I hadn’t intended to bring these home. I just couldn’t get rid of them.
I hadn’t tweeted in I don’t know how long, and I had forgotten how Musk had screwed things up.
I got a notification about a story in The New York Times magazine, and used the link to write this reaction:
You’re right. We shouldn’t spend millions minting the silly things. Or, for that matter, nickels, dimes or quarters. Or printing paper money. What do we need cash for anymore?
Before Musk screwed with Twitter, that would have appeared above the headline with an image from the story. Since that no longer happens, I looked and saw that my reaction would make no sense. So I’m writing this post.
What I was reacting to was this:
America Must Free Itself
from the Tyranny of the Penny
The piece begins:
I was disappointed to learn, recently, that the United States has created for itself a logistical problem so stupendously stupid, one cannot help wondering if it is wise to continue to allow this nation to supervise the design of its own holiday postage stamps, let alone preside over the administration of an extensive Interstate highway system or nuclear arsenal. It’s the dumbest thing I ever heard. I have come to think of it as the Perpetual Penny Paradox.
Most pennies produced by the U.S. Mint are given out as change but never spent; this creates an incessant demand for new pennies to replace them, so that cash transactions that necessitate pennies (i.e., any concluding with a sum whose final digit is 1, 2, 3, 4, 6, 7, 8 or 9) can be settled. Because these replacement pennies will themselves not be spent, they will need to be replaced with new pennies that will also not be spent, and so will have to be replaced with new pennies that will not be spent, which will have to be replaced by new pennies (that will not be spent, and so will have to be replaced). In other words, we keep minting pennies because no one uses the pennies we mint.
A conservative estimate holds that there are 240 billion pennies lying around the United States — about 724 ($7.24) for every man, woman and child there residing, and enough to hand two pennies to every bewildered human born since the dawn of man….
And so forth. You get the idea. Pennies are a huge waste; you’ll get no argument from me.
But what about other forms of cash?
I used to carry small amounts of cash in my wallet, 20 bucks or less at a time. Since COVID, I haven’t even done that. The only cash I regularly need is a quarter — one quarter — to pay for a shopping cart each time I go to Aldi. But when you put the cart back, you get your quarter right back out of the slot attached to the handle. One quarter, used over and over. (The system seems to work. The carts are in better condition than those at most stores. Ze Germans are clever…)
Sure, I know other needs arise — such as when you do business with someone seeking to avoid taxes. But that sounds like the stupidest reason in the world. Why should the government spend millions — nay, billions — to produce something that abets tax evasion?
I also realize that a lot of poor folks don’t have bank accounts, or debit cards or anything of that kind. But can’t that be worked around? Don’t the cards that have replaced food “stamps” suggest a way to address that need?
Of course, that means everyone would have to be more fully in “the system,” which might offend the sensibilities of our libertarian friends and neighbors. But why would a libertarian, of all people, want the government to waste his tax money on something as wasteful and inefficient as cash?
And if you understand the history of money — going back all the way to King Croesus of Lydia, who developed the very first standardized gold coins — the whole idea of money that everyone would accept (which is what makes it “money,” rather than, say, barter) was that the government issued it, granting something close to universal legitimacy. Back in the 6th century B.C., coins demonstrated that by having the king’s image on the “heads” size. Or, today, George Washington’s. Or the queen’s. And I saw some with King Charles on them in England this summer.
(This is why you see some libertarian fantasists today going for Bitcoin. Which indicates that they don’t fully understand what money is, and how you make sure it has lasting value.)
So why not some nice, neutral electronic credits instead? Oh, we could call them “dollars” if you like. We already do, with our bank accounts and debit and credit cards. Remember, only about a tenth of the real-life money we spend in today’s world is backed up by actual, physical coins and banknotes. This in no way inhibits commerce. Ask Jeff Bezos.
