Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
As you know, the pennies aren't made of copper anymore.
There are a bunch of different type of metals, including zinc.
But it costs three cents to make a one cent coin,
so we're technically losing money on penny production. And I
wanted to bring in our penny expert. You can find
him at pennies dot org. Americans for common sense, it
(00:21):
is Mark Weller. We've had Mark on the show before
Market morning. How are you.
Speaker 2 (00:25):
I'm doing well, Good morning.
Speaker 1 (00:27):
So we've talked about this before Mark, and now it
seems like the US Mint has been ordered to stop production.
We're not pulling pennies out of circulation right now necessarily,
but the US Mint will not produce any new pennies.
Do I have that right?
Speaker 2 (00:43):
That's correct. The Treasury has some an inventory that will
continue to be minted, but those supplies will probably be
depleted by this fall or this winter. So we're gonna
be left with a situation where shortages of pennies, and
then retailers and merchants are going to be loved with
an awkward situation of what do they do? Do they
start rounding prices up or down? We have felt very
(01:07):
strongly that consumers are going to lose without the penny.
That there's one thing everybody agrees on that the businesses
have an incentive to maximize profits and those prices are
going to get rounded up and not down.
Speaker 1 (01:18):
So and that's your biggest concern, is that prices will
go up and they'll round the nearest nickel versus the
nearest penny. So and if they stop producing pennies, walk
me through how what that looks like. What happens? So
do people then just hang on to more and more
loose change in their house, or they roll it up
(01:39):
or they collect it, and then that takes more pennies
out of circulation, where then you have the situation as
you describe, where there's a penny shortage.
Speaker 2 (01:47):
Yeah, there's a couple of concerns that the one I
would mention first though, would be the proponents of doing
away the penny have said that it's going to save money.
As you mentioned in your introduction, it's over three cents
to make a penny, But the fact is we're actually
going to spend more money without the penny, and the
alternative is the nickel, and then nickel now costs fourteen
(02:10):
cents so you were losing nine cents on every nickel produced,
So it's a bit short sighted to say we're going
to save money without the penny. Our argument has been
the treasury should get a handle on the nickel production
and then we could maybe talk about the penny after that.
But you're I'm sorry, good.
Speaker 1 (02:29):
No, So you think the nickel is the one we
should be looking at, not the penny.
Speaker 2 (02:33):
Absolutely, And the good news is there's a new team
and a treasury, a new team coming into the mint.
I think they understand that, and they're starting to look
at some alternatives that could get that cost down on
the current nickel. Because it just makes no sense to say, oh,
we're going to save a little money without the penny open,
but we're going to lose over two hundred million a
year by making fourteen cent nickels. That that makes no
(02:54):
sense at all.
Speaker 1 (02:55):
So maybe we should look at just the cost of
producing coins altogether and try to reduce costs. And he's
still make the penny. He still make the nickel, but
how do we make it cheaper and reduce the cost
in production and then just keep everything in circulation as
it is.
Speaker 2 (03:11):
Yeah, I think that's a good observation. The metals certainly
play a big part in the cost that you know,
have copper and nickel that are very expensive that they
make up the current nickel diamond quarter. And there are
awesome materials that are used in you know, batteries and
electricity transmission stations and all these demands we're going to
see coming down the line in the future. So when
(03:33):
we have your coins made out of the same materials
that are going to be high demand in other areas,
it's probably not not the best approach.
Speaker 1 (03:39):
So when you're looking at this, speaking with Mark Weller
from Americans for Common Sense, Pennies dot org is where
you can find him. He is a proponent of keeping
the penny, lobbying to keep the penny in circulation. You know,
why stop at the penny and the nickel because then
you know, now, what does it cost to make a
dime or a quarter? I mean, at some point we're
(04:01):
going to run out of coins.
Speaker 2 (04:03):
Yeah, I think it's a slippery slope. And you make
a very good point. You know, if you start looking
at this just on the cost issues, you begin to
rounding to the nickel, and that's a real bad approach
for consumers. You have a hedge on inflation when you
have a load denomination coin. It's real testament the economy.
We've had the penny as long as we've had it,
(04:25):
and not only are you having an overall effect on
inflation and the economy, you're really hurting those that can
afford it the least. There's a ten million Americans that
are unbanked. There's millions more that are under bank. They
don't really have access to checking accounts, charge cards. They
rely predominantly on cash transactions. When you start getting in
these rounding schemes, you're hurting working families all across the country.
Speaker 1 (04:48):
And I think that's one of the arguments too, is
that fewer and fewer people are actually still using cash,
and of those that are, the very few of them
are using coins. I mean a lot of times see
people throwing a penny in the little jar on the
counter at the convenience store, and you're just throwing away money.
