…When was the last time you saw someone pick up a penny off the street? A nickel? A dime? Nowadays, even bums often can’t be bothered to pick up anything less than a quarter. The U.S. dollar has become so debased that these coins are essentially pieces of rubbish. They have little to no practical value.
Up until 1982, the penny was 95% copper. Today, the melt value of these pre-1982 pennies is 2.1 cents—more than double their face value—as commodity prices have soared and the dollar’s purchasing power has plummeted. That’s why the US Mint no longer uses so much copper to make pennies. Modern pennies are only 2.5% copper, with cheaper zinc making up the remaining 97.5% of the coin. Further, even after using a cheaper metal to make the penny, it still costs the U.S. Mint about 2.1 cents to make every penny. For nickels, it costs the U.S. Mint 8.5 cents to make.
Last year, the U.S. government lost over $144 million making pennies and nickels so, why is it wasting taxpayer money making coins bums don’t even use? Because phasing out the penny and nickel would mean acknowledging currency debasement—governments never like to do that. It would reveal their incompetence and theft from savers.
This isn’t new or unique to the U.S.. For decades, governments worldwide have been reluctant to phase out worthless currency denominations. This helps them deny an inflation problem even exists. They refuse to issue currency in higher denominations for the same reason. Consider this:
- The $100 bill is the largest in circulation. That wasn’t always the case. At one point, the US had $500, $1,000, $5,000, and even $10,000 bills.
- The government eliminated $100 bills in 1969 under the pretext of fighting the War on (Some) Drugs.
- The $100 bill has been the largest ever since. But it has far less purchasing power than it did in 1969. Decades of rampant money printing have debased the dollar. Today, a $100 note buys less than $13 in 1969.
- Even though the Federal Reserve has devalued the dollar by over 87% since 1969, it still refuses to issue notes larger than $100.
Consider what a penny and a nickel would be worth under a hard money system backed by gold. From 1792 to 1934, gold was around $20 per ounce. Under this system, it took about 2,000 pennies to make an ounce of gold. At today’s gold price, a “hard money penny” would be worth about 85 modern pennies. A “hard money nickel” would be worth about $4.25. I don’t pick up pennies off the sidewalk but I would if pennies represented 1/2,000 an ounce of gold. If that were to happen, I doubt there would be many pennies on sidewalks.
Ron Paul said it best when he [said]:
- “There is an old German saying that goes, ‘Whoever does not respect the penny is not worthy of the dollar.’ It expresses the sense that those who neglect or ignore the small things cannot be trusted with larger things, and fittingly describes the problems facing both the dollar and our nation today.
- Unless Congress puts an end to the Fed’s loose monetary policy and returns to a sound and stable dollar, the issue of U.S. coin composition will be revisited every few years until inflation finally forces coins out of circulation altogether and we are left with only worthless paper.”
There’s an important lesson here: Politicians and bureaucrats are the biggest threats to your financial security. For years, they’ve been debasing the currency… and inviting a catastrophe that now could be imminent.
The above version of the original article by Nick Giambruno (internationalman.com) has been edited ([ ]), abridged (…) and reformatted for the sake of clarity and brevity to provide the reader with a faster and easier read.
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debasing the currency