Biden’s Inflationary Spending Spree Led to the Demise of the Penny

The saying “a penny saved is a penny earned” seems outdated now.

We may soon lose the phrase “a penny for your thoughts,” as future generations won’t even recognize penny loafers.

This shift follows President Trump’s announcement that the federal government will immediately cease the production of the penny.

Upon hearing this, I felt a wave of nostalgic sadness.

I’m of the age where I can recall buying a pack of baseball cards for 10 cents or a Coke for 15 cents. I remember when McDonald’s fries were just 19 cents.

However, the end of the penny was somewhat predictable due to the decline in its value—and the dollar’s as well.

Today, a small bag of fries can easily exceed $2.

The penny has been losing its worth since inflation surged in the 1970s.

Yet, it was former President Biden whose spending measures may have truly delivered the final blow to the coin, diminishing its value by 21% over four years.

Currently, the purchasing power of 10 pennies equates to what a single penny could buy 50 years ago.

In essence, the penny has lost 90% of its purchasing power.

This decline is a testament to a runaway government that continues to overspend, further diminishing our currency’s worth. Special acknowledgment goes to President Richard Nixon for removing the dollar from the gold standard.

This is why Trump had little alternative: it now costs over three cents to mint each of the 3 billion new pennies produced annually—turning it into a financial loss for Uncle Sam.

The materials in a penny, primarily zinc and copper, are nearly as valuable as the coin itself.

This situation is termed “reverse seigniorage,” resulting in a loss exceeding $80 million for the government last year.

My concern is that abolishing the copper penny (which mostly consists of zinc) represents a capitulation in the ongoing battle against inflation.

If we accept the continual decline of the dollar as inevitable, the substantial government spending driving this erosion is likely to become a permanent aspect of our economy.

We also face additional challenges: charities might receive fewer donations from jars filled with unwanted pennies at cash registers. What implications will this have for “Jerry’s kids”?

A more critical question is whether businesses will round prices up or down in a world without pennies. Will $2.67 gas be rounded to $2.70 or $2.65?

Some consumer advocates fear this could lead to a tactic of “rounding up” profits.

I predict that in a few years, we might also bid farewell to the nickel. A paper from the Brookings Institute a decade ago supported the idea of eliminating the nickel and rounding all prices to the nearest tenth of a dollar.

Eventually, we may find ourselves without coins entirely. Heaven forbid the United States ever resembles Zimbabwe, a country that continues to print bills with ever-increasing zeros.

This presents a significant advantage for an inflation-driven government: it never runs out of paper for issuing currency. The only limitation might occasionally be the ink.

Historically, this distinguishes bills from coins, which were created thousands of years ago because the materials—silver, bronze, or gold—held actual value.

The cessation of penny minting carries an intriguing irony: as pennies vanish from circulation, they will become increasingly valuable.

Some pennies from the 1950s and 1960s are already valued at over $1,000.

So, if you have jars of pennies tucked away, hold on to them.

If we don’t change the financial recklessness emanating from Washington, those coins may soon surpass the value of a rapidly depreciating dollar.

Stephen Moore is a senior fellow at the Heritage Foundation and a co-founder of Unleash Prosperity.