President Trump has directed the U.S. Treasury to cease the production of pennies, citing their high production cost and minimal economic value. The move, spurred by criticism from Elon Musk and the Dogecoin community, is expected to have a minimal impact on the national economy but may lead to changes in pricing strategies.
President Donald Trump ordered the U.S. Treasury to halt the production of pennies, citing their high production cost exceeding their face value. This decision followed criticism from Elon Musk and the Dogecoin community, who highlighted the penny's inefficiency and environmental impact. While economists acknowledge the minimal economic impact of eliminating the penny, they predict potential inflationary pressures and changes in pricing strategies. The penny, representing 0.006% of U.S.
currency in circulation, costs approximately $192 million annually to produce. Its elimination, according to economists, would have a negligible effect on the national budget. David Gulley, an economics professor at Bentley University, points out that the penny's cost outweighs its value, leading to a significant economic burden. He anticipates that prices would be rounded to the nearest five cents, impacting transactions involving cash payments.However, the inflationary effect, if any, is expected to be minimal. David Smith, an economics professor at Pepperdine University, suggests that businesses might round up more frequently, leading to a slight inflationary pressure. Nevertheless, studies indicate that rounding prices to the nearest nickel does not cause significant inflation. Canada's experience after eliminating the penny in 2013 demonstrates that cash transactions are rounded to the nearest five cents based on the total amount, rather than individual items. While the move to eliminate the penny is primarily seen as a cost-saving measure, it could disproportionately impact low-income earners who rely heavily on cash transactions
ECONOMICS INFLATION CURRENCY GOVERNMENT SPENDING ELON MUSK
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