President of U.S. Money Reserve, Philip Diehl, appeared on CNBC’s Squawk Box to talk about the possibility of eliminating the penny from American currency circulation. According to the original article found on PR Newswire, the interview aired on December 30th and Diehl favored taking the penny out of circulation because he believes the cost to produce it is more than its worth.
Diehl went on to say that people don’t use the penny anymore adding that if a person takes the time to bend over and pick up a penny they find on the street they are actually getting less than the minimum wage for the second it takes to do so.
Andrew Ross Sorkin, host of the morning talk show, mentioned during the interview that some economists believe removing the penny is doing to result in distorted prices and eventually maybe even inflation of prices. However, Diehl combated the thought by stating that people have been saying that for 25 years, but today is a different landscape.
Diehl added that he believes most businesses would round down any penny transaction totals they had to show good faith towards their consumers. Due to the tough competition in the marketplace he believes that businesses are going to keep their prices fair which means that the market will regulate itself.
Critics of the move believe that it would be actually more expensive to get rid of the penny because doing so would mean more nickels would have to be produced. Nickels cost 9.4 cents to make which means that it is not as cost effective as the penny. However, the copper nickel mix of the nickel could be slightly altered to make it a better move. If the penny is taken out of circulation taxpayers could be saved as much as $105 million every year.
Diehl is in a position to make a statement about the penny because not only is a former U.S. Mint Director, but he serves as the U.S. Money Reserve. The U.S. Money Reserve is one of the largest distributors of platinum, gold, and silver products that are U.S. government issued. The company has a highly trained team that includes everyone from numismatic professionals to coin research experts to make sure that they are able to buy precious metals with the highest profit return.