So you know, are people do people still save coins
(05:11):
at the end of the day they get their loose change.
I got to believe that in the average household there's
got to be fifty to one hundred bucks in coins
just sitting in jars.
Speaker 2 (05:21):
Well, that's actually a great observation. You know, we I
use cash. I think it's important. It's the cheapest way
to go. You're not subject to you know, interest charges
with your credit card and other other negative effects of plastic.
But yeah, coinstart tells us the company that have those
kiosks in your grocery store and other retail outlets that
the average jar when people turn those in is fifty
(05:45):
eight dollars. And so people have a lot of money
sitting around in those excess coins jars, and when they
turn them in, there's a significant amount of money that
actually comes back into circulation. About two thirds of all
our coins are actually recircular related, day in and day out,
and it's the mint only makes about a third of
the new coins. But I take your point. Look, you
(06:07):
know the way we buy and sell things, they certainly
purchase things have change. Post COVID. People got more comfortable
with ordering online and you know, using their charge card
or doing curb side pickup with a you know, a
restaurant and not using physical cash in currency. They're still
transactions under twenty five dollars, over forty five percent of
(06:29):
those are still made in cash. So so for the
lower transactions twenty dollars thirty dollars, still a lot of
cash use out there, and it's it's important to have
accurate pricing and the lower denomination coin mark.
Speaker 1 (06:43):
Are people still collecting pennies to the extent that they were,
you know, twenty twenty five, thirty years ago. I know
that they're they're not as as valuable based on the
you know, the the metal content, But are do people
still collect pennies in the way they used to roll
them up?
Speaker 2 (07:00):
We're seeing a decline in that. Really that that matches
some of the decline in use of cash and coin
in the economy. We used to see school groups, for example,
all across the country that would do you know, penny
drives for a new flag pole or computer system, and
those have dropped off as people just don't have as
much loose change around it. But it's still quite a
(07:22):
significant number. I was just you know, doing a McDonald's
drive through last week and looked down in the Ronald
McDonald's Children's charity bin and there were a large number
of coins in there. So I think it's still a
significant fundraiser for the charities that use it, but not
at the level it would have been four or five,
ten years ago.
Speaker 1 (07:40):
Yeah, it's certainly fascinating. We appreciate the insight Mark Weller,
we call
As you know, the pennies aren't made of copper anymore.
There are a bunch of different type of metals, including zinc.
But it costs three cents to make a one cent coin,
so we're technically losing money on penny production. And I
wanted to bring in our penny expert. You can find
him at pennies dot org. Americans for common sense, it
(00:21):
is Mark Weller. We've had Mark on the show before
Market morning. How are you.
Speaker 2 (00:25):
I'm doing well, Good morning.
Speaker 1 (00:27):
So we've talked about this before Mark, and now it
seems like the US Mint has been ordered to stop production.
We're not pulling pennies out of circulation right now necessarily,
but the US Mint will not produce any new pennies.
Do I have that right?
Speaker 2 (00:43):
That's correct. The Treasury has some an inventory that will
continue to be minted, but those supplies will probably be
depleted by this fall or this winter. So we're gonna
be left with a situation where shortages of pennies, and
then retailers and merchants are going to be loved with
an awkward situation of what do they do? Do they
start rounding prices up or down? We have felt very
(01:07):
strongly that consumers are going to lose without the penny.
That there's one thing everybody agrees on that the businesses
have an incentive to maximize profits and those prices are
going to get rounded up and not down.
Speaker 1 (01:18):
So and that's your biggest concern, is that prices will
go up and they'll round the nearest nickel versus the
nearest penny. So and if they stop producing pennies, walk
me through how what that looks like. What happens? So
do people then just hang on to more and more
loose change in their house, or they roll it up
(01:39):
or they collect it, and then that takes more pennies
out of circulation, where then you have the situation as
you describe, where there's a penny shortage.
Speaker 2 (01:47):
Yeah, there's a couple of concerns that the one I
would mention first though, would be the proponents of doing
away the penny have said that it's going to save money.
As you mentioned in your introduction, it's over three cents
to make a penny, But the fact is we're actually
going to spend more money without the penny, and the
alternative is the nickel, and then nickel now costs fourteen
(02:10):
cents so you were losing nine cents on every nickel produced,
So it's a bit short sighted to say we're going
to save money without the penny. Our argument has been
the treasury should get a handle on the nickel production
and then we could maybe talk about the penny after that.
But you're I'm sorry, good.
Speaker 1 (02:29):
No, So you think the nickel is the one we
should be looking at, not the penny.
