ECON 101 No penny for your thoughts The 1-cent goes the way of the wooden nickel
By Robert Eyler T he U.S. penny is going away, albeit slowly at first. In November 2025, the United States discontinued the production of new pennies. Still, an unknown quantity (the number could be as high as 300 billion pennies, or $3 billion worth, for you collectors out there) remains in circulation. There are some small implications for this policy choice, perhaps both long in the making and not coming for a long time. There are no expectations of immediate rounding up to the nearest five cents. The economics of doing so immediately do not hold in all cases. We should also not expect goods and services paid for with digital payments to change their pricing, given their coinless, cashless nature. However, it may also accelerate cashless payments by enabling greater efficiency gains from moving more transactions online and pricing as close to optimal levels as possible. It is important (sort of) to recognize that coins are not legal tender; they allow transactions under $1 but lack
the same legal backing as the statement “this is legal tender for all debts, public and private” of foldable money in the United States. This is generally a trivial distinction, unless you intend to pay a bill with just coins. You may get a quick education if the vendor refuses payment. Because of inflation, the cost of minting 1-cent coins is now higher
than their face value, perhaps as high as 4 cents to mint every 1 cent in the United States. Such economics was a consideration when Canada in 2012 stopped producing its penny. (I still have a few at home from traveling to Canada
Comparison of Canadian Core Inflation versus American Core Inflation, Jan. 2000 to Aug. 2025 Source: Federal Reserve (Core inflation is consumer price index inflation less food and energy products and services price inflation), the arrow points toward the start of the Canadian policy in 2012.
18 NorthBaybiz
December 2025
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