Philip Diehl recently gave an interview on CNBC to discuss the demise of the penny. Diehl is the president of U.S. Money Reserve and previously served as a Director of the U.S. Mint. His appearance on Squawk Box focused on why the penny should no longer be minted. Essentially, people really don’t use the penny like they once did. Also, the government has to spend a lot of money to mint pennies. With such diminished need, minting the penny is a waste of funds.
The amount of money spent minting pennies is around $105 million per year. All of that money could be saved by retiring the penny. Many do resist the any suggestions to eliminate the penny.
One reason the penny is still minted is due to worries over the economic impact in the aftermath of its elimination. By ceasing to mint pennies, inflation is a purported likely outcome. Diehl dismissed this notion on the interview. In fact, he pointed out the argument is an outdated one due to the way people pay for things. In modern times, roughly 75% of all transactions are performed electronically. Payments made online with a credit card and those in stores with a debit card are examples of electronic payments. People simply do not use cash and coins like they used to.
Anyone affiliated with U.S. Money Reserve knows the business of coins. The Austin, TX company does not del in copper pennies. The coins sold are made from precious metals. The gold, silver, and platinum coin sold by U.S. Money Reserve are legal tender, and they are perfect investment vehicles for those hoping to expand a portfolio.
Gold coins are always going to have value. The future of the copper penny is no so bright. As more and more transactions are processed electronically, the less the one-cent piece will be needed. In time, the penny will be no more.