Jason Furman, a notable economist and former Chair of the Council of Economic Advisers under 44th U.S. President Barack Obama, expressed regret over not abolishing the penny during his tenure, according to a post on X on Sunday.
What Happened: Furman said, “One of my (many) failures in govt was not getting rid of the penny. I tried—with President Obama publicly supporting the effort—and failed.” He further suggested transitioning to a single decimal currency system, where new pennies would be worth 1 cent and new nickels 5 cents.
Furman attached a New York Times article titled “America Must Free Itself from the Tyranny of the Penny,” which delves into the logistical and economic challenges posed by the continued production of pennies. The article highlights that most pennies are produced but never spent, creating a perpetual demand for more.
Furman’s comments reignite the debate over the penny’s relevance in modern currency, echoing sentiments from various economists and policymakers who have long advocated for its elimination due to its inefficiency and cost.
Why It Matters: Furman’s recent comments come amid ongoing discussions about the U.S. economy and monetary policy. In an August interview on CNBC’s “Squawk Box,” Furman dismissed fears of an imminent recession but urged the Federal Reserve to act decisively if unemployment rises.
He stated, “The odds are we are not going to have a recession…it’s just that inflation is about half a point above where it should be. The unemployment rate is rising. I think inflation is going to head probably back down certainly if the unemployment rate stays there.”
Additionally, the relevance of physical currency has been questioned in light of recent discoveries, such as the one million old pennies found in a Los Angeles home in June 2023. This discovery highlighted the inefficiency and inconvenience of dealing with large quantities of low-value coins.
Moreover, the debate over the future of currency isn’t limited to pennies. Discussions around Central Bank Digital Currencies (CBDCs) have intensified, with figures like Rep. Tom Emmer (R-Minn.) voicing strong opposition to their implementation without stringent oversight, emphasizing the need for any proposed CBDC to be open, permissionless, and private.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
