International Man: President Trump has ordered the Treasury to stop minting pennies after 232 years, citing the fact that each one costs more than two cents to produce—calling it a waste of taxpayer money.
What’s your take on this move?
Doug Casey: It may seem odd that we’re talking about something as trivial as the disappearance of the penny while we may be staring World War 3 in the face any day now. We can visit that next week since the situation is so fluid.
But let’s turn our attention from a potentially traumatic war to a gradually degrading coinage, starting with a fun fact. People have forgotten that the US used to have a half-penny coin, which circulated from 1793 until 1857; it was pure copper and only slightly smaller than our current quarter. The debasement of coinage is a long-standing trend in the United States.
Now, the US is abolishing the penny. As usual, Trump is understating the negative, just as he always overstates the positive. It doesn’t cost two cents to produce a penny. It costs 3.7 cents. He mentioned that it’s uneconomic to mint them, but he should explain that it’s only because the currency itself is being destroyed. However, I’m uncertain that he understands the cause and effect of the matter.
It’s necessary to get rid of the penny because they cost the Treasury about $60 million a year to mint, even though nobody uses them. People don’t even bother picking them up off the street anymore. It’s estimated there are about 250 billion of the things pointlessly saved in mason jars. They’re a total waste of metal.
A bit of history is in order: When the first US penny was minted in 1793, it was pure copper and weighed 208 grains (13.48 grams), larger and heavier than the current half dollar. It was reduced to 168 grains (11 grams) in 1795. In 1856, it was further reduced to 72 grains (5 grams).
In 1864, it was reduced to 48 grains (3 grams) and was no longer pure copper but an admixture of 5% tin and zinc. This version of the penny lasted until 1982 when the government perpetrated a genuine fraud by replacing all the copper with zinc, disguised by a copper coating. Boobus americanus never noticed. Zinc usually trades at about a quarter of the value of copper. The weight of the penny also dropped to 38.6 grains (2.5 grams).
The trend of reducing the penny’s intrinsic value has been steady from the beginning. Now, the penny is being eliminated entirely. Gold went away in 1933, silver in 1964, copper in 1982. Soon, all coins will be gone, then the paper currency.
In 2006, the US government imposed a fine of up to $10,000 and/or five years imprisonment on anyone who melts or exports pennies or nickels for profit because people were doing just that—for the metal content. That’s something you’d expect in a Third World country.
International Man: What does the evolution of US coin designs tell us about the cultural and political transformation of America?
Doug Casey: Just as important as the degradation of the coins themselves is the symbolic significance of what is on the coins.
Up until 1909, US coinage always displayed a symbol of Liberty or something traditional like an Indian or an eagle—but not the portrait of a dead president. This changed starting with the Lincoln penny. The same thing happened in Rome when it transitioned from a republic to an empire. Before the time of Caesar, Roman coins bore ideals, noble concepts, perhaps a god. After Caesar, the money became instruments of propaganda, sporting portraits of the emperors while its silver content gradually went to zero. The same thing is true of the US. As a degenerate bankrupt empire, we’re following in Rome’s footsteps.
In 1909, the noble Indian on the penny was replaced with Lincoln. In 1938, the Buffalo on the Nickel was replaced with Jefferson. In 1932, Liberty on the Quarter was replaced with George Washington. This happened under Franklin Roosevelt, a statist who overturned many traditions that made America unique. But at least Washington, Jefferson, and Lincoln were semi-mythical figures from our distant past. An even more disturbing change unfolded after Roosevelt died. The winged Mercury featured the dime was replaced with Roosevelt’s portrait in 1946. That was highly inappropriate for a free republic. Not as bad as putting a living person on the coins, but using a recently dead politician is symptomatic of the degradation and politicization of the currency.
That signaled a new trend. Benjamin Franklin replaced Liberty in 1946, and JFK replaced him in 1964. Eisenhower was put on a large faux silver dollar from 1971 to 1978, only to be replaced by a quarter-sized token commemorating Susan B. Anthony, basically a community organizer who agitated for women’s suffrage. She graced the coin from 1979 to 1981, when it simply went out of circulation.
Many other frauds have been perpetrated on the coinage. The biggest was in 1964, the last year there was silver in dimes, quarters, and half dollars. Since then, they’ve been made of copper with a wash that makes them look like silver—which is exactly what the Roman Empire did towards its end. Technically speaking, they’re not even coins. They’re tokens. Coins have value.
Lots of things have changed over the years. The first motto on our coins, right after the country’s founding, was “Mind your business.” A great motto. But starting in 1864, “In God We Trust” was used. I’d say it’s questionable insofar as it mixes a religious concept with the nation’s currency. Perhaps “Allahu Akbar” will replace it someday…
International Man: With the nickel now costing nearly 14 cents to produce, is it next on the chopping block?
Doug Casey: Yes, it’s going out of circulation for the same reason the penny did. Let me point out that a nickel is 25% nickel and 75% copper. Nickel now trades for about twice what copper does. That’s quite cheap historically. Nickels will soon be history.
In fact, all US coinage is on the way out because it’s basically worthless. Quarters are the only denomination that still see some use, although they’re nearly worthless. You can’t even buy an arcade game with a quarter anymore.
It’s a pity. Kids used to collect coins, pulling them out of day-to-day circulation. That inculcated the value of money and saving. But they haven’t been worth collecting for years, because the coins are now just slugs without any intrinsic value. Soon we won’t have any coins at all, because they’re simply too worthless. Too bad. How will cool uncles amuse the kids with coin tricks?
International Man: The US has kept the $100 bill as its highest denomination since 1969—even though it now holds only about 10% of its purchasing power back then.
Why is the government so reluctant to issue higher-denomination bills even after decades of inflation?
Doug Casey: We saw this phenomenon in Argentina, where the government didn’t want to admit that inflation was that bad. For a while—before Milei took over—if you wanted to pay cash, you needed a briefcase to transport the inconvenient bills. The biggest ones were worth only $1 a piece.
We used to have $500 bills, even $10,000 bills, circulating in the US. But the government really wants to get rid of all paper currency—which is to say, all monetary privacy. We’re clearly heading toward a digital currency, which will be an utter and complete disaster. With paper currency, at least you had something physical that you could move and transport privately. But when we go to a digital currency, you’ll be completely under the thumb of the Authorities. Your account will be debited or credited at the will of the central bank.
International Man: What are the broader investment implications of eliminating the penny—and what does it reveal about the future of the dollar, inflation, and trust in fiat money?
Doug Casey: The dollar is going to suffer the fate of every other fiat currency from time immemorial. It’s being inflated out of existence as we speak. Or we could say digitized out of existence.
The government is running a two trillion-dollar deficit. That will soon be three, then four, then more. Almost all of it will be monetized since nobody sane will buy government debt at some point. Currency inflation will reach extremely high levels.
People are going to lose all faith in the dollar, both internationally and within the US. When that happens, we’re looking at a multilevel catastrophe.
Reprinted with permission from International Man.
