15 billion pennies in support of its charitable work, which is equal to about $150 million for blood cancer research and treatment. I mean, I get the point there that, you know, it's easy to say, hey, bring in a penny, but is it any more difficult to say, hey, bring in a nickel?

Jeff Matevish  10:10  
I don't know. We, we had fun with it in school. We had something called Penny Wars at my school. Okay, so you'd, your class would collectively collect pennies, like, you know, you bring, you know, 100 pennies or whatever from your house, and you put in a jar, and other classes could take their pennies and put it in your jar, and that kind of subtracted from your classes count, okay? And whatever classroom at the end of this period of time had the most money saved up, we get something like a pizza party or something like that. But I mean, you were, we raise a lot of money that way.

Jeff Matevish  10:13  
So, you're kind of incentivized two ways. You're incentivized to try to raise the most money, but you're also incentivized to always be competitive ahead of the next, yeah, because you're trying to cancel out the other classrooms. That's neat. Yeah, that's it.

Jeff Matevish  10:55  
It was a fun, fun little thing.

Drew Thomas  10:57  
That's, that's a really neat idea. I like that. But again, couldn't you do that with nickels?

Jeff Matevish  11:02  
You could, but I mean, asking my mom for 100 pennies is a little easier than asking my mom for 100 nickels. I don't know.

Drew Thomas  11:09  
I guess that's, I guess that's true. I guess my, I guess it really comes down to how much is a penny really worth? Yeah, in in today's world, yeah, oh, yeah, right. You know what I mean, like, is, is it just as easy to say, well, hey, mom, I need a nickel. Like, would your parents balk at saying, well, you know, if you had asked me for a roll of pennies.

Jeff Matevish  11:26  
No, but yeah, like you said 20 years ago, when, when we were doing these things, a penny went a lot further.

Drew Thomas  11:33  
Yeah, that's true. That's true. So, so let's go down the con list here, right? So, we got a con list here of, should the penny stay in circulation? So, so those are the pros to keeping the penny in circulation, right? Keeping consumer prices down, usability and longevity, and then money for charities. The con, a penny has practically no value and should be taken out of circulation, just as other coins have been. So, you were saying we took out the half penny. Yeah, US Mint took out the half penny.

Drew Thomas  11:33  
Back in 1857.

Drew Thomas  11:55  
Okay, so that's where that year stuck in my head. Okay, yeah, I knew I read that year somewhere. So, at one point the US did have a half penny, but not, but then they were like, hey, nobody's using this half cent. That's a good point. Yeah, good point. You keep me on my toes, Jeff, you keep me honest. That's good. So, the purpose of the monetary system is to facilitate exchange. The penny no longer serves that purpose. When people start leaving a monetary unit at the cash register for the next consumer, the unit is too small to be useful. So, it sounds like we kind of got the con, even though we were talking about the pro, yeah. But I guess we're not the only ones who think that the con is also, you know, the fact that the pennies aren't really being used for anything, or they're not being used as money.

Jeff Matevish  12:43  
Yeah, yeah.

Drew Thomas  12:45  
Put it that way, I guess. Con number two, the process of making pennies, is costly, both financially and, and environmentally. Now that's an interesting part.

Jeff Matevish  12:52  
Yeah, I don't know if I believe that one as much.

Drew Thomas  12:57  
According to this it says over the last 35 years, 107 million pounds of carbon dioxide have been emitted due to pennies being delivered from the Mint to banks. How do they even calculate that? I mean...

Jeff Matevish  13:08  
That and, I mean if you get rid of the penny, they're gonna have to produce more of some other coin, and that's going to produce more carbon dioxide from mining whatever metal that coins made out of.

Drew Thomas  13:17  
Yeah. It says in making, it says making pennies requires the mining of zinc and copper. But I would argue, I mean, there's, there's not silver in almost any of our coins in the US anymore. They haven't been silver since the 1960s, early 60s. Regardless, there's zinc, there's copper, there's nickel in all of our coins these days, right? None of them are precious metal in that regard, right? And then the con number three here, eliminating pennies would save time at the point of purchase without hurting customers or businesses financially. So, I guess it depends on whether or not you believe that stat that we talked about earlier about the grocery stores.

Jeff Matevish  13:54  
This one's funny, yeah.

Drew Thomas  13:55  
The use of pennies in paying for goods and making change adds time to sales transactions. A study by Walgreens and the National Association of Convenience Stores, because we have to have a National Association for everything, found that pennies add two to two and a half seconds to each transaction, and a result of that extra time, the average citizen wastes 12 minutes a year paying with pennies. Are you, who has the time to do these studies?

Jeff Matevish  14:18  
Well, it goes even further. Now they say, if you bend down and pick up a penny off of the sidewalk, if you make minimum wage, you are losing money.

Drew Thomas  14:28  
Are you kidding me, really, the amount of time it takes you to bend over and pick it up.

