Dear Dr. Per Cap

Is it true the government is going to do away with small coins? 

Signed,

Thrifty Nickel

Dear Thrifty Nickel

While it might appear that pennies and nickels are more out of date than a Ronald McDonald vs Hamburglar commercial – don’t expect them to disappear any time soon.  In fact one of the less talked about impacts of the global pandemic is a shortage of coins in the U.S.

With limited in person banking and fewer open retail businesses a lot less coins are being recirculated.  That old Maxwell House can full of loose change under the bed isn’t helping matters.  Contrary to all those cool mobile payment apps and contactless debit cards there are still plenty of folks who use coins in Indian Country and beyond.  Think car washes, laundromats, and all those toll roads in Oklahoma.

There are strong arguments both for and against discontinuing small coins.  While it’s well documented that the U.S. Mint spends more to make pennies and nickels than the coins are even worth, the Mint actually makes huge profits on dimes, quarters, and dollar coins which more than offset losses on smaller coins.

Critics aren’t impressed.  They say small coins are more hassle then they’re worth and point to our hockey loving neighbors to the north.  Canada nixed its penny in 2012 and Queen Elizabeth gets along just fine without her mug stamped on copper plated steel.  They round all purchases to the nearest five cents and call it good.

Penny fans fire back with theories like eliminating the coins would set a bad precedent by demonstrating a lack of confidence in the U.S. financial system.

In recent months we’ve seen a big push for people to deposit coins at banks or cash them in at coin kiosks like you see at the grocery store.  Moreover, coin production has ramped up at U.S Mint facilities like Philadelphia and Denver.

When the pandemic finally lets up the coin shortage will probably ease up too.  After that I honestly don’t know what the answer is.  I agree pennies seem like kind of a waste until you learn that Bloomberg reported in 2016 that $62 million dollars in pennies are lost every year in circulation.

If that doesn’t inspire you to ransack the couch cushions I don’t know what will.  And besides who doesn’t love a spiral wishing well coin funnel that supports a good cause?  I’m getting dizzy just thinking about it!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit www.firstnations.org. To send a question to Dr. Per Cap, email askdrpercap@firstnations.org.