I have been a fan of abolishing the penny for several years. It costs more to mint than it's worth… it's seldom-used… and it makes the lives of people who use cash frequently (something I wish we all did a little more — but that's another post) unnecessarily more burdensome. But there have always been hurdles in dispatching with the 1¢ peice. Dropping the penny from circulation effectively (albeit on very small scale) raises the prices of everything for the poor of our nation — who disproportionately pay for things in cash. And then there's our nation's love affair with Abe Lincoln, whose face adorns the penny — which pretty much guarantees the coin's future.
So I was pleased earlier this week to read in the New York Times of a proposal put forth by Mr Velde of the Chicago Fed (PDF): keep the penny, but make it worth 5¢, then stop minting the nickel. Voila! We keep Abe in circulation, so there's little need for Illinois' federal delegation to get in a snit; the penny is now worth more than it costs to mint (a good thing™); and all the pennies out there are suddenly worth 5¢ — negating the "cost" of rounding prices that the poor would otherwise incur.
Brilliant.
Now... if only we could get a legislator to move on it.
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