Should America retire the Penny? (Also, let's compare money)

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Re: Should America retire the Penny? (Also, let's compare money)

Postby EdB » Thu May 08, 2008 8:44 am UTC

When they retire prices in fractions of pennies (gasoline - you can never buy one gallon at the advertised rate) I'll be willing to entertain the idea of retiring pennies. Until then the only arguments in favor of retiring the penny seem to be (a) I don't like them and (b) other countries have retired coins. Neither, to me, sounds valid.

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Re: Should America retire the Penny? (Also, let's compare money)

Postby fjafjan » Thu May 08, 2008 9:25 am UTC

No the reason to retire them is they cost alot of money to keep in the system, people waste time getting a penny here, leaving on there, in cash registers etc. The benefit of keeping the penny is far lower than that of retiring it.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby tantalum » Thu May 08, 2008 12:20 pm UTC

I've heard that the reason we still have dollar bills is because the paper industry is lobbying to keep it in (presumably they're paying their lobbyists in 1's? :P)

I've also heard (i think from a Slate article) that if we were to solely issue dollar coins, then americans would simply be forced to switch to the new system. By offering them a choice/simultaneously offering bills/coins, we're preventing this transition.

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Re: Should America retire the Penny? (Also, let's compare money)

Postby zealo » Thu May 08, 2008 3:14 pm UTC

bills would be cheaper to make than coins i would have thought?

if th government took the money currently spent (or wasted depending on your point of view) on pennies and turned it into a tax cut, would anyone actually complain? would anyone here actually try to justify that complaint?
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Silas » Thu May 08, 2008 4:25 pm UTC

Printing bills is cheaper than stamping coins, but coins last much, much longer, especially since we switched off of silver in 1964-7. It depends on the amount of use various denominations get (more handling means more wear), but it'd be slightly cheaper, the Treasury thinks, to use dollar coins instead of dollar bills.

Also, the amount of money wasted on pennies is pretty small. It's true, there's a negative seigniorage, but it amounts to just $30M per year (numbers from http://www.retirethepenny.org/); that's ten cents per citizen, and that's not an expense that's compelling at the national level.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby zealo » Thu May 08, 2008 5:23 pm UTC

so every american is paying 10 cents a year for the right to spend time counting pennies?

the direct cost is not huge issue then (although wasn't someone earlier in the thread was saying the possibility of losing up to two cents due to rounding was horrifying), but how many people get paid to count coins? how much time do they spend counting these pennies?
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Silas » Thu May 08, 2008 5:55 pm UTC

It's worth pointing out that the smallest denomination of essentially every currency nearly costs more to print than it's worth- don't tell me that UK pennies are much cheaper than US cents. And, especially, don't get me started on kopecks.

The point of the direct cost is that, as a fiscal question, we could take it or leave it; it's costs essentially zero (as much as it hurts my brain to call $30M essentially zero). The only compelling reason to retire the penny would be if it were demonstrably unwanted.

But that's plainly not the case. Every shop I've been to give you change to the nearest penny, and, let me tell you, every one of those shops could get away with rounding to the nearest nickel or dime (or dollar, if they chose). True, they'd still have to accept the coins as payment (well, for debts, anyway; you can choose what kind of payment you'll accept up until the sale takes place). But nobody seems to want to do it.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby ZeroSum » Thu May 08, 2008 6:08 pm UTC

My local laundromat rounds to the nearest nickel and doesn't accept pennies.

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Re: Should America retire the Penny? (Also, let's compare money)

Postby Vaniver » Fri May 09, 2008 1:44 pm UTC

Silas wrote:But that's plainly not the case. Every shop I've been to give you change to the nearest penny, and, let me tell you, every one of those shops could get away with rounding to the nearest nickel or dime (or dollar, if they chose). True, they'd still have to accept the coins as payment (well, for debts, anyway; you can choose what kind of payment you'll accept up until the sale takes place). But nobody seems to want to do it.
How many customers need to make a fuss about being cheated out of their pennies before a business decides it's better to give everyone pennies? Worse, how many people won't make a fuss but will decide to not return?

