Pennies are useless. Actually, they are worse than useless. In a way, they are actually harmful. Why? Because they are supposed to function as money. Money is used to “facilitate the exchange of goods and services” and pennies simply aren’t valuable enough to do that. They used to, but thanks to inflation, the buying power of the penny is so small that its practically useless. When is the last time you saw a penny on the ground and actually bothered to pick it up? Never, I know. Simply put, the opportunity cost to pick up, sort and deal with pennies is more than the penny is worth.
So we’ve accepted that pennies are useless, but harmful? How could that be, you might ask? Here’s how. Pennies actually cost more to produce than they are worth. It costs around 1.8 cents to produce a penny. And the U.S. mint continues to make millions of pennies a year.
If you want to know more about how pennies suck (and nickels too!), I’ve linked to a couple of great videos that discuss that in further detail. Next time, I’ll be discussing the economic benefits of replacing the dollar bill with dollar coins.
CGP Grey’s Death to Pennies