Removing Pennies from Circulation = Color Change (Poker)???

I made a thread earlier in the BreakingAltNews forum and I wanted to make a new thread with a more SkunkWorks-esque slant on things.

Original Thread

Original Article

Essentially, the article quotes Treasury Secretary Henry Paulson as saying that he would like to remove pennies from circulation. He also goes on to state that this would not be "politically doable" at this time, but that it is something he would like to see done. The article further states that it is more likely to change the composition of the penny to lower cost of production (pennies are currently minted with 97.5% zinc and 2.5% copper).

However, since this is SkunkWorks, I would like to explore the potential effects of the removal of the penny (even though they make it seem like an unlikely possibility).

When thinking about this article, I could not help but think of a No-Limit Texas Hold 'Em poker tournament. In most poker tournaments, you generally start with $1500 in chips. Let's assume that there are chips with values of $25, $50, and $100. Before the cards are dealt on every hand, two players are forced to make "blind" bets, in order to ensure that there will be money in the pot. At designated intervals, these "blinds" increase, stimulating more "action" and ensuring bigger pots. There is also something known as a "color change" that occurs at designated intervals. This "color change" requires all players to exchange all of their $25 chips for $50 chips. This is also done to stimulate "action" and ensure bigger pots.

Generally speaking, the players effected most by both the increasing blinds and color changes are the players with the least amount of chips (aka short-stacks). They are forced to take more risks due to the dwindling value of their "stack".

This is somewhat analogous to the potential removal of pennies from circulation. Inflation/increased blinds causes the value of a penny/$25 chip to decrease. Eventually, this leads to the removal of the penny/color change. I know this is not a completely accurate analogy, but I hope you can see the correlation.

My question to you SkunkWork ATSers is this: Would the removal of the penny cause a major impact to the "short-stacks" of our fair country, as it does in poker? And if yes, will this cause "short-stacks" to make "riskier plays" in order to survive? What might these "plays" be?


[edit on 29-2-2008 by kawz1]

It's an interesting idea, but the maximum economic impact would be a price change of $0.04. That's not likely to cause any massive change in spending habits.

The most likely reason for wanting to retire the penny (and it's been discussed since at least the early 1980's) has more to do with cost of production and transport than with any desire to force a change in spending / buying habits. Depending on which source you consult, it costs between 1.2 and 1.4 cents to mint a penny...so it's costing more than face value to bring an extra 1 cent into circulation.

reply to post by Brother Stormhammer


I agree that the price change will be no more than $0.04 as prices are rounded to the nearest 5 cent multiple. However, this change in price will be felt with nearly every item/service purchased, every time. This can definitely add up when you are living on a tight budget, as most middle and lower class families are.

In regards to the value of the penny from a production standpoint, it definitely does not make any sense (pun?) to produce a coin with $0.01-monetary-value when it costs you $0.014-$0.016 to produce it.

Any other thoughts on this subject? Anyone?

Do you think the removal of the penny could be a prelude to the removal of hard currency (I know, I know, that's definitely a stretch...but hey, SkunkWorks, right?)?

Originally posted by kawz1

When thinking about this article, I could not help but think of a No-Limit Texas Hold 'Em poker tournament. In most poker tournaments, you generally start with $1500 in chips. Let's assume that there are chips with values of $25, $50, and $100. Before the cards are dealt on every hand, two players are forced to make "blind" bets, in order to ensure that there will be money in the pot. At designated intervals, these "blinds" increase, stimulating more "action" and ensuring bigger pots. There is also something known as a "color change" that occurs at designated intervals. This "color change" requires all players to exchange all of their $25 chips for $50 chips. This is also done to stimulate "action" and ensure bigger pots.

Actually your a little off here. They color down chips because there is no need for such small denominations when the stakes get higher. Also, so people can physically manage the chips. An example of this is would be say, carrying four quarters is easier than carrying 100 pennies.

At a point, those small chips will be relatively worthless. The same goes with pennies. When a gallon of milk costs 100 bucks, I doubt we will be worrying about the pennies.

Another sidenote, I would think that by the time pennies do get to that relitively worthless point, we probobly won't even have physical money in circulation anymore. Then again, who knows.

I doubt it will affect the poor any more than the rich though.

There used to be 1/2 cent coins.
There used to be 2 cent coins.

Maybe we should go back to the 2cent coins instead of making the jump to 5 cents.

It is merchants that make this penny thing so ridiculous. They can't just price something at $2.00. It has to be $1.99.

prices would not neserceraly rise , in every case one strategy you over look is the simple " tactic " of reducing pack size to reduce price

confectionary [ candy ] manufactures have been doing it for years - reducing bar size to keep retail price constant

they may boast that thier bar still costs the same - but they neglect to point out that the bar weighs 7 grams less than it did 5 years ago

i can see the same thing happening if the 1 c coin is withdrawn

rather than a price hike to 1 dollar - 96 cent items will shrink and fall to 95c

or they might grow to give the apperance of greater value - but with the obesity debate and supersize controversy - it would bet on shrinkage

just my opinion

reply to post by OhZone


We also used to have 3 cent coins, half-dimes (replaced by the nickel - go figure! ), and twenty cent pieces.

I served on an overseas military base and there were no pennies shipped to the banks there, or used on base because of the cost of shipping them. 0.97 would be rounded down to .95 and .98 rounded up.

I say get rid of pennies,i'm tired of them.They wont go away,i've got them all over the house,in cups,jars,dresser drawers...and they multiply daily!