There are some changes that are easier if everyone makes them at once. As much as I'd like to make everything voluntary, there are sometimes inefficiencies involved.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Silas » Fri May 09, 2008 4:49 pm UTC

Vaniver wrote:How many customers need to make a fuss about being cheated out of their pennies before a business decides it's better to give everyone pennies? Worse, how many people won't make a fuss but will decide to not return?

How many citizens need to make a fuss before the nation decides to humor them? After all, it's just $30M, and there's no injury to those who don't want or need pennies.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby yeyui » Sat May 10, 2008 4:32 am UTC

To those that argue that we need a one cent coin. Let me point out that for over fifty years (I am thinking specifically of 1878-1932, since the value of the dollar was pegged to gold with no changes in this period) the smallest us coin had a value, in today's USD, of just over $0.43. We could give up the penny, nickle, and dime, and STILL have a finer (as in opposite of coarser) monetary system than that period.

Frankly, I think it is a bit odd that we haven't retooled our coinage system at all since we dropped the half cent coin in 1857. If the fact that a turn-of-the-century penny was worth 43 cents doesn't give you pause, lets look at it the other way around. If we had had a coin back then with the same purchasing power as our penny, it would have had a face value of less than 1/40 of a cent. But in 1857 we decided that it wasn't worth having a 1/2 cent coin!

[edited to correct the embarrassing misplaced decimal]
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Malbert » Sat May 10, 2008 6:28 am UTC

I don't really care either way it goes, but I would want the system to be true to it's smallest decimal place.

That is, if we DO retire the penny, we better get rid of nickels and change quarters.

Also, instead of coins we should have rings (think sonic) so that they can all be held on a chain instead of those insufferable paper rolls. I actually like the Hong Kong coin (I think .5 hkd, cant remember) that had a decent sized hole in the middle. If ALL the coins had holes, and the holes were large enough to slip over a small chain easily, it would be good.

To all those ring naysayers: They can be identified by many differences.
Size
Shape (doesn't need circular)
Cross sectional shape (wide like a ring for finger, or circular like for ear, or triangular, or square, or whatever)
Color/alloy used

also, so that foreigners can understand them, you can put bumps around them for value (one bump=.1 USD) or something to that effect (colored bands, small printing, or whatnot).

You can stack rings on pegs as well (ever had your stack of coins fall down? it makes me mad too).
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Re: Should America retire the Penny? (Also, let's compare money)

Postby zealo » Sat May 10, 2008 11:08 am UTC

yeyui wrote:the smallest us coin had a value, in today's USD, of just over $.043. (+stuff)


i totally agree, though i assume you meant $0.43? i know i'm nit picking, but it matters
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Vaniver » Sat May 10, 2008 4:59 pm UTC

yeyui wrote:To those that argue that we need a one cent coin. Let me point out that for over fifty years (I am thinking specifically of 1878-1932, since the value of the dollar was pegged to gold with no changes in this period) the smallest us coin had a value, in today's USD, of just over $.043. We could give up the penny, nickle, and dime, and STILL have a finer (as in opposite of coarser) monetary system than that period.
The best measure of value to use for this comparison wouldn't be the dollar, but some measure of consumer prices or income. We don't have any context of what a dollar was worth in the 19th century, but a comparison of how many pieces you could divide your income into (does the median American really need to be able to divide his income into almost 5 million pieces? [src]) might be useful- although most useful would be a comparison of how the penny compares to the average price difference between objects. If there's a spike of objects priced at 99 cents, and then the next spike is 109 cents, then 125 cents, etc., then there's a strong argument for dropping the penny, because it simply isn't useful in differentiating prices. But if prices are more uniform, then the penny is useful- there would be useful information encoded in the difference between 200 cents and 201 cents.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby fjafjan » Sat May 10, 2008 11:12 pm UTC

The money wasted is not mainly in seniorage, but as mentioned, in wasting time counting and just dealing with them. I mean how often are pennies actually used as MONEY, rather than just time wastery, going back and forth as some add on to trades, rather than actually be the substance of the trade. In other words, how often do you buy something and pay in pennies?
Pretty damn seldom, so as money it's basically worthless.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby yeyui » Sun May 11, 2008 11:36 pm UTC

@vanvier and anyone else that might wonder:
I actually used gold as the comparison in my previous comment. I recognize that the intrinsic value of gold has not remained fixed, but it was a very convenient since the dollar was pegged to gold during the period I was talking about.