In fact, we’re not far from cash becoming passé. Europe is ahead of us on that, though. I had a terrible time getting anyone in Amsterdam to accept Euros. I came back with 50 euro or so in my wallet, and I had not meant to. I just couldn’t unload them. Dutch merchants generally wouldn’t accept contant geld; they preferred my debit card from Palmetto Citizens, and they particularly liked my Target credit card, which has tap capability. They’re really into tap over there.
A few days before, I’d had little trouble getting the English to take pounds. But in Amsterdam, forget about it.
So how long do you think we’re going to be minting and printing and in many cases carrying around these filthy things?
And how long should we?
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It’s not that no one would take cash. We had read before going that a lot of places in Amsterdam wouldn’t take cash, and other places would take ONLY cash. I didn’t run into much of the latter — maybe a lot of those businesses were in the famous red light district.
But if I’d known more, I could have spent more. For instance, we were in Amsterdam more than a week, and we went to the Albert Heijn a couple of blocks from where we stayed practically every day. We would only buy two or three things each time, so of course we went to the self-serve checkout.
I think it was on the day before we left that I learned that the full-serve line would take cash. A bit late for me. I wasn’t going to buy that much coconut-milk yogurt…
I didn’t include the usual “How about YOU?” question, and I should have, because I’m curious.
How many of y’all regularly carry cash these days, and why?
I enjoyed reading your post and wanted to chime in on the topic of cash—something that’s both a bit nostalgic and incredibly relevant in today’s rapidly changing economy.
Cash has traditionally been king. The clink of coins and the feel of paper bills are symbols of financial transactions that have stood the test of time. However, as we move deeper into the digital age, the way we think about and use cash is evolving.
Cash has always been about immediacy and certainty. When you pay with cash, there’s no middleman, no delay in processing, and no need for a network connection. It’s simple: you hand over the exact amount, and the transaction is complete. This directness is why cash has remained a trusted form of payment for so long.
But as you pointed out, we’re seeing a “digital ” shift. Cash is still king, but how “cash” looks and functions is changing. Digital payments, mobile wallets, and even cryptocurrencies are becoming more common, and they all represent new forms of “cash” that still hold the same principles of immediacy and certainty—just without the physical form.
When you pay through a digital wallet or a mobile app, the experience mirrors that of paying with cash: the money is transferred instantly, and the transaction is confirmed on the spot. But now, instead of carrying bills and coins, you’re carrying bits and bytes in your phone.
Even though the format is changing, the concept of cash is still very much alive. Digital cash, much like its physical counterpart, offers a level of security and convenience that continues to make it a preferred choice for many. In fact, digital transactions might even enhance the power of cash by making it more accessible and easier to use across different platforms and currencies.
Think of it this way: while we may eventually move towards a society with less physical cash, the principles that make cash so powerful—certainty, immediacy, and simplicity—are being translated into these new digital forms. So, in a sense, cash is still king, but it’s getting a modern makeover.
Now, let’s briefly touch on the math behind your playful mention of a “conspiracy” to keep making pennies. The idea revolves around the way prices are often set at amounts like $1.99 or $3.47, which require pennies to make exact change.
Here’s the simple math: If something costs $1.99 and you pay with $2, you get back 1 cent. These odd price points ensure that pennies remain necessary for transactions, keeping them in circulation. So, while the idea of a conspiracy is tongue-in-cheek, it highlights how pricing strategies keep these small coins in our pockets and tills.
While the coins in your pocket may slowly disappear, the essence of cash remains. It’s just taking on new forms that fit our increasingly digital world. Whether it’s paper bills or digital currency, the fundamental power of cash continues to drive transactions, providing the trust and immediacy we’ve come to rely on.
I usually start with $100 and use it sporadically over the course of a month or so .
As a libertarian, I support getting rid of pennies from the pure cost benefit stance. Businesses can round up or down to nearest nickel. Imagine if we took that same approach to all levels of government? A private business would stop making pennies tomorrow because it makes sense..
I do think it’s interesting that you think it’s easy for those without bank accounts to find a solution. I assume you agree that obtaining and showing an id to vote should be mandatory as well? We’re in the silly season where all the claims are made about how votes are suppressed because of the mythical large number of voters who are incapable of getting an id.
