getting rid of the penny?

President Trump recently ordered the U.S. Mint to stop producing pennies, for a simple-sounding reason. Each penny, he said, has “literally cost us more than 2 cents.”

He’s right. Since 2006, the government has spent more money minting pennies than those pennies have been worth.

The production costs of coins can be confusing. A nickel is worth half as much as a dime but costs twice as much to mint. A penny, which used to cost less than 1 cent to make, now costs 3.7. In 2011, a quarter was cheaper to make than a nickel; today the two coins cost about the same.

Since pennies are a clear money-loser, it seems straightforward to think that getting rid of the penny would save taxpayers money. But it’s not that simple.

Option 1: Don’t change anything — keep minting the penny

The U.S. Mint loses money on every penny and nickel it mints but is profitable because of its sale of dimes and quarters. The Federal Reserve buys the coins from the Mint at face value and then sells the coins to banks, also at face value. Unlike most government agencies, the U.S. Mint receives no appropriations from Congress.

Option 2: Stop minting the penny

If the Mint did stop minting pennies, it would save about $85 million a year. Unfortunately, it would then have bigger and more expensive problem: the nickel.

“If you get rid of the penny, it will increase the amount of nickels,” Mr. Jeppson said. “And you lose more on a nickel than you do on a penny.”

Last year the government lost 8.8 cents on each nickel it minted (compared with 2.7 cents per penny).

Option 3: Stop minting both the penny and the nickel

Why stop at the penny?

Eliminating the money-losing nickel also seems like a logical idea. One drawback is a practical consideration: It would be harder than you might think to make exact change. It would be easy to get exact change if your bill were $4.90. But do you really want more than a dollar in coins if the bill is $4.85? (If you gave $6, you’d get three quarters and four dimes back. Not fun.)

Alternatively, you could address this problem by rounding all prices to the nearest 10 cents. But this, too, would put pressure on the quarter, making it less useful for making change. Or it could present curious situations, like a price for $5.25 if you have a quarter, but $5.30 if you don’t. At that point, it may be easier to round every price to the nearest 50 cents.

A penny-less and nickel-less world would leave the United States with only two coins in wide circulation: dimes and quarters. That would make the U.S. quite an outlier among its peer countries, which have five (Canada), six (Japan), six (Australia) or eight (the Eurozone) commonly used coins.

Option 4: No more coins

If recent trends continue, the quarter and dime could cross from money-making to money-losing in the next 10 to 20 years. At that point, there would be a strong case to stop circulating essentially all coins.

Still, even if it stopped making coins for circulation, the U.S. Mint would still return money to the Treasury because of the other coin products in its portfolio. Last year the mint made over $80 million on its numismatic and bullion divisions (think collectible coins and investment level gold). This income, which has held steady over the last decade, is just slightly smaller than the $100 million in profits the circulating coin program returned last year.