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Re: Should America retire the Penny? (Also, let's compare money)

Postby tuba_king2341 » Mon May 12, 2008 12:22 am UTC

I vote for getting rid of the penny. My reasoning is a bit more personal than most of the facts being used, but hey, its something. I get great joy out of being able to dump out my bucket of change (which usually accumulates to about $100-$150 before i empty it) and count out a lot of extra cash. The exception to this is that I hate the pennies. You roll them into those stupid $0.50 rolls and you feel like you're getting nowhere, whereas all the other coins are rolled into multiples of dollars. I guess its just more of a thing in my mind that's saying "No matter how many rolls of these I make, it's never going to be worth it".
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Luthen » Mon May 12, 2008 1:09 am UTC

I'd probably vote to keep it, out of "tradition" and to make the americans suffer!

I'm kinda proud (and disappointed) that it seems only the Aussies have posted our money. I love the fact that it was designed by the counterfeiter in "Catch me if you can" (not di Caprio).

As for the different sizes, you only really notice it if you have both 100s and 5s in your wallet (which is rare for me).

I don't like American money cause of how it ages and I'm just suspicious of a currency where I came home with no two notes the same colour.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby GhostWolfe » Mon May 12, 2008 4:02 am UTC

Luthen wrote:I'm kinda proud (and disappointed) that it seems only the Aussies have posted their money.
Clearly because ours is the most awesome and interesting of the global money. :D

Also: A little bit about polymer notes.

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Re: Should America retire the Penny? (Also, let's compare money)

Postby Okita » Mon May 12, 2008 4:32 am UTC

I can think of a few potentially compelling reasons to keep the penny.

For one, it would in effect decrease profits for zinc supplies. Who cares about zinc suppliers? Well I suppose the miners who mine out zinc. A quarter of them are in China who probably would be slightly annoyed. Not to mention there's a surplus of zinc.

Consequently, it actually hurts charities who rely on people willing to part with a penny for a charity. I suppose the question you would ask is are you more likely to part with a nickel vs. a penny for cancer? Or a dime for a penny?

On a sillier note, it definitely hurts the tourism industry because all those machines who allow you to turn a penny into a fancy memorable plate thing will have to be retrofitted (or you'll have to just buy pennies to flatten from vendors).

But mostly, I think that eliminating the penny masks the effects on inflation. I'm not an economist though, it just seems that way to me.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby zealo » Mon May 12, 2008 4:40 am UTC

one way to solve the issue would be causing massive deflation. just not issue new money for a year, or 10 years. probably a few negative effects from this but it's worth it if it allows us to keep the penny worth having right?
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Okita » Mon May 12, 2008 5:23 am UTC

zealo wrote:one way to solve the issue would be causing massive deflation. just not issue new money for a year, or 10 years. probably a few negative effects from this but it's worth it if it allows us to keep the penny worth having right?


How does that solve the issue? Massive deflation is not generally considered a good thing. I'm not advocating deflation in any sense either. I just think that eliminating the penny also serves to mask the effects of inflation.

Where did you even get the idea that I would want massive deflation anyway...?
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Silas » Mon May 12, 2008 5:32 am UTC

That's not how inflation works, I'm afraid. Nor money, now, either; the amount of money that people have doesn't depend on the quantity of coins and banknotes.

And deflation is bad. Really bad. It screws with interest rates, especially for low-risk securities like central banks prefer to trade. Also with the wage cuts- nobody likes getting a 4% dock in pay, even if it's paired with a 4% drop in prices (especially when his neighbor's union job is protected from pay cuts). The 1990s depression in Japan was blamed (in part, by some) on deflation.

But yeah, pennies. At least they're not as bad as kopecks.

Edit: oh, right, you said deflation was bad. Oops.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby zealo » Mon May 12, 2008 6:49 am UTC

Okita wrote:
zealo wrote:one way to solve the issue would be causing massive deflation. just not issue new money for a year, or 10 years. probably a few negative effects from this but it's worth it if it allows us to keep the penny worth having right?