I have no problem with IDs for voting. I don’t feel strongly about it either way, though. If you remember, I’ve many times set forth that “issue” as one that illustrates the problem I have with these parties…
If you search for “voter ID,” you’ll find several instances when I’ve done this. Here’s an example from 2013, regarding South Carolina’s voter ID law:
Basically, I was saying that we didn’t NEED the SC law, but we didn’t need Eric Holder to fight it, either. Just something these people like to yell at each other about…
If Democrats put as much energy into getting ids for the mythical hordes they have claimed (since 2013 as you mentioned and longer), the need for them to make it an issue would disappear. It may have worked in 1965 but in 2024 the number of people without ids is miniscule… and those who don’t have them likely don’t care to get one.
While we’re getting rid of the penny, how about we get rid of the ridiculous $255 death benefit paid by Social Security to surviving spouses? I guarantee it takes more tax dollars to keep that archaic benefit going than $255… there’s probably dozens of bureaucrats in Washington making $100K+ each just to handle the forms, computer resources, etc. Scrap it. And then begin the process of overhauling the entire Ponzi scheme known as Social Security. If adult black men who statistically live shorter lives than any other demographic realized they paid all that money in for 40-50 years so that old white women who live to 90+ can get their checks for 30 years, they might be willing to try something different instead of a lousy annuity paid by other workers.
IDs won’t solve any issue.
If everyone has an ID, the usual whiners that whine all the time will complain that people were faking their ID. Just like Trumpers (including Trump himself) were accusing two poll volunteers in Georgia of fraud and almost ruining their entire lives when numerous investigations by Republican officials in Georgia proved they did nothing wrong.
Heckl, many states already have the requirement, and people are still complaining about it in those states.
Those folks won’t be happy until only people who vote exactly like them are the only ones that are allowed to vote.
As one Republican legislator in Georgia claimed after the 2020 election when asked if her own election was fraudulent said, “No, I won.”
It’s one reason I no longer vote at all- will not vote ever again- and am not even registered anymore. I had someone accuse me of fraudulently voting in 2020 in South Carolina.
Yeah, I’m still not clear how you get to that “I don’t vote” conclusion, but that’s up to you…
you sure are posting the burning issue questions here
Seems like there has to be a lot of other things going on right now….. but it’s your place.
Yup.
Most of the “other things going on” don’t interest me much these days. But some things DO, so I tend to think and talk about those. On the blog, I try to only write about the subset of those things that interest me AND might interest y’all. This seemed like one of those.
Yeah, I once felt compelled to comment on every significant news story. Increasingly, and with time available for blogging diminishing, that appeals to me about as much as watching paint dry…
As for what I used to do…
Remember, I started this blog to augment my work at the paper. I had always been frustrated by the limitations of the newspaper page. Space was finite — extremely finite. You could just barely sketch out a line of thought, and you couldn’t back it up with documentation, much less fun stuff like video.
The idea was to say all the things — or a lot of the things, since “all” would be impossible — that couldn’t be crammed into the paper. We’d run, say, a candidate endorsement in the paper, but on a blog I could give you a full and varied report from the endorsement interviews, and even video clips (I think Jim Harrison and Boyd Summers were the first candidates I did that with, back in 2006.)
I was too ambitious. It proved impossible to accomplish what I meant to, because there just wasn’t time. Time was as finite as ever.
So, over the course of almost two decades now, I’ve very gradually narrowed down what I write about. More and more is just stuff that interests me…
It is not just the price point, though. It is also the wide variation in tax rates. Here in Anderson County I pay 7% sales tax. So if the item that was $1.99 in Mr. Amundson’s example was rounded up to $2, I would still be paying 14 cents in tax, which would require the use of … you guessed it, pennies. While I can see folks being enamoured with the idea of going down to 5%, it could just as well go up to 10%. And rounding to the nearest nickel would also be fraught.
