Motley Fool Hidden Gems Investing - Get Rid of the Penny

Episode Date: December 8, 2020

A single penny costs more than two cents to make, which means the U.S. government loses roughly $90 million a year on its production. Stephen Dubner, co-author of the bestselling "Freakonomics" books and host of “Freakonomics Radio”, makes the case for getting rid of the penny altogether.   Learn more about your ad choices. Visit megaphone.fm/adchoices

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BetMGM operates pursuant to an operating agreement with iGaming Ontario. With a Motley Fool Money Extra, I'm Chris Hill. Just a few months ago, the Federal Reserve weighed in on a specific economic ripple effect of COVID-19. Namely, a national shortage of coins. The coins haven't disappeared, they're just not being circulated for obvious reasons. and more local businesses are asking more people to use digital payments whenever they can. The situation reminded me of a conversation I had years ago with Stephen Dubner, host of Freakonomics Radio, and one half of the team that has written several best-selling Freakonomics books.

He also hates the penny. So much so that if it were up to him, the penny would be gone in a heartbeat. If I get the magic wand, I will definitely eliminate the penny, but only if I have like 20 wishes and that's number 20. All right. So I know I sound like an anti-penny zealot and I am, but only because I don't even know how it got started, Chris. I think I just casually wrote about, you know, throwing away pennies when I get the change

because who on earth, you know, the penny is just a ridiculous thing. Inflation has rendered it literally almost valueless, plus which we're paying taxes to our government to make the penny, which costs a lot more than a penny to make. And when you look at who are the biggest defenders of the penny, one of the biggest organizations is a group called Americans for Common Sense, C-E-N-T-S, which tells us how great the penny is that children do penny drives to raise a lot of money, to which I say, why can't they do a dollar drive and raise more money? Is the penny some magical thing? They tell us that if you round up to a nickel, think of how much more expensive things would be for people, which is totally idiotic in my view.

And it turns out that the biggest lobbying group for the penny is basically funded by the zinc industry, which supplies the raw material for the penny. So to me, it's a slam dunk. There's no use. The only reason we still have the penny is because of tradition and inertia. And if you look at other, you know, modern countries, they routinely eliminate their smallest currency that inflation invalidates and why we haven't is beyond me. But I have to say, I've stopped caring because it was just too much. To care so much about something so stupid was

just a waste of my time. So I give up. To anybody out there who wants to take up the anti-penny baton, power to you. You can read everything I've written about. I'll give you some ammunition, but I'm off that train. For what it's worth, the U.S. got rid of the half penny coin in 1857. We'll see how much longer the penny can hold on. I'm Chris Hill, thanks for listening, we'll see you next time.