Cancel the "penny", prepare for the "dollar"
The news that the penny coin costs about 12 pennies for manufacturing is not a question of cancelling the penny itself. It is a question of awakening and changing the government monetary policy. It simply means that not only the penny is devaluing, but also the dollar, the savings, the value of our job. And that is the real problem.
Some journalists have calculated that the existence of pennies costs the up to now about $436 million to the taxpayers. About $100 million can be saved every year if the penny is cancelled. OK. We can save this. But how we will save the trillions of lost value of everything else, caused by the same inflation that has made the penny look extremely ridiculous?
In 80s in Yugoslavia (not existing now) there was a profitable business of collecting coins and melting them into metal. The inflation was so high that the metal of coins has more value than its nominal. Of course, as you can guess, the Yugoslav dinar have lost is quality of being money and no one used it seriously. Instead the Deutsche Mark was the real used currency.
So the real decision of the problem with the "penny" is not in the penny itself. It is in much more responsible monetary policy, in stopping the money-print and starting some more conservative budget and fiscal policy. I.e. we must cut some of the costs we have no money for, balance the budget and repay the old debt, using real and earned with hardworking money. That is the right way. Money is the value of our production. Uncovered money mean nothing, do not create production and do not make us richer and better.
Solving only the "penny" problem, without solving the premises for it, that are the real problem, will simply mean very soon we will have a "dollar" problem.
Feb 20th 2013