Oh, I still carry some cash, at least for emergency purposes, since there are places that are unwilling or unable to accept any kind of digital money. Not to mention vending machines that do not accept cards. Some people do not trust the security of digital transactions (my mom is like that) and it is true you cannot hack cash. Not to mention that you need to keep track of your expenditures in order to know how much you have in your account at any one time. Still, since the pandemic, I have been using my debit card a LOT more.
I talked to my brother over the phone the other day and he was trying to convince me to buy gold and/or silver because he thinks there is going to be a collapse of the banking system soon. I hope he is wrong because some of my savings for retirement will go up in smoke. I am really old-fashioned about having money in the bank. I can see his point about money being valued less today than some years ago but I like to have some money in my bank accounts. I also like to carry some cash around to pay for items I deem too small to be put on a credit card or debit card. I also collect coins for my grandchildren and I need those coins to keep on coming.
Yeah, I used to collect coins — and I still like to bring home a few when I visit other countries.
But the coins minted these days just look so crappy compared to the ones I collected as a kid. Actually, they don’t just look crappy; they are crappy. Today, a penny is only 2.5 percent copper. Before 1982, they were more like 95 percent. Yet another reason to keep your eye peeled for a 1909 S VDB.
Not all coins are that way. Look at the pound and especially two-pound coins in Britain. They look like something made by the elves when they weren’t making the rings of power. Ditto with the two-euro coin.
When we make a dollar coin over here, it looks like something you’d get out of a souvenir machine in an arcade at the beach…
You mention your brother wanting you to buy gold and silver. That’s ironic, since I was just talking about King Croesus.
People used little lumps of gold as “money” long before Croesus. His innovation was to standardize those lumps, causing the receiver to have confidence in the currency. They saw one of those coins with his image on them, and they knew it was worth x amount. That was a huge boost to trade…
Clark Howard recommends having a few hundred dollars in cash at home for emergencies for natural disasters.
If the American banking system collapses, having some gold or silver isn’t going to help anyone anyway unless you intend to hand over a gold bar for a loaf of bread.
My favorite is all the celebrity endorses out there pushing gold and silver IRAs on right wing talk radio and right wing cable news. Heard Donald Trump Jr promoting one of those today- no surprise. LOL. Of course, they are getting paid in cold, hard cash to endorse those folks.
Gold and silver shysters have been promoting the coming banking collapse for decades. I still remember when Glenn Beck would get on the radio on WVOC in Columbia and predict economic collapse any day. He did that in 2001, 2002, 2003, 2004, 2005, 2006.. you get the idea.
Same thing for all the “PATRIOT” emergency food supply companies out there padding their pockets ripping mainly old people off scaring them to death to buy hundreds of pounds of food supplies they can bury in their backyard.
Why a 75 year old grandma is worried about a 30 year shelf life for the food she buries in her backyard, I don’t quite get.
Granny, if society collapses so badly that you have to dig up your backyard in order to eat, you aren’t going to want to be be around anyway.
For those indifferent about privacy, a cashless society may pose no problems. For those of us not so blasé, not so much.
Also, a society with no cash alternative requires a digital environment that is 100 percent reliable 24/7 and therefore 100 percent resilient against cyber threats.
Lastly, it’s easy for those who possess all the requisite resources needed to easily make cashless payments to assume a transition could work for all and ignore the possibility that their view is skewed by their own privilege.
Ken, how come you can’t bring yourself to participate in a friendly discussion about the money system in a changing world without delivering a lecture about other people’s character flaws?
“for those of us not so blasé…” Harrumph.
“it’s easy for those who possess all the requisite resources…” Harrumph!
“their view is skewed by their own privilege…” HARRUMPH!
And if you respond with further reflections on my lamentable shortcomings — or someone’s (I don’t know who you’re responding to, as nothing you said seems relevant to anything previously said in this thread) — I’ll just do what I should have done the first time. Just not approve the comment, and move on…
I mean, after all, I don’t have time for this. I need to hurry out to my countinghouse to take a swim…
I saw something the other day (sorry, no citation) which said that it costs three cents to manufacture a penny.
… which is indeed a losing proposition.