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Cent proves even air is expensive

With all of the problems on the plate of the Obama Administration, it is not too likely that priority status will be given to the problem of what to do about the cent and the nickel.

The Mint’s annual report, which covers fiscal year 2009, which ended Sept. 30, 2009, shows that even with dramatic declines in the prices of copper, zinc and nickel, the Mint still loses money on each coin it makes.

For the cent, the cost problem actually got worse. This is due to the fact that total mintages have plunged so dramatically. The overhead assigned to each coin goes up as the number made goes down. In the present economy, it doesn’t look like there will be an improvement any time soon.

It currently costs 1.61 cents to make a cent. The metallic value is roughly 0.61 cents, so overhead adds another cent. To make a ridiculous point, if the Mint made the present number of cents out of absolutely nothing, it will still cost them a cent to produce them.

Not a pretty picture when looking for alternative compositions.

It appears that the only rational choice is to abolish the denomination, but you know that will not happen.

For the nickel, the problem remains the high cost of copper and nickel. In 2009 it cost the Mint 6.05 cents for every nickel it made. A less valuable composition would make the denomination cost effective.

When will the compositions of the cent and nickel arise again? There is no way of knowing this with certainty. There is no advantage in an election year for either party to bring the issue up at all.

The irony for the nickel is that presently its face value equals its metallic value, a circumstance that hard money advocates want for all American coinage.

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One Response to Cent proves even air is expensive

  1. What is the point of this note? Are you stoking the flames of the vast conspiracy? Even with the cent and nickel costing more to make than their face value, the annual report shows that the US Mint made more money on other sales than they used in their overall operations.

    Since the labor costs of the US Mint did not change–they did not lay off workers as production decreased–wouldn’t it make sens to think that if production rose the labor and production costs would be amortized across more coins and be lowered? It was a business decision for the Mint to keep their employees as demand shrank, which is a good thing for the Mint.

    This story is not a matter of the US Mint losing money on making two coin types, the US Mint still made a profit even during these economic times. The US Mint will not need taxpayer money to fund its operations and the Treasury will have money in the US Mint Public Enterprise Fund to add back to the general treasury!

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