Take away the penny.

[KvHotDog4]

Something that's important to consider is that the extinction of the penny would really only need to affect cash purchases, and business-to-business transactions generally are not using cash. Any other form of payment could still account for individual cents. As quickly as we are progressing toward a cashless society, I believe we will see discontinued use of the penny as a physical object, but not the value of $.01, which could still easily be used.

What could potentially be a real game changer would be to discontinue use of the penny and the nickel. To quit using both of those coins could render the hundreths column obsolete in consumer pricing. Then we could be looking at goods in a pricing system based on a 1/10th dollar rather than a 1/100th (or 1/20th). So your prices for individual goods would be $1.00, $1.10, $1.20, $1.30, etc. Again, businesses will not lower prices to accommodate the change in currency policy because there would be no neutral ground for them. They would either lose money by lowering prices to meet the new standard, or gain money by raising prices to meet it. Of course, that's assuming that the price was not at an even 1/10 dollar increment to begin with.

I think the effects of the discontinuation of the nickel are probably more clear-cut at this point than the effects of losing the penny, simply because that second place after the decimal would no longer have a reason to be on price tags.

There's really waaaaaay more to it than this, but at least this is some food for thought.

If the penny did not exist then neither could the .01 because you cannot exchange a currency that doesn't exist.

Yes businesses do exchange money without ever seeing the physical cash, but if they still use the .01 it will have to be carried out until it reaches the consumer. Products change hands several times before reaching the retail stores that you and I purchase them at each time it is traded (before us) it is bought and a % is added. If each business that trades the item has to round up to .05 they will then add that .05 to their cost which will make their % go up, then bought again round up to .05 another % and so on until it finally reaches the retail stores where we can purchase it.

If businesses don't round up and still use the .01 currency then the retail stores have to eat the cost of rounding up the grand total because they purchased the item with a currency that doesn't exist??? This would not work unless the .01 was eliminated and in that case we the consumer would be the ones paying the price of every product rounding up at most .04 plus the % increase on an additional .04 every time it changed hands (as few as 3 as much as 10-20). Then after all that increase our grand total will be rounded to the nearest .05, we would only see the grand total being rounded, but imagine how many times the total of each product has already been rounded before it gets to you.

That also means if you have anyone working for you then you will have to round their pay also because you don't have a .01 currency, also any raise would have to be in .05 increments because you can't be paid in a currency that doesn't exist. This doesn't mean bigger raises it will mean less raises. Then also when paying out after you as an employer takes out the governments % then it will be up to you to round your employees pay to the nearest .05 and that will have to be out of your pocket.

I honestly don't see how anyone would gain from removing the penny, its not much as one but it adds up quick.

I think our government should learn to manage their own money before trying to control ours.

 

[Flicka]

And then there's the quarter, which opens up a whole different can of worms. It would still use the hundredths column, but only for 1/5th of its value. That seems pretty wasteful.

Maybe if we got rid of the penny and the nickel, then we could just use dimes and half dollars. There are a lot of angles to it, but it really could go a lot of different directions.

Man, I gotta get more than two hours of sleep tonight.

Sent from my iPhone using The Force

 

[Flicka]

If the penny did not exist then neither could the .01 because you cannot exchange a currency that doesn't exist.

I'm at a gas station, so I'll respond to this part now.

The price of "regular" is $3.739 per gallon. When was the last time you saw a 1/10th cent coin in circulation?

I'll reply to the rest when I get back to a computer.

 

[majestic12]

The funny thing is some are worried about the cost of fuel going up. Has any one ever noticed that the cost of a gallon of gas is 3.649? They are already taking advantage of the rounding we all learned in grade school, most people haven't realized it.

Also the one cent price will still exist they would just be rounded to the nearest 5 cent mark.

There is nothing saying they will always round up ie. 1.06 rounded up to 1.10. If rounding to the nearest 5 cents 1.06 will be rounded to 1.05. WAIT people cry won't the shop owner loose out. NO they won't the 1.08 prices will be rounded up to 1.10 so it will all come out in the wash.

For those visual learner here is a video explaining the wonder post my ChattanoogaBusa.

