CNBC Squawk Box interviewed Phillip Diehl formerly of the director of the U.S. Mint and now the president of U.S. Money Reserves about the dying of our precious penny.
Mr. Diehl is a graduate of Stamford University, and during his forty year career also worked at Senate Finance Committee. In the interview Mr. Diehl explains how it costs more to make the penny than it’s now worth, and that how the penny is no longer made of copper, but is over 97 percent zinc.
Mr. Diehl goes onto explain that even if you see a penny in the street and bend over to pick it up you are working for less than minimum wage.
The example given Mr. Diehl were MacDonald’s burgers selling for $3.99. Taking the penny away, some feel the price will rise to $4.00, and this effect of removing the penny will affect prices across all industries and products.
U.S. Money Reserves president disagrees with those views. He believes that Mac Donald’s is more likely to come down to $3.95 for the burger instead of annoying customers over a penny. Mr. Diehl believes that it’s an argument use by the penny lobby to keep it in production. He explains that 75 percent of all transactions now are electronic, and that only 25 percent are in cash.
The penny lobby is made up of the zinc industry, and the industry that produces the blanks and the penny itself. Mr. Diehl explains by eliminating the penny, the government will save about one hundred and five million dollars a year.
When it was pointed out that it costs more to produce a nickel than five cents, Mr. Diehl replied that we are able to change the composition of a nickel, but it’s impossible to do the same with the penny anymore. He also mentions that the Illinois Congressional Delegation wants to keep the penny in circulation because of Abraham Lincoln.