Time to Start Collecting Pennies

The debate over whether to get rid of the worth-more-as-metal-than-currency penny has gone on for a number of years as inflation has marginalized the coin’s usefulness. In the February Chicago Fed Letter a senior economist at the Federal Reserve Bank of Chicago, François R. Velde, outlined a plan to rid the country of the 1 cent penny entirely. He does not advocate debasing pennies, making them out of cheaper materials than the current mix of Copper plating around a Zinc core, which has been done previously (think steel pennies). Rather, Verde proposes changing the value of the penny from one to five cents. As the New York Times article explains, there won’t really be any financial wizardry involved; the penny you hold would immediately increase in value five fold. That’s the best rate you can get short of winning the lottery and it’s enough to make me want to gather up thousands of pennies to store under my mattress.

My only thought is, when if it’s decided that The Fed will change the value of the penny, wouldn’t there be a mad rush to acquire pennies before the switch? You’d definitely see me in line at the bank.