So much for the maxim “a penny saved is a penny earned.”
No longer will you be able to offer someone “a penny for your thoughts.” The next generation won’t even know what penny loafers are.
That’s because President Trump has announced the federal government will stop forthwith the production of the penny.
When I heard the news I felt pangs of nostalgic sadness.
I’m old enough to remember when you could buy a pack of baseball cards for 10 pennies or a Coke for 15. I remember when McDonald’s fries cost 19 cents.
But alas, the demise of the penny was inevitable given the erosion of its value — and that of the dollar, too.
Now that small bag of fries can cost $2 or more.
The penny has been slipping in value since inflation hit hard in the 1970s.
But former President Biden probably put the final nail in the coin’s coffin with his spending spree that cut the value of a penny by 21% in four years.
Today the purchasing power of 10 pennies equals roughly what one penny was worth 50 years ago.
In other words, the penny has lost 90% of its purchasing power.
This devaluation is a failure of a runaway government that spends more and more and shrinks the value of our currency on the way. Special thanks for the debacle goes to President Richard Nixon for taking the dollar off the gold standard.
Here’s why Trump had no real choice here: It now costs more than three cents to mint each one of the more than 3 billion new pennies made every year — so it has become a money-losing proposition for Uncle Sam to produce them.
The zinc and copper in a penny are about as valuable as the buying power of the coin itself.
The term for this is “reverse seigniorage,” and last year it meant a loss of more than $80 million for the government.
My worry is that the end of the copper penny (actually made mostly of zinc) is a surrender in the fight against inflation.
If we’ve accepted as inevitable the steady erosion of the dollar, the massive government spending driving that decline is more likely to remain a permanent fixture of our economy.
There are other issues to grapple with. Charities may collect less in donations from jars full of unwanted pennies at cash registers. What will this mean for “Jerry’s kids”?
A more serious question is whether in a penniless world, companies will round up or round down their prices. Does $2.67 gas become $2.70 or $2.65?
Some consumer groups complain this will become a ruse to “round up” for profits.
My bet is that in a few years, the nickel will be a goner, too. The Brookings Institute published a paper a decade ago endorsing the idea of killing the nickel and rounding the final price of everything we buy up to one-tenth of a dollar.
At some point maybe we won’t have coins at all anymore. God forbid that the United States ever becomes like Zimbabwe, a nation that prints up more and more paper bills with ever more zeroes on them.
That’s a big advantage to an inflationary government: It never runs out of paper for printing bills. Only the ink may sometimes be in short supply.
Historically, that’s the difference between bills and coins, which came into existence thousands of years ago because the silver, bronze, or gold in the coin had real value.
The fact that the penny won’t be minted anymore holds a deeper irony: Over time, pennies will be more and more valuable as they move completely out of circulation.
They will become rare coins. Some pennies from the 1950s and 1960s are already worth more than $1,000.
So if you have jars of pennies in your cabinet, hold on to them.
If we don’t reverse the course of financial recklessness set by Washington, pretty soon they may be worth more than a newly printed, fast-declining dollar.
Stephen Moore is a senior fellow at the Heritage Foundation and a co-founder of Unleash Prosperity.
This story originally appeared on NYPost