 

[gurrera]

You are not getting the point

If something cost $1.31 each.

That item will be rounded out to $1.35 be for it goes to the store.

If you by 10 of them, then you will be paying $.40 more at the register, Then add the 7% then round that out to the narist 0 ro 5.

That will add in the long run.

 

[Flicka]

If the penny did not exist then neither could the .01 because you cannot exchange a currency that doesn't exist.

Yes businesses do exchange money without ever seeing the physical cash, but if they still use the .01 it will have to be carried out until it reaches the consumer. Products change hands several times before reaching the retail stores that you and I purchase them at each time it is traded (before us) it is bought and a % is added. If each business that trades the item has to round up to .05 they will then add that .05 to their cost which will make their % go up, then bought again round up to .05 another % and so on until it finally reaches the retail stores where we can purchase it.

If businesses don't round up and still use the .01 currency then the retail stores have to eat the cost of rounding up the grand total because they purchased the item with a currency that doesn't exist??? This would not work unless the .01 was eliminated and in that case we the consumer would be the ones paying the price of every product rounding up at most .04 plus the % increase on an additional .04 every time it changed hands (as few as 3 as much as 10-20). Then after all that increase our grand total will be rounded to the nearest .05, we would only see the grand total being rounded, but imagine how many times the total of each product has already been rounded before it gets to you.

That also means if you have anyone working for you then you will have to round their pay also because you don't have a .01 currency, also any raise would have to be in .05 increments because you can't be paid in a currency that doesn't exist. This doesn't mean bigger raises it will mean less raises. Then also when paying out after you as an employer takes out the governments % then it will be up to you to round your employees pay to the nearest .05 and that will have to be out of your pocket.

I honestly don't see how anyone would gain from removing the penny, its not much as one but it adds up quick.

I think our government should learn to manage their own money before trying to control ours.

Okay... Your whole post assumes that businesses buy their goods one at a time. Either that, or that they are buying larger quantities of goods, but treating each unit as a separate transaction. It also effectively assumes that those goods are being bought with cash, and that the rounding to the next $.05 is being done on a per unit basis. That simply is not the case. You know that Walmart isn't buying one DVD per order. They're buying thousands at a time through accounts with each of their vendors which, I guarantee you, are not being paid with cash, and therefore remain unaffected by the demise of the penny as a coin.

Majestic12's video illustrated very well that the discontinuation of penny production doesn't mean that the amount, $.01, no longer exists. It simply means that once all the pennies have been worked out of circulation, you'll no longer have the ability to pay an amount < $.05 with physical currency.

I was not aware that Canada had taken the step to end the penny, but it's good to see that they are moving in a sensible direction. I also like the approach they are taking toward either rounding up or down as normal. I was coming from a money-hungry Capitalist perspective when I said always round up, but the fair approach would be to round normally and let it all work out in the bottom line.

And to your point about paychecks... As a business owner, I could probably stand to tack on an extra < $.04 to make someone's check come out to a cashable amount. It wouldn't be a big deal on the business end, but I'm sure it could cause some frustration to the employee (and the cashier of the check) if it didn't end in an evenly cashable amount.

 

[Blanca BusaLess]

I don't understand why we don't let china make them?
Everything else is?

 

[mrsBusawhipped]

I will gladly take any unwanted pennies.

 

[Blanca BusaLess]

You are not getting the point

If something cost $1.31 each.

That item will be rounded out to $1.35 be for it goes to the store.

If you by 10 of them, then you will be paying $.40 more at the register, Then add the 7% then round that out to the narist 0 ro 5.

That will add in the long run.

If you took ten and went to register it would ring up $13.10 and you wouldn't pay anymore.
They are not going to round up each item before sale?

Buy one and yes you'd pay .04 cents more for it.

 

[Flicka]

You are not getting the point

If something cost $1.31 each.

That item will be rounded out to $1.35 be for it goes to the store.

If you by 10 of them, then you will be paying $.40 more at the register, Then add the 7% then round that out to the narist 0 ro 5.

That will add in the long run.

