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The Penny’s Last Stand: Why Trump’s Call to End Minting Makes Cents – In a bold move that has reignited an age-old debate, President Trump announced on Truth Social that he has instructed the U.S. Treasury to halt the production of pennies. His reasoning? The cost of minting these tiny copper-coated coins far outweighs their value. With each penny costing taxpayers 3.7 cents to produce in fiscal year 2024—a staggering 20% increase from just two years prior—the math simply doesn’t add up.

While this decision may seem symbolic at first glance, it underscores a broader push for efficiency within the federal government, spearheaded by the newly formed Department of Government Efficiency (DOGE), led by none other than Elon Musk. According to DOGE, eliminating wasteful spending—including the $179 million spent producing pennies in FY2023—could save billions. But is scrapping the penny really the right move? Let’s dive into the arguments for and against.

Why Get Rid of the Penny?

The case for abolishing the penny is rooted in simple economics: it costs more to make than it’s worth. This isn’t a new issue; Canada eliminated its penny in 2012, citing similar concerns about inefficiency. Since then, cash transactions have been rounded to the nearest five-cent increment without significant disruption . Australia and New Zealand followed suit decades ago, proving that economies can function smoothly without the smallest denominations.

Proponents argue that removing the penny would streamline commerce and reduce unnecessary expenses. After all, Americans already discard millions of dollars’ worth of coins annually—approximately $68 million per year. If people are throwing away pennies anyway, why continue making them?

Moreover, the rise of digital payments has diminished the need for physical currency altogether. As e-commerce continues to grow globally—projected to reach 33% of total trade by 2028—the relevance of small-denomination coins like the penny becomes even less clear.

Potential Challenges

Despite the apparent logic behind ditching the penny, there are valid concerns about what this change might mean for everyday consumers and businesses. One major hurdle is how merchants handle cash transactions once the penny is gone. Without pennies, prices would need to be rounded to the nearest nickel. Critics worry this could lead to price inflation if retailers consistently round up rather than down.

TD Cowen analyst Jaret Seiberg highlights another potential snag: managing the transition period. Merchants might struggle to adapt to a dwindling supply of available pennies while adjusting their systems for rounding. To address this, Congress would likely need to pass legislation allowing for standardized rounding practices, much like Canada did over a decade ago.

There’s also the sentimental factor. For many Americans, the penny holds nostalgic value, symbolizing thriftiness and tradition. Removing it from circulation could feel like losing a piece of history—even if it’s not particularly practical.

Lessons from Other Countries

Canada’s experience offers valuable insights into how the U.S. might navigate this shift. When the Canadian penny was phased out in 2012, initial skepticism gave way to widespread acceptance. Cash transactions were rounded to the nearest five cents, but studies showed no evidence of systemic price increases. Consumers adapted quickly, and businesses reported minimal disruptions.

Australia and New Zealand provide further examples of successful transitions. Both countries eliminated their one- and two-cent coins in the 1990s, opting instead to round cash transactions to the nearest five or ten cents. These moves were largely seamless, demonstrating that economies can thrive without the smallest denominations.

If the U.S. follows suit, it could reap similar benefits—not only in terms of cost savings but also by simplifying transactions for both consumers and businesses.

A Broader Push for Efficiency

Trump’s directive aligns with the broader mission of DOGE, which has already identified over $1 billion in potential savings across federal programs.

By targeting inefficiencies like penny production, the administration aims to redirect resources toward higher-priority initiatives. In fact, this approach mirrors recommendations from experts who advocate for “ruthlessly prioritizing” government spending to ensure taxpayer dollars are used effectively.

Eliminating the penny could serve as a low-risk test case for larger reforms. If successful, it might pave the way for reevaluating other outdated policies or programs that drain public funds without delivering commensurate benefits.

Looking Ahead

Of course, any major policy shift requires careful planning and communication. To avoid confusion during the transition, the Treasury and Congress must work together to establish clear guidelines for rounding and educate the public on what to expect. Retailers will also need time to update their point-of-sale systems and train employees.

Ultimately, the question boils down to whether the penny still serves a meaningful purpose in today’s economy. Given the rising costs of production and the declining use of cash, the answer seems increasingly clear. While some may lament the loss of this iconic coin, the potential savings and operational efficiencies make a compelling argument for moving forward without it.

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https://www.wsj.com/finance/currencies/trump-tells-u-s-treasury-to-stop-minting-pennies-3291ee2c?mod=finance_lead_pos2

https://mgiedit.org/trumps-2025-tariff-surge-a-1-trillion-trade-war/