The president for the US money reserve, Phillip Diehl, is of the opinion that the US penny has outlived its use. He holds the view that given that the coin costs more to make that its actual value, its manufacturing should be discontinued. Philip further argues that by eliminating the penny, the nation will be saving about $105 million annually.
In an interview with the CNBC Squawk Box, , Philip highlighted the various reasons why he is against further processing of the penny. Apart from being costly and unprofitable, he argued that the coin is just ceremonial and hardly used in the American market. He further holds the opinion that the penny has outlived its use having being in circulation for over 25years.
There is, however, the fear by several economists that the discontinuation of the penny might cause market disruptions that could be injurious to the market including contributing to inflation.
These he said, includes the private companies contracted to manufacture the penny blanks, the zinc companies, the metal from which the coin is manufactured, and the Illinois Congregational Delegate.
Philip noted that of all the transactions carried out in the United States involving money, only less than 25 percent require liquid cash with over 75 percent being non-cash.
According to him, this means that very few transactions will be affected by the dissolution of the penny. He is also optimistic that by eliminating the penny, companies will be forced to round down their company products.
He concluded by stating that, unlike the nickel whose composition can be altered to make its production cost profitable or near profitable, the penny is a lost cause, and nothing can be done to reduce its ineffectiveness.