Point taken, I just don't agree with it.

 

[KvHotDog4]

My point is if something is going to cost a .01 then that penny has to be exchanged somewhere along the line. Yeah Wal-mart buys in the thousands even millions, but each item has its own value doesn't matter how many you buy they still have their own individual value and once it gets down to the consumer its up to us to pay the extra.
Wal-mart doesn't pay in cash but the amount has to be transfered between accounts if its in the amount of a penny then that penny has to be transfered, but it doesn't exist so where does it come from? Using a card is the same as using cash you are still spending your money the only difference is it is moving directly to their account. How can a .01 balance be transfered from one account to another if it doesn't exist? To spend it on a card it still has to be transfered.
You being a business owner would you be willing to round up on everyones pay and then also round up on all your expenses? When doing this would you let it cut into your personal profit or would you pass it on to the consumer, when passing it on to the consumer would you be able to be as competitive with your pricing. Where I work we compete with China, which means we have a very low profit margin. Now we would have to pay more for our raw goods to make our product that we already have a very low margin on and if we raise the prices our customers go to China, how is this going to work?

The penny doesn't exist so therefor it cannot be transfered in anyway. You cannot spend something that doesn't exist. Even if its only on paper the physical would have to exist to be able to transfer, there is no way around that. That video makes good since up until the point where it says the .01 would exist if paying with a card......how can it exist if there is no physical proof of it!?!?!?!?!?

 

[kml]

That's not exactly how it would work.

First, assume that the merchant is going to round your total up to the nearest $.05, not down. That's a safe assumption.

But remember, that the effect is not per unit purchased, it is effective only on the balance of the entire transaction. This also means that if the total balance ends with a 0 in the tenths column, or with a 0 or 5 in the hundreths column, there will be no added expense to you because there is no rounding needed.

Let's break it down by vehicle at a price of $4.019/gallon for all vehicles...

Truck: 4.019 x 50 Gal = $200.95 --- This amount ends with a 5 in the hundreths column (an even nickel). No rounding required, so no extra cost to you.

Car: 4.019 x 12 Gal = $48.228, or $48.23 when rounded up to the next even cent --- Round up to the next nickel, you pay $48.25 total.

Busa: 4.019 x 6 Gal = $24.114, or $24.12 when rounded up to the next even cent --- Round up to the next nickel, you Pay $24.15 total.

So if you fill up each of those vehicles twice a week, that's 104 times per year.

104 x (.02 + .03) = $5.2

So... at that given fuel price and number of fill-ups per year, and if we are conservative and always round up instead of to the nearest cent or nickel, this would cost you an extra $5.20 per year.

Not all that bad.

(I'm doing this on the fly, so correct me if I miscalculated anything )

Maybe he pumps one gallon of gas goes in and pays for it, pumps another gallon of gas, pays for that one and so on and so forth...

Huh?!? smarty pants? How do you know?



cheers
ken

 

[Rainbow7]

Use golf balls, they work better.

Yeah...but it's harder to explain to the popo why you are carrying golf balls, rather than a handful of change.

Edit: KvHotDog - You are panicmongering over nothing. Having lived in not one but two countries which have eliminated physical currency of less than 5 cents in value, I assure you that electronic payments are still charged in 1 cent increments, e.g. diesel fuel in Australia typically costs around $1.49/litre. If I bought exactly one litre of diesel and paid via Visa I would be billed exactly $1.49.

Gurerra - You clearly don't understand how rounding works. If an item comes to, say, $2.11 it would be rounded back to $2.10, not up to $2.15 as you erroneously seem to think.

 

[card16969]

they say the average person will give away $1000 dollars to the gas station when paying for gas because of the fraction of a cent

 

[Flicka]

I don't know what else to say here without repeating myself. The way this will actually play out, you'll only notice a difference in your personal budget if you go looking for it, and it will be negligible. There's no reason to stress over it.

 

[majestic12]

I will gladly take any unwanted pennies.

I would mail you mine but the cost of the stamp to mail a few pennies. . . I don't know just seems like an expensive way to get rid of the jar/ paper weight consisting of pennies.