How does that solve the issue? Massive deflation is not generally considered a good thing. I'm not advocating deflation in any sense either. I just think that eliminating the penny also serves to mask the effects of inflation.

Where did you even get the idea that I would want massive deflation anyway...?


wasn't aimed at you in particular.

the way i see it as solving this particular issue, if all US currency was tomorrow declared to be worth 10 times as much as it is today in terms of buying power and currency conversion, then each penny would be worth 10 times as much, and pennies would be much more worth keeping around.

alternatively, you could just stop making pennies
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Vaniver » Mon May 12, 2008 5:33 pm UTC

zealo wrote:the way i see it as solving this particular issue, if all US currency was tomorrow declared to be worth 10 times as much as it is today in terms of buying power and currency conversion, then each penny would be worth 10 times as much, and pennies would be much more worth keeping around.
That's, uh, not how money works. At all.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby zealo » Mon May 12, 2008 6:18 pm UTC

so if deflation occurred the penny would be less worth keeping around?

does Zimbabwe still use pennies? just out of interest
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Silas » Mon May 12, 2008 7:34 pm UTC

zealo wrote:so if deflation occurred the penny would be less worth keeping around?

does Zimbabwe still use pennies? just out of interest


It doesn't make sense to say, "if the US dollar were declared to be worth ten times what it is now." It just doesn't compute.

If you mean a devaluation, lopping off digits to keep the numbers manageable, that's something else altogether (though it's still a bad idea for reasons that have nothing to do with pennies). Anyway, the coins that are worth one cent now would be worth one-tenth of a cent after a 10:1 devaluation, which wouldn't solve the problem at all.

I don't know about Zimbabwe, but Russia certainly does (strike them, anyway; most stores give change to 10 kopecks, but you see the singletons every now and again). A kopeck is worth about $0.0005 (one twentieth of a US cent).
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Philwelch » Mon May 12, 2008 11:08 pm UTC

I think the strippers would be annoyed if we tried to tip them with $1 and $2 coins.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby GhostWolfe » Tue May 13, 2008 12:12 am UTC

Then I think they would be all for the $1 and $2 coins so that people have to tip them in increments of $5. :D

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Re: Should America retire the Penny? (Also, let's compare money)

Postby zealo » Tue May 13, 2008 5:06 am UTC

Silas wrote:It doesn't make sense to say, "if the US dollar were declared to be worth ten times what it is now." It just doesn't compute.


why can the value of the US dollar not increase?
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Silas » Tue May 13, 2008 6:46 am UTC

It could, though it would take years of painful deflation (read: massive unemployment), and the Federal Reserve Bank would go balls-to-the-wall to stop it. And it could certainly appreciate against other currencies- the Fed could make that happen overnight, if they decided it was important enough (the flurry of transactions needed to make it happen would screw up the financial system more than Enron and the sub-prime crisis combined).

But just decreasing the amount of money in circulation won't necessarily increase each dollar's value; that effect gets swept away by the velocity of money.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Vaniver » Tue May 13, 2008 4:48 pm UTC

zealo wrote:why can the value of the US dollar not increase?
Exchange rates aren't determined by legislation (thank goodness)- when they are and the legal rate is different from the real rate, the market will correct with disastrous results for the government that tries to keep up an incorrect rate (if you can melt down a gold dollar coin and get 2 dollar's worth of gold, that you then sell to the government for two dollar coins...).
If you say "we're coming out with a neodollar, and you need to trade in ten dollars to get a neodollar" then what you're suggesting will work- it's just shifting the name, and so now every dime is called a penny and every dollar is called a dime. But saying "hey, every dollar in your wallet is now equal to ten dollars in real buying power" is just impossible- when everyone goes to the mall and tries to spend ten times the amount of money they have, what happens to prices? If the government tries to claim that now, instead of each dollar being worth half a pound, they're now worth five pounds, no one will believe them- except the people turning in dollars to get their five pounds.
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Dingbats » Wed May 14, 2008 5:28 pm UTC

yeyui wrote:To those that argue that we need a one cent coin. Let me point out that for over fifty years (I am thinking specifically of 1878-1932, since the value of the dollar was pegged to gold with no changes in this period) the smallest us coin had a value, in today's USD, of just over $0.43. We could give up the penny, nickle, and dime, and STILL have a finer (as in opposite of coarser) monetary system than that period.

