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# MARCUS: A penny is not worth a cent anymore

October 23, 2010
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“Outrageous,” I said loud enough to be heard all over the small building.

I was bringing my pennies and nickels to my credit union. Those coins filled the little bank I bought in Princeton at a craft fair many years ago. The bank was made from an old wooden post office box. It still had the working combination lock from its more active days.

Two decades ago, when the first of six grandchildren was born, I started putting pennies and nickels into the post office bank each evening. Over time I collected enough to have a low-four-digit savings account that someday will be divided among those children.

It’s not much per child, but it represents their daily presence in my thoughts. Now, this credit union was telling me that I would have to pay a 7-percent charge to have their machine sort and count my coins. This from a financial institution that pays a measly 0.15 percent on its savings accounts.

Note: This credit union is no worse than other banks or credit unions in Indiana. I have my account at this institution because they still counted coins for free long after many others began charging for this service.

Why is it outrageous for a savings institution to charge for counting coins? Yes, counting can tie up a person and machine when some wacko comes in with a 5-gallon pickle jar filled with coins. People who collect coins and rarely put them into banks are sick, afflicted with coinucopia.

The courteous folks at the credit union explained that the armored car company charges extra for hauling large volumes of coins from the credit union to its commercial bank. Somewhere there is a disconnect.

If my change equaled \$10 and the counting charge is 7 percent, then I would have only \$9.30 to deposit. It takes 48 years, at my credit union’s current savings rate, to earn back that 70-cent counting fee. Most rational sixth-graders can figure that out; it helps explain why people are reluctant to save money.

We teach small children that they should save. We tell them to put their money in a safe place at home and transfer it to a bank or credit union. We don’t tell them that ordinary saving by the ordinary citizen became a self-destructive activity in the 1970s and has shown only little improvement since then. That’s because we keep it a secret that the real rate of return on their savings is zero or negative when the rate of inflation equals or exceeds the interest rate on savings.

Coin hoarders can take their barrels of change to the grocery store, where a green machine is installed to gobble up those coins. The fee is an incredible 9.8 percent. Can’t we expect far better from our fiduciary institutions?

On another note, a candidate for state representative in my district is distributing cards saying “it is private business—not government—that creates jobs.” This is stupidity if believed; a lie otherwise.

A job is created when a person is hired and paid for his/her work. It does not matter in the grand scheme of things if this person works for the private or public sector. But economic ignorance, dressed in partisan cloth, is on display this time of the year.

At night I wake in a sweat fearing that this foolish person will win and the level of ignorance will rise still more in the General Assembly. We are at flood stage already. How much worse will it get after Nov. 2?•

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Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.