I would like to begin my first reply by rebutting the two points my opponent made in his first reply and then I will illustrate several of the main
points in my opening statement.
1. The United States one cent piece should no longer be produced. It is a waste of our time and money to continue producing one cent pieces. It cost
approximately 1.26 cents to manufacture each penny last year, and has taken up to 1.7 cents years prior.
While I agree that it is ridiculous that one penny costs 1.7 cents to make, I never argued that the penny must continually be made of its current
materials. There are many alternative materials that would be far more cost effective and still represent the penny.
But, in that same vein, the nickel costs 0.0953 cents to make- almost DOUBLE!
Plastic, aluminum, some other composite etc would all be fine alternatives. Therefore, my opponent's argument holds no ground.
There is a reason why the government continues to pay what they pay for the production of the penny, even though there is current legislation pending
that would change the composition of the new penny to be released in 2009.
Where the sentiment might land today, amid the financial crisis, is anybody's guess. Experts and officials are acutely attuned to the issue.
Several bills now pending in Congress would allow the Mint to change the coin's composition, and one would require use of steel and copper
Fine by me! The government knows that by eliminating the penny, the US would ultimately have to retool its entire financial system - but more on that
My Opponent also states:
2. Many countries have done it, including Australia, France, Spain, the Netherlands , and New Zealand. New Zealand has been without it for over twenty
years, and it did not cause any kind of Economic Collapse, as Truth Within has suggested.
Since New Zealand is the only currency with any link to it, I will discuss that.
The current exchange rate of the New Zealand Dollar to the USD is nearly 4 to 1. Meaning that 1 penny in New Zealand is worth .25 pennies in the US -
that's 1/4th of a penny - NO WONDER THEY ELIMINATED IT! Therefore, once again, my opponent's argument is refuted.
The other thing to consider is that the majority of the world's goods and services are not traded in the New Zealand Dollar or even the Australian,
French or Spanish dollar. These goods and services, oil being among the most frequent, are traded in US Dollars.
So what does this mean? Well...it leads into my argument quite nicely. Allow me to explain...
Imagine if the penny were eliminated and you had to price goods and services in increments of 5 cents as opposed to 1 and businesses were asked to use
their discretion as to whether they should round up or round down.
I would imagine that the board room discussion would be brief and the short an sweet answer would be "Round Up!".
This would mean that business would exchange goods and services at a higher rate (rounded up several cents per transaction). Further more, this cost
would be passed down to consumers and then rounded up again!
10 Barrels of oil is sold for $34.46 (now at $34.50) or $3.46 a barrel to a distributor.
So far 4 cents has been passed on...
Then the distributor sells the gas to ten different stations at 4.46 cents a barrel (now 4.50 a barrel).
We are up to 8 cents passed along...
Each gas station sells 1 gallon of gas at a time (I know that's not how it works, but this is an illustration) If there are 50 gallons of gas per
barrel and the price works down to 11 cents a gallon (now 15 cents) then that is 4 extra cents per unit sold multiplied by 500
We end with $8.08 passed along each time this transaction occurs! Transactions like these happen with the US a dollar BILLIONS of times a year. This
could add up to be in the Hundreds of Millions of Dollars!
Not just pennies any more, huh?
Business and Sales Tax
You and I have seen weird tax rates all of our lives. I live in NY and my sales tax is 8.375. So what happens if the penny goes away? Well, it
would be a real possibility that we would have to round the sales tax.
Would New York's Governor be willing to listen to an argument to take the tax rate down to 5%? I doubt it.
Once again, the meeting would be would be brief and the short an sweet answer would be "Round Up!".
In my next posts we will discuss the costs of making this adjustment, and the magnitude of that will make your eyes bulge.
I open the floor to my opponent.