It costs more than a cent to mint a penny (two cents, in fact). Nickels cost 9 cents to mint. Of course some of that is material costs. But there’s also the cost of the minting process itself:
Picture credit: Encyclopedia Britannica blog.
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Why pennies cost more to mint than they’re worth, in one picture
October 22, 2010 at 12:04 pm
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by DJMoore on October 25th, 2010 at 15:04
Forgive a non-economist for asking an perhaps ignorant question, but isn’t the real problem that cents are so inflated that they don’t cover the total cost of making pennies?
by James on October 25th, 2010 at 18:11
@DJMoore,
No, because a penny can be spent more than once.
by DJMoore on October 25th, 2010 at 18:31
So, you’re essentially saying that the value of a penny is $0.01 times the number of times the coin is spent until it’s withdrawn from circulation times (I’m guessing) some constant?
by Richard on October 26th, 2010 at 00:42
Perhaps the relevant point is that small coins — pennies and nickles are perhaps and increasingly obsolete manifesttation of a technology and economic methodology that isas obsolete as dial telephones.