As we have often seen, the science of economics is inexact. One theory after another has been proven wrong; experts crunch numbers to predict that prosperity (or doom) is just around the corner, and they seem to be right even less often than weathermen.
I’m no scientist, but I’m capable of being wrong, too, so here’s one reason I think the U.S. economy has stagnated: it’s all those pennies you have in that jar in your bedroom.
OK, it’s not entirely your fault, but there are 300 million people in the United States, and we’re all doing the same thing you are — just tossing our spare change into a drawer and leaving it there. No one knows for sure how many pennies aren’t circulating, but estimates range from one-half to two-thirds of all pennies made by the U.S. Mint are now in hiding.
The number of one-cent coins produced by the Mint’s facilities in Philadelphia and Denver varies from year to year. In 2000, over 14 billion pennies were produced; in 2010, around 4 billion were made. Obviously some coins stay in circulation (or in your sock drawer) for many years — it’s believed that there are a total of at least 140 billion pennies floating around out there. So that would be… wait a second while I divide by… carry the one… I come up with $1.4 billion in pennies! That’s too much to leave in ash trays by cash registers, don’t you think?
Here’s another thing: Until 1982, the Lincoln cent was at least 95% copper, but as that metal became more expensive, the formula changed. It is now 97.5% zinc and 2.5% copper — basically, Abe Lincoln’s little portrait is a disc of copper-plated zinc.
Even so, the Annual Report of the U.S. Mint stated in 2010 that it cost the Mint 1.79 cents to make each penny, when costs of materials, production and shipping are included. So we taxpayers are losing money by not keeping those coins in circulation. Think about it — the more times a penny changes hands as part of an actual transaction, the cost of producing it is effectively reduced, because a replacement doesn’t have to be minted; we’re getting our money’s worth from it.
By the way, some geniuses got the idea several years ago that pennies — especially the pre-1982 models — could be melted down and sold to metal recyclers, since the copper content was worth slightly more than the coin was worth. As a get-rich scheme, this is about as practical as selling your hair — you need a heckuva lot of it to make any serious money.
Besides, if you get caught melting down U.S. coins for their copper content, it’s a $10,000 fine and/or a maximum prison term of five years. To make matters worse, your attorney probably won’t accept payment in pennies, and in prison, coins don’t have as much buying power as cigarettes.
In Benjamin Franklin’s day, a penny saved was a penny earned. In our times, though, a penny saved is just clutter. But if you take that penny and put it with all the other loose coins in your stash… you probably have enough to buy yourself something nice, like batteries or a magazine. Go ahead, you deserve it — and hey, you’ll be helping our economy. A grateful nation thanks you.