Penny's Death Could Kill the Nickel
45sThe surprising connection between killing the penny and the nickel's demise sparks curiosity and debate about government coin production.
▶ Play ClipAI Summary
The video discusses the potential demise of the US nickel coin, following the government's decision to eliminate the penny due to production costs exceeding face value. It highlights that the nickel is also unprofitable to produce, with losses of about 9 cents per coin, and that the penny's removal could increase nickel demand by 30-40%, potentially accelerating its phase-out. The video mentions legislative efforts and alternative compositions as possible solutions.
Chapters
[00:02]
Penny production cost
It cost 3.69 cents in raw materials to make a single penny, which was worth only 1 cent, leading to losses of about 2.69 cents per penny.
[00:16]
Nickel production cost
Producing a nickel costs about 13.8 cents, while its face value is 5 cents, resulting in a loss of about 9 cents per coin.
[00:30]
2024 nickel losses
In 2024, the losses from nickel production totaled 17.7 million dollars.
[00:42]
Penny removal impact on nickel demand
With pennies gone, cash transactions round to the nearest nickel, potentially increasing nickel demand by 30-40%.
[00:55]
Legislative action
A bill in Congress, HR1270, seeks to suspend both penny and nickel production. Another option is re-compositioning the nickel from 75% copper to a cheaper material.
[01:08]
Future outlook
Nickel production may not end immediately, but if costs keep climbing, it would make little sense to continue producing them.
The video concludes that the nickel may be the next coin to be eliminated, driven by production costs exceeding face value and the ripple effect of the penny's removal on demand. Legislative and compositional changes are being considered, but the future of the nickel remains uncertain.
Mentioned in this Video
Study Flashcards (5)
How much did it cost to produce a penny before it was discontinued?
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How much did it cost to produce a penny before it was discontinued?
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3.69 cents in raw materials.
00:02
What is the production cost of a nickel and its face value?
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What is the production cost of a nickel and its face value?
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Production cost is 13.8 cents, face value is 5 cents.
00:16
What were the total losses from nickel production in 2024?
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What were the total losses from nickel production in 2024?
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17.7 million dollars.
00:30
How could the penny's removal affect nickel demand?
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How could the penny's removal affect nickel demand?
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It could increase nickel demand by 30-40%.
00:42
What is HR1270?
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What is HR1270?
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A bill in Congress seeking to suspend both penny and nickel production.
00:55
💡 Key Takeaways
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Nickel production loss per coin
Quantifies the financial burden of nickel production, making the case for its elimination concrete.
00:16
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Penny removal increases nickel demand
Shows an unintended consequence of policy, illustrating how decisions can have ripple effects.
00:42
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Legislative response
Highlights active policy measures addressing the issue, indicating real-world relevance.
00:55Full Transcript
[00:02] is that by killing the penny we might have accidentally killed the nickel as well. The government famously got rid of pennies because they were losing money every time they pressed one, so it used to cost 3.69 cents in raw materials to
[00:16] make a single penny, but obviously it's only worth a penny after it was pressed. million dollars a year in pennies. But the problem that people aren't thinking more per coin when it's pressed. So we lose about 13.8 cents [music] to produce
[00:30] a single nickel worth about 5 cents. So we're losing about 9 cents just for printing it, and [music] in 2024 alone that added up to 17.7 million dollars in losses. Now that pennies are gone, every cash transaction in America is going to
[00:42] round up to the nearest nickel, and that means the demand for nickels could jump up 30 or 40%. So by killing the penny we actually might be killing the nickel to kind of backwards. There's actually a bill in Congress already known as bill
[00:55] HR1270, and it seeks to suspend both penny and nickel production. Another option is they're looking at basically re-compositioning the nickel from 75% copper to something else in order to bring costs down. But still, I don't
[01:08] anytime soon, but if costs do keep climbing it would not make that much climbing it would not make that much sense to keep making them.
