Thursday, April 24, 2008

Penny For Your Thoughts?

Christmas is a comin’ and the geese are getting’ fat!
Would you kindly drop a penny in a poor man’s hat.
If you haven’t got a penny, then a ha-penny will do!
If you haven’t got a ha-penny, may God bless you!

No need to check your calendars! You still have time to do your Christmas shopping!
I wanted to see how many history buffs remember the Half penny Crisis of 1984*? That was the year that Great Britain removed the modern half penny from circulation. After that, merchants were forced to round up or round down prices to the nearest whole penny! (Horrors!)

Something similar is overdue here. It currently costs 1.7 cents for the U. S. government to manufacture a single penny. I know! We lose money on every sale, but we make up for it on the volume!

Back in the ‘60s and ‘70s, thirty pennies would buy you a gallon of gas. Now it takes over 300 of them to do the same thing! The copper penny has outlived its usefulness. There’s talk of changing the penny to use less copper and more steel, but why bother? Get the government out of the useless copper trinket department and free up that copper for other commercial uses.
Personally, I try to get rid of pennies as soon as I can. They are virtually worthless (except to make!). Most of mine end up on dressers and tables. I do try to carry four with me at all times in case I have to pay cash for something. (As a means of not having any more foisted upon me!) I try to use a credit card for most things (including groceries, paying off my balance every month) and take advantage of cash back and airline mile offers.

I think some people fear that the demise of the penny will mean that prices will creep up, as merchants round up their prices to the nearest nickel. I think that fear is unfounded. Marketers know that keeping prices rounded down, sound like less money and encourage people to spend. If $9.99 sounds less than $10.00 psychologically, then in a “penniless” world, they’ll have to round down to $9.95 to keep the same psychological edge. You could actually save up to four cents on the dollar if the penny goes the way of the ha-penny! Or, at least, four cents on every item purchased!

If I may update Ben Franklin for this modern age:

“A penny saved is a waste of time!”

*No, there wasn’t a crisis in 1984 and there won’t be one when our penny goes the way of the dodo, either.

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