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The penny no longer makes cents
Hello and welcome to the Sunday Edition 👋
​​HHThe news these days feels like a million half-baked stories whizzing by. But one story that caught my eye this week is the potential elimination of the penny.
When I first moved to Australia in 2005, one of the first things I noticed was that the country didn't have any 1-cent coins.
“Oh yeah, we got rid of those years ago,” my friends told me.
“Cool. That makes sense!” I replied.
I couldn't understand why America was still manufacturing these absurdly worthless coins. (And this was twenty years ago!)
Fast-forward to 2025, and it looks like the penny's luck may have finally run out.
In a move that's got efficiency lovers and ​numismatists​ buzzing, this week President Trump announced plans to ​halt production​ of the one-cent piece.
Now, this makes for great headlines, and appears to be one of the few things Trump has said which nearly everyone seems to agree on. (Hallelujah! It's a miracle!)
But like with everything these days, there is tons of confusion and speculation about what it all means.
Today, we'll break down what's actually happening here:
What's the elimination plan? (psst, there isn't one yet)
How have other countries handled this in the past?
How does “Swedish Rounding” work?
Who benefits: consumers or retailers?
Are nickels next? (they should be)
Let’s go 👇
The penny drops
To be clear, there does not appear to be any detailed, official rollout plan for Trump's decision to ditch the cent. The announcement seems to have been made rather abruptly via his Truth Social platform:
During a social media rant while watching the Super Bowl, Trump claimed he had ordered the Treasury secretary and former hedge fund manager ​Scott Bessent​ to halt production.
Other posts seem to indicate that, over the next 18 months, the US Mint would gradually phase out penny production. Existing pennies will remain legal tender indefinitely, so you can still use them to buy…err, well, nothing. (Let's face it, nothing costs a penny anymore.)
But plan specifics aside, the economics behind this decision are about as straightforward as you can get. Pennies are made from ​copper-plated zinc​, and it currently costs about 2.06 cents to produce a single penny.
You don't need to be Warren Buffett to see that's a losing proposition.
Given current zinc prices, the US Government loses about $179 million on penny production. That's a lot of copper-plated zinc going down the drain.
But the benefits of removing the penny go beyond just saving on production costs. The hidden costs & externalities have been nickel-and-diming Americans for years:
Handling and distribution: Banks, retailers, and the Federal Reserve spend a ​substantial amount​ just moving these little Lincolns around.
