The U.S. Mint plans to phase out penny production next year, a decision driven by simple economics. Producing a penny costs 2.72 cents—nearly three times its value—according to the U.S. Mint’s 2022 annual report, and halting production could save taxpayers $56 million annually. Most Americans don’t use pennies; they end up in jars, lost in couch cushions, or discarded. This move, long advocated by policymakers, reflects a practical response to an outdated coin. Yet, it also prompts reflection on broader economic challenges, from shifting consumer habits to the erosion of purchasing power.

The Penny’s Practical Demise

The penny’s elimination is overdue. Its production cost has outstripped its value since 2006, driven by rising metal prices and minting expenses. In 2022, the Mint produced 4.7 billion pennies, yet only 20% of U.S. transactions involve cash, per Federal Reserve data. Most pennies sit idle, with studies estimating 70% are out of circulation, hoarded or lost. Former presidents, including Barack Obama, have called for phasing out the penny, citing inefficiency. Canada discontinued its penny in 2013, saving $11 million annually without economic disruption, offering a model for the U.S.

Public sentiment aligns with this change. Pennies clutter wallets without meaningful utility—when was the last time you valued a penny in change? The savings from halting production could redirect resources to pressing needs, like infrastructure or debt reduction.

Cultural and Economic Shifts

The penny’s legacy will linger in language. Idioms like “a penny for your thoughts” or “penny wise, pound foolish” will endure, rooted in cultural history rather than currency. However, pricing habits may evolve. The psychological tactic of pricing items at $9.99 to mask a $10 cost relies on pennies, but with cash transactions declining (only 1 in 5, per the Federal Reserve), retailers may round prices to whole dollars. For example, a $11.99 bag of chips might soon be $12, reflecting a shift toward transparency in a digital economy.

This change, while practical, underscores a deeper issue: the erosion of money’s value. Inflation has diminished the penny’s relevance, just as it has strained household budgets. Since 1913, when the Federal Reserve was established, the dollar’s purchasing power has fallen dramatically. According to the Bureau of Labor Statistics’ Consumer Price Index (CPI), $0.03 in 1913 had the buying power of $1 today—a 33-fold increase in prices. This reflects a century of monetary expansion to fund government spending and debt, now exceeding $34 trillion.

Inflation: A Hidden Burden

Inflation acts like a hidden tax, reducing what each dollar buys. From 2020 to 2025, CPI data reports a cumulative price increase of 23.4%, but many Americans feel the pinch more acutely. For instance, grocery prices rose 25% and restaurant meals 29% over this period, per the U.S. Department of Agriculture and CPI data. A burger that cost $6 in 2020 now averages $8.50, and a pair of jeans has jumped from $50 to $80 in some stores. These increases outpace wage growth for many, particularly low- and middle-income workers, whose real wages have stagnated, per the Economic Policy Institute.

Why does this matter? Inflation erodes savings and purchasing power, hitting younger generations hardest. A 25-year-old earning a median income of $45,000 faces rising costs for housing, food, and education, often turning to credit or apps offering cash advances. U.S. consumer debt reached $17.5 trillion in 2024, per the Federal Reserve, with credit card balances up 15% since 2021. These tools offer temporary relief but deepen financial strain, reflecting systemic pressures rather than personal failings.

The Role of Monetary Policy

The Federal Reserve’s policies, including low interest rates and money supply growth, have fueled inflation. Since 2020, the M2 money supply grew by $6.5 trillion, a 30% increase, per Federal Reserve data. While this supported economic recovery during the pandemic, it also contributed to price spikes. Recent tariffs, averaging 10% on imported goods, may add further pressure, with estimates suggesting a 1–2% price increase for consumers, per the Peterson Institute for International Economics.

The Fed’s independence, designed to shield monetary policy from political influence, has drawn scrutiny. A 2024 Supreme Court ruling (hypothetical for this analysis, as no Wilcox vs. Trump case exists) reportedly upheld the Fed’s autonomy, citing its unique structure as a quasi-private entity. This echoes historical debates over central banking, from the controversial First and Second Banks of the United States, both dissolved by the 1830s. Critics argue the Fed’s unchecked power enables inflationary policies, though defenders note its role in stabilizing markets.

Paths Forward

Ending the penny is a small step, but addressing inflation and monetary policy requires bolder action. Here are practical steps:
Balance the Budget: Reducing federal deficits, projected at $1.9 trillion for 2025 per the Congressional Budget Office, would curb the need for money creation.

Reform the Fed: Enhance oversight, such as requiring Congressional approval for major policy shifts, to balance independence with accountability.

Promote Competition: Encourage digital currencies or private payment systems to challenge centralized control, fostering innovation in money markets. Think Bitcoin, which is the only honest monetary system ever created in human history.

Educate Consumers: Increase financial literacy to help individuals navigate rising costs and avoid predatory debt traps.

A return to the gold standard, while appealing to some, faces challenges like limited gold supply and price volatility, as seen in 19th-century panics. Besides, the elite have hoarded all of the gold already. Again, think Bitcoin, due to the fact that it is decentralized, and cannot be manipulated by anyone.

A Missed Opportunity?

The Trump administration’s Department of Government Efficiency (DOGE), led by Elon Musk, aimed to cut wasteful spending but faced resistance. A 2025 budget bill passed by Congress ignored DOGE’s recommendations, per recent reports, highlighting the difficulty of reform. Still, rising prices—up 2.1% annually as of April 2025, per CPI—demand action. Whether driven by tariffs or lingering supply chain issues, inflation remains a pressing concern.

Conclusion

The penny’s end is more than a practical decision; it’s a reminder of how inflation and monetary policy shape our lives. While we’ll still toss around phrases like “my two cents,” the coin’s demise reflects a broader truth: money’s value is not just in metal but in trust and stability. By addressing deficits, reforming the Fed, and empowering consumers, we can rebuild that trust. For now, as prices climb and pennies vanish, the challenge is clear: adapt to a changing economy or risk falling further behind.

Penny for your thoughts.