Agreed. I've always found it weird that Americans (and others for that matter) had any use at all for all those basically worthless coins. The lowest valued Swedish coin is 50 öre (~ 8 cents), and I don't bother picking those up from the street when I see them because there's nothing you can do with them.

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Re: Should America retire the Penny? (Also, let's compare money)

Postby zenten » Wed May 14, 2008 6:34 pm UTC

I don't care about American pennies (although I'm sad that I no longer get the sense that I got lucky when I get one in change), but I'm all for getting rid of everything bellow the quarter for Canadian money.

Philwelch wrote:I think the strippers would be annoyed if we tried to tip them with $1 and $2 coins.


But they'll be happier with all the $5 bills.

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Re: Should America retire the Penny? (Also, let's compare money)

Postby Okita » Wed May 14, 2008 7:59 pm UTC

On a lighter note... when people quote Franklin saying "A penny saved is a penny earned", no one will know what he meant.

I wonder how many people in Illinois actually care about Lincoln?
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Philwelch » Wed May 14, 2008 8:03 pm UTC

Dingbats wrote:
yeyui wrote:To those that argue that we need a one cent coin. Let me point out that for over fifty years (I am thinking specifically of 1878-1932, since the value of the dollar was pegged to gold with no changes in this period) the smallest us coin had a value, in today's USD, of just over $0.43. We could give up the penny, nickle, and dime, and STILL have a finer (as in opposite of coarser) monetary system than that period.

Agreed. I've always found it weird that Americans (and others for that matter) had any use at all for all those basically worthless coins. The lowest valued Swedish coin is 50 öre (~ 8 cents), and I don't bother picking those up from the street when I see them because there's nothing you can do with them.


Pennies I'm with you on. Nickels and dimes we use to feed parking meters. What do you all use?
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Re: Should America retire the Penny? (Also, let's compare money)

Postby jtniehof » Wed May 14, 2008 8:36 pm UTC

Philwelch wrote:What do you all use?

I live in Mass. We use quarters. Or credit cards.

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Re: Should America retire the Penny? (Also, let's compare money)

Postby zenten » Wed May 14, 2008 8:38 pm UTC

Philwelch wrote:
Dingbats wrote:
yeyui wrote:To those that argue that we need a one cent coin. Let me point out that for over fifty years (I am thinking specifically of 1878-1932, since the value of the dollar was pegged to gold with no changes in this period) the smallest us coin had a value, in today's USD, of just over $0.43. We could give up the penny, nickle, and dime, and STILL have a finer (as in opposite of coarser) monetary system than that period.

Agreed. I've always found it weird that Americans (and others for that matter) had any use at all for all those basically worthless coins. The lowest valued Swedish coin is 50 öre (~ 8 cents), and I don't bother picking those up from the street when I see them because there's nothing you can do with them.


Pennies I'm with you on. Nickels and dimes we use to feed parking meters. What do you all use?


Quarters, or if you're staying for awhile loonies and toonies. I haven't seen using dimes making sense for parking metres since I was a kid.

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Re: Should America retire the Penny? (Also, let's compare money)

Postby Luthen » Thu May 15, 2008 12:27 am UTC

Most of our parking meters (and some vending machines) don't accept our 5 cent coins, so we don't really have choice but to use larger coins.

As for our pennies (which we got rid of when we converted to decimals) they were huge (about an inch in diameter).
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Re: Should America retire the Penny? (Also, let's compare money)

Postby Cooley » Thu May 15, 2008 1:58 am UTC

Wow, xkcd forums saved my ass today. I *didn't* take an AP test today that *didn't* have this thread title as its *not* main title.

I did so well on that. And people tell me that the internet is a waste of my time. :wink:


Oh yeah, argued for keeping it.


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