U.S. Money Reserve president Philip Diehl recently did an interview with CNBC’s Squawk Box and explained why he felt the penny was more trouble than it’s worth and why he feels production should be discontinued on it.
“Nobody uses the penny anymore, I mean if you bend down and pick it up off the street, you’ll be getting paid less than minimum wage for your trouble. So most people just pass it up.”
The problem Diehl feels is that it costs more to produce than it’s actually worth, and he believes that the US Mint could save 10s of millions of dollars by eliminating pennies. Another reason he feels the penny is becoming obsolete is because the surge in electronic transactions as opposed to cash.
“The reality is”, he states, “that about 25 percent of all transactions are now in cash. The other 75 is in electronic forms of one type or another.”
He also said that usually the arguments about increased inflation come mostly from the penny lobby groups and that he feels that increased competition in the markets, would actually cause companies to not increase the price. In fact he thinks prices may be lowered. Or in his own words, “Why would you irritate a customer over a penny?”
The interviewer went on to say that while there may be some costs savings in eliminating the penny, he asked about eliminating the nickel as well. Diehl stated that the nickel was a different animal and that it’s “composition could be changed to make it more profitable.”
He went on to say that the main reason the penny was still being kept around is because of private interest groups that are responsible for printing the blanks, the zinc industry, and the Illinois congressional delegation due to Abraham Lincoln’s image being stamped on it.