Philip Diehl, who is currently the president of US Money Reserve has offered his insight into the demise of the penny and its uncertain future during interview on CNBC’s Squawk Box. Mr. Diehl also debunked several myths on the penny, including the assumption that getting rid of it would increase prices and lead to a disruption of the economy.
The president of US Money Reserve can be considered an expert on such matters. He has served as the director of the US Mint from 1994-2000 and was also a former US treasury chief of staff. Mr. Diehl also served on the senate finance committee where he was the majority staff director. If there is a person that can be considered an expert on the affairs of the US Mint and its coins, it is Philip Diehl as he knows the minting process, the value of currency and its affect on the economy in depth.
The interview, which took place Ispot TV mentions how it actually costs more money to make the penny that what it is actually worth. Mr. Diehl revealed that the penny has been costing the US Mint losses for the past 25 years now, and he believes it should be removed from circulation. He estimates that such a move would save the US government more than a hundred million dollars a year. The penny which is thought by many to be made out of copper, is now actually made out of 97% zinc, with the remaining 3% copper. This was done to prevent people from melting the penny down and selling the copper at higher prices.
Another critical point discussed in the interview with US Money Reserve President Philip Diehl is the idea some economists have that taking the penny out of circulation could raise prices and increase inflation. Mr. Diehl responded by saying that the effect should be minimal, and prices most likely will remain the same. “Companies” he says “Can raise or lower the price as they see fit.” The removal of the penny could actually lower prices, if prices have to be rounded. While the penny is slated to remain, it is costing more to produce than it is worth and most of its production is actually done by private companies and not the US Mint.