Another Creative Way For the Government To Waste Money

Posted on April 21st, 2006 by Christopher.
Categories: Current Events & Politics.

What happens if a penny is worth more than one cent?

That is an issue the U.S. Mint could soon face if the price of metals keeps rising. Already it costs the mint well more than a cent to make a penny.
This week the cost of the metals in a penny rose above 0.8 cents, more than twice the value of last fall. Because the government spends at least another six-tenths of a cent above and beyond the cost of the metal to make each penny, it will lose nearly half a cent on each new one it mints.

Another real problem could come if metals prices rise so high that it would be economical to melt down pennies for the metals they contain. Think about this, basically it could become economical to actually MELT pennies down. I’ve been ponderng this a bit tonight, eventually the costs of the metals in pennies should rise above the 1 cent mark at which time you would be getting very high return on investment by just trading dollars into for pennies and melting them down. If the cost of the individual metals is 1.1 cents and you bought thos metals for 1 cent your making a 10% ROI. (OK, yes this is so over simplified it’s not even funny but it’s still an interesting dilema) .

Asked if the mint had a backup plan for what it will do if zinc prices rise far enough that it could pay to melt down pennies, a spokesman said that such issues were for Congress to decide. Perhaps the mint could go back to making steel pennies, as it did during World War II when copper was needed for the war effort. Personally I suspect they won’t do anything in the short term, the cost of changing over equipment and processes would be very expensive.. the only real solution would be to abolish the penny.

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