A penny saved is ... a real bother

As I write this, our nation is contemplating the purchase of $700 billion in bad debt, more money than the entire Iraq fiasco has cost us to date. No one seems interested in discussing where the cash will come from. The Bush administraton has run up a massive debt of its own since taking office in 2001. There is no surplus to fall back on. And no one, it seems, proposes raising taxes to pay for the $700 billion pledge. As a result, do you hear that humming noise coming from Washington, D.C.? That hum comes from the printing presses being warmed up -- to print the money that will pay for this splurge.

And what's that anguished screaming you hear in foreign capitals? It comes from individuals and governments, trying to unload their dollar holdings -- buying euros or gold or other commodities -- as fast as possible, before they're hit by the greenback's further devaluation. For us here at home, expect sharply increased inflation, as we need more and more dollars to pay for the same goods and services.

But let's turn our attention from great matters of global finance, which just makes our head hurt, and look at something related, but closer to home.

On my dresser top is a messy pile of coins, mainly pennies. It has been there for a long time, sometimes growing higher, sometimes shrinking lower-- but, over time, climbing higher and higher, spreading to the edges and falling onto the floor. I also have boxes of pennies stashed away from previous frenzied attempts to clean up my dresser. I try to remember each day to put a few pennies in my pocket, so I can avoid getting more pennies in change, but I usually forget. I'm inundated.

At the same time that the government was taking steps, in effect, to radically devalue the dollar, the U. S. Mint was announcing plans for the humble Lincoln penny. To celebrate Lincoln's 200th birthday, the reverse of the penny is being redesigned in four different forms, each with a different scene from Abe's life. This new issue will apparently encourage collectors to seek them out and hold onto them. As if there was any problem with people holding onto pennies.

The real problem is that it now costs more than its face value to make each penny. In 2007, it cost 1.7 cents to mint a penny. As a result, the government had to make it illegal to melt pennies down and sell the metal. Thus the penny is different from the quarter dollar. With quarters, the government makes a profit from every quarter that get socked away in boxes or put into collections, because its face value is substantially more than its cost to produce.

Despite the fact that it loses money on every new penny, the government put 7.4 billion new pennies into circulation in 2007, and now is encouraging collectors to demand even more of them by its commemorative changes in design.

The purchasing value of the dollar in the 1950's was almost ten times what it is today. In other words, a dime bought as much as today's dollar. A penny bought as much as today's dime. Americans got along fine without 1/10 cent pieces in the 1950's; they'd get along fine without pennies today. Even the nickel borders on useless, worth the same as a half penny in the 1950's.

Britain abandoned its half penny coin -- worth roughly the same as our penny -- in 1984. We should stop making pennies today, and certainly not encourage additional demand for a coin that costs more to make than it's worth.

Maybe then, finally, I could once more see the surface of my dresser top.