Philip Diehl once served as the director of the US Mint, and he has moved on to work as president of US Money Reserve. The US Mint has persisted in keeping the penny in production, but Philip believes that it is time for the penny to go. The video of his interview on CNBC’s Squawk Box is below, and his thoughts on the penny are discussed in this article. Philip makes an interesting case for eliminating the penny from production.
#1: The Penny Costs Far Too Much To Produce
Every penny costs 1.8 cents to create, and the penny itself is losing almost a penny every time one is made. Philip has noted that people are much better off leaving pennies on the ground, and the penny is no longer vitally necessary for cash transactions in America. The overwhelming expense of the penny alone is reason enough to discontinue its production.
#2: Everyone Uses Credit Cards Now
Credit cards and debit cards represent nearly 75% of transactions today, and cash transactions make up the other 25%. Anyone who has lobbied for the penny notes that prices could go out of control, but Philip argues that retailers would change their prices to prevent trouble. Philip is right in thinking that prices could change easily, and the lack of cash transactions makes the penny less important.
#3: The Penny Lobby Profits From The Coin
The penny lobby includes zinc producers, stamp producers and blank producers. These companies make quite a bit of money from the US Mint every year, and each company has lobbied heavily to keep the penny. Keeping the penny around benefits a few people, but the US Mint continues to lose money as it creates more pennies every year.
Philip makes a compelling case for discontinuing the penny, but anyone who is lobbying for the penny will use outdated ideals to help keep the penny going. A coin that loses nearly its entire value as soon as it comes off the press is not good for the US economy, and Philip Diehl believes that the US Mint has hard decisions to make in the future.