Speaker 2 (02:33):
Absolutely, And the good news is there's a new team
and a treasury, a new team coming into the mint.
I think they understand that, and they're starting to look
at some alternatives that could get that cost down on
the current nickel. Because it just makes no sense to say, oh,
we're going to save a little money without the penny open,
but we're going to lose over two hundred million a
year by making fourteen cent nickels. That that makes no
(02:54):
sense at all.
Speaker 1 (02:55):
So maybe we should look at just the cost of
producing coins altogether and try to reduce costs. And he's
still make the penny. He still make the nickel, but
how do we make it cheaper and reduce the cost
in production and then just keep everything in circulation as
it is.
Speaker 2 (03:11):
Yeah, I think that's a good observation. The metals certainly
play a big part in the cost that you know,
have copper and nickel that are very expensive that they
make up the current nickel diamond quarter. And there are
awesome materials that are used in you know, batteries and
electricity transmission stations and all these demands we're going to
see coming down the line in the future. So when
(03:33):
we have your coins made out of the same materials
that are going to be high demand in other areas,
it's probably not not the best approach.
Speaker 1 (03:39):
So when you're looking at this, speaking with Mark Weller
from Americans for Common Sense, Pennies dot org is where
you can find him. He is a proponent of keeping
the penny, lobbying to keep the penny in circulation. You know,
why stop at the penny and the nickel because then
you know, now, what does it cost to make a
dime or a quarter? I mean, at some point we're
(04:01):
going to run out of coins.
Speaker 2 (04:03):
Yeah, I think it's a slippery slope. And you make
a very good point. You know, if you start looking
at this just on the cost issues, you begin to
rounding to the nickel, and that's a real bad approach
for consumers. You have a hedge on inflation when you
have a load denomination coin. It's real testament the economy.
We've had the penny as long as we've had it,
(04:25):
and not only are you having an overall effect on
inflation and the economy, you're really hurting those that can
afford it the least. There's a ten million Americans that
are unbanked. There's millions more that are under bank. They
don't really have access to checking accounts, charge cards. They
rely predominantly on cash transactions. When you start getting in
these rounding schemes, you're hurting working families all across the country.
Speaker 1 (04:48):
And I think that's one of the arguments too, is
that fewer and fewer people are actually still using cash,
and of those that are, the very few of them
are using coins. I mean a lot of times see
people throwing a penny in the little jar on the
counter at the convenience store, and you're just throwing away money.
So you know, are people do people still save coins
(05:11):
at the end of the day they get their loose change.
I got to believe that in the average household there's
got to be fifty to one hundred bucks in coins
just sitting in jars.
Speaker 2 (05:21):
Well, that's actually a great observation. You know, we I
use cash. I think it's important. It's the cheapest way
to go. You're not subject to you know, interest charges
with your credit card and other other negative effects of plastic.
But yeah, coinstart tells us the company that have those
kiosks in your grocery store and other retail outlets that
the average jar when people turn those in is fifty
(05:45):
eight dollars. And so people have a lot of money
sitting around in those excess coins jars, and when they
turn them in, there's a significant amount of money that
actually comes back into circulation. About two thirds of all
our coins are actually recircular related, day in and day out,
and it's the mint only makes about a third of
the new coins. But I take your point. Look, you
(06:07):
know the way we buy and sell things, they certainly
purchase things have change. Post COVID. People got more comfortable
with ordering online and you know, using their charge card
or doing curb side pickup with a you know, a
restaurant and not using physical cash in currency. They're still
transactions under twenty five dollars, over forty five percent of
(06:29):
those are still made in cash. So so for the
lower transactions twenty dollars thirty dollars, still a lot of
cash use out there, and it's it's important to have
accurate pricing and the lower denomination coin mark.
Speaker 1 (06:43):
Are people still collecting pennies to the extent that they were,
you know, twenty twenty five, thirty years ago. I know
that they're they're not as as valuable based on the
you know, the the metal content, But are do people
still collect pennies in the way they used to roll
them up?
Speaker 2 (07:00):
We're seeing a decline in that. Really that that matches
some of the decline in use of cash and coin
in the economy. We used to see school groups, for example,
all across the country that would do you know, penny
drives for a new flag pole or computer system, and
those have dropped off as people just don't have as
much loose change around it. But it's still quite a
(07:22):
significant number. I was just you know, doing a McDonald's
drive through last week and looked down in the Ronald
McDonald's Children's charity bin and there were a large number
of coins in there. So I think it's still a
significant fundraiser for the charities that use it, but not
at the level it would have been four or five,
ten years ago.
Speaker 1 (07:40):
Yeah, it's certainly fascinating. We appreciate the insight Mark Weller,
we call
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