There is a growing movement of people who want to get rid of the penny in the United States. They argue that it costs more than $0.01 to produce a penny, that pennies can’t really be used to buy anything, and that digital and electronic forms of money are making pennies obsolete.
These are many good reasons, and I agree with all of their statements. However, it makes me think about what money actually is, and how we buy and sell goods today.
If the penny were to be eliminated, some say, everything would have to be rounded to the nearest five cents, which would cause prices to go up. This makes sense as there is no justification for pricing something at a number too precise for even the smallest coin. Even with the penny still in existence today, there are numerous prices that are determined down to the tenth of a single penny. Gas prices often have three numbers after the decimal point. After the total amount of gas is pumped, the price will be rounded up to the nearest whole cent. Sales tax, interest, and other money calculations are completed very specifically and rounded at the very end.
The physical existence of the penny allows prices to be set to the hundredth of a dollar. We could eliminate the penny, but we could also go all the way and just halt any production of a paper or metal based value substitution system and go completely digital. If that idea scares you or sounds ridiculous, you have common cents.
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