I was thinking about the debate whether to keep the cent or to elimnate it because of the cost of production. Rather than talk about the emotional or economic arguments of the debate, what about reality of the U.S. Mint’s production? The Mint says that &ldquo[t]he primary mission of the United States Mint is to produce an adequate volume of circulating coinage for the nation to conduct its trade and commerce.” To carry out this mission, the Mint distributes coins to the Federal Reserve System banks and branches as necessary. Regardless of the cost of production, is it really necessary for the Mint to produce so many cents for circulation?
Unlike commemorative or other collectible items, the number of business strike coins distributed are determined by the individual Federal Reserve banks. As the need arises, the Federal Reserve banks place orders with the Mint for coins to distribute to the nations banks. From those banks, coins are circulated to the public through business or teller operations. Although there are some stockpiles of under used coinage (mostly halves and dollars), the Mint uses “just-in-time” inventory management and distribution like many other manufacuturing facilities. Thus, production of busines strikes are based on the demand created by the ordering practice of the various Federal Reserve banks.
If the cent is obsolete and economically infeasable with little buying power, then why is the Federal Reserve ordering so many for circulation?