Jeff Matevish  14:32  
It is not worth your time, if you make minimum wage to pick up a penny. You are losing money if you pick up a penny.

Drew Thomas  14:37  
Wow. Okay, that's interesting. So, I don't know other obviously, other countries have gotten rid of the penny, yeah, or their version of a penny, yeah, their one cent piece. Canada withdrew the penny, or their version of a penny, in 2012. Australia stopped minting one and, and two cent coins in 1991 but still mint them as non-circulating coins. Then why, then why bother? Why didn't you? Why did you stop at all at that point? The Bahamas, the central bank stopped issuing one cent coins on January 31, 2020, and they were demonetized on December 31, 2020. So, I guess you can't even spend them in the Bahamas anymore. In Canada, you can still spend them. If you have them, you can still spend them. They'll still take them as currency.

Jeff Matevish  15:18  
Do they, do they recirculate those then? Or if a store gets a one cent piece, do they have to turn that into their treasury or something?

Drew Thomas  15:27  
That's a good question. I would think that, I don't know. It said the Canadians could redeem pennies at financial institutions or donate them to charities, okay, but it doesn't really say what the government suggests that the charities or the businesses or the banks do with them once they get them, okay. And then there's some other countries here, Finland, Switzerland, Barbados, I mean, most of these have withdrawn their one cent piece sometime in the last 15 to 20 years. So, the UK and the US are two of the largest countries still using a one cent coin. And I don't know if it's not even worth bending over to pick the thing up, it's probably not worth minting is, I guess. I mean, that's really probably the best argument you can make, isn't it?

Jeff Matevish  16:08  
Yeah. I mean, so there are more pennies minted each year than any other coin, so maybe a starter is mint less?

Drew Thomas  16:15  
Well, yeah, you could mint less and make people start using the ones that are in the jars, yeah, yeah. And I guess that's the thing you know, that, that kind of goes against that first argument that, you know, pennies can be used for decades. Well, if they're being used for decades and nobody's using them, then why are you still minting so many?

Jeff Matevish  16:31  
Because people throw them away.

Drew Thomas  16:34  
Because they're not using them as currency anyway. So, what's the point? Yeah, I just, I to me, I don't, my personal thought of it is, I would get rid of the penny. That's my personal point of view after reading all this stuff.

Jeff Matevish  16:47  
I know it's an it's inevitable, I think, but I don't think you're gonna see the penny go away in our lifetime. I mean, to get rid of a penny requires, you know, the government to make a decision, and I don't think it's, they have bigger problems right now than whether to keep a penny or not, so I don't think that that's high on their radar.

Drew Thomas  17:07  
I think you could have stopped with it requires the government to make a decision. It's hard enough to get the government to make a decision about anything. Everybody wants to, like, sit on the fence about everything. Yeah, I don't know. I'd like to think that maybe they would make a decision on this within our lifetime. I mean, I'm hoping to be around for a while yet, but you're right, there's, and there's, there's so much [nostalgia]. We assigned a lot of nostalgia to things in our society too, where we're like, oh, we can't get rid of that because I remember my grandparents used pennies whenever we would put stuff out for Christmas and stuff. And it's like, okay, but you can still have that memory without the US Mint spending twice as much to create the penny as they are to their worth. I mean, it doesn't take your mem[ories], it doesn't take your memories away, right? I mean, right. What was the other con?

Drew and Jeff  17:53  
That was another con that I read in some article, those opposed to stopping the minting of pennies said that removing this unit of currency would dishonor Abraham Lincoln. He's on the five, that's one less currency with Abraham Lincoln on it apparently.

Drew and Jeff  18:05  
He's on the $5 bill. He's, he's already got something most people are using. Well, it actually, this is what I read. Oh, he's on the $5 bill twice, actually, yeah? Because if you turn it around, yeah, there's a little tiny version of him back there in the back of the Lincoln Memorial, on the back of the five too. Although I guess that's, is that still on the back of the penny? Yeah? Oh, I don't know. It's not the shield, the shield. I think it's the shield. Now they have that one cent.

Jeff Matevish  18:33  
I don't know. I don't have any in my pocket right now, so I can't even tell you.

Drew Thomas  18:36  
You said you always have cash on you, Jeff, what the heck. Do we have anything else? Does that pretty much cover it? I don't know. What do you guys think? What do you, I would love to hear a comment from somebody that's listening to this episode. I mean, you can go into the show description, there's a link there that you can give us some feedback and talk and send text messages. You can send it via text message or email. Let us know, do you like pennies, or don't you like pennies? I think that's a really interesting thing. I'd love to hear what other people think, yeah, yeah, fair enough. Okay, I got nothing else. You got anything else now, I think we're good. All right, well, I'm gonna go back and try to earn some pennies. Okay.

Jeff Matevish  19:13  
All right, thanks Drew.

Drew Thomas  19:23  
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Drew Thomas  20:30  
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