Why the Penny Should be Retired
It costs 1.2 cents to make a penny (1 cent)!
Now all the currencies in the world have value only because everybody who uses them agrees they have value. The RMB, for example, is rarely accepted in the United States because of rampant counterfeiting and capital controls by the Chinese government. The USD, one of the most counterfeited currency in the world, is accepted by everybody without question because it is THE currency of trade and commerce in the world (simply because the oil states have agreed to trade oil in USD).
The SGD was not widely accepted in the early days of its use too. It was with great pride then, that I found the SGD accepted at the Leonardo da Vinci airport back in 1991 (but not the MYR!) Today, despite the Singapore government"s refusal to internationalise the SGD, it remains a currency of choice in countries like Indonesia (especially in islands like Batam and Bintan).
Now, one of the reasons why counterfeit currency is never found in smaller denominations comes from the fact that there"s a production cost involved in making the notes. The more sophisticated the anti-counterfeiting technology used, the more expensive it is to produce the notes - so counterfeiters almost always counterfeit the more expensive notes, so that it"s more worth it.
So when the penny coin kept being circulated and produced, despite the fact that no counterfeiter would ever produce it, tells of how ridiculous things can get sometimes. Singapore retired that coin many years ago. Imagine using a USD100 note that costs USD120 to produce and you"ll really balk at the logic behind.
But as usual, there"s really no logic involved (or there is, depending on your point of view). The penny is being kept in production simply because it"s supporting one industry - the zine producers (the penny is made of zinc). About 1/3 of the cost of producing the coin comes from the cost of the metal. Any attempts by the government to retire the penny would be met with fierce opposition and lobbying by this powerful industry.
I think I hear some gasps from my American friends. Maybe it"s time you support your congressmen who are lobbying for the retiring of the penny. Then perhaps some the debts can be paid off, and the world can heave a sigh of relief (the world will probably collapse if the USD ever collapses...which I personally think it will one day)!
Michael Chan used to be a teacher, before he left to run a managed fund. When his business failed, he returned to teaching, and is currently a Department Head at the Shanghai Singapore International School.
He constantly applies his business acumen to his job, to add value to his employer. His thoughts on K-12 education and on financial education can be found in his blog at Source: http://ezinearticles.com/
..AND PENNY'S AN ICE CREAM CLONE - Sunday Mirror
Every penny counts - Times Record News
Carbon trade ads coming soon - ABC Online
The Age Carbon trade ads coming soon ABC Online, Australia - Federal Climate Change Minister Penny Wong says the Government is about to mount an advertising campaign to push the merits of its controversial carbon ... Penny Wong kept mum on climate change Penny drops on climate change Climate Change Minister Penny Wong says failure 'not an option' -