Doug Casey on the end of the penny and the next phase of currency devaluation

International Man: President Trump has ordered the Treasury Department to stop minting the penny after 232 years. He justifies this by arguing that it costs more than two cents to produce a coin – a waste of taxpayer money. What do you think about this?

Doug Casey: It may seem strange that we’re talking about something as trivial as the end of the penny when we may be on the verge of World War III. But we can look at that in the near future – that’s how fluid the situation is.

So let’s turn our attention to something less dramatic: coin minting. An interesting fact: The United States once had a halfpenny coin – between 1793 and 1857 – made of pure copper and almost the size of a modern quarter. Debasement of coins is a long-standing trend in the United States.

Now the penny is about to be abolished. As usual, U.S. Administration underestimates the bad consequences – just as they overestimate the good ones. It costs not two cents, but 3.7 cents to produce a penny. They talked about economic inefficiency, but should have mentioned that this is because the currency itself is being destroyed. I’m not sure they truly understand cause and effect.

Abolition is inevitable: Production costs the Treasury $60 million annually – and no one uses the coins anymore. No one bends down to pick up a penny off the street. It’s estimated that 250 billion pennies are sitting uselessly in jars. They’re just wasting metal.

A quick look back: The first penny in 1793 weighed 13.48 grams of pure copper – heavier than today’s half dollar. The weight was reduced in 1795, and again in 1856. By 1864, it consisted of only 5% tin and zinc, and in 1982, copper was completely replaced by zinc – with a copper coating. A clear fraud that the Americans never noticed. Zinc is only about a quarter as valuable as copper.

Its intrinsic value has been steadily declining. Now the penny is being completely abolished – following gold in 1933, silver in 1964, and copper in 1982. Soon all coins will follow – and then paper money.

In 2006, it was made a criminal offense to melt down or export pennies or nickels because their metal value exceeded their face value. A measure familiar from third-world countries.

I.M.: What does the evolution of coinage tell us about cultural and political changes in the United States?

D.C.: Just as important as material deterioration is symbolic deterioration. Until 1909, US coins depicted symbols like the Goddess of Liberty, Native Americans, or eagles – not dead presidents. That changed with the Lincoln penny. It was similar in Rome: Before Caesar, coins depicted ideals; after him, they bore portraits of emperors – while the silver content plummeted to zero.

In 1909, Lincoln replaced the Native American. In 1938, the buffalo on the nickel was replaced by Jefferson. In 1932, Washington replaced the Goddess of Liberty on the quarter. Roosevelt continued this trend: in 1946, he replaced Mercury on the dime. This was inappropriate for a free republic – a dead politician on coins symbolizes the currency’s descent into politics.

Benjamin Franklin then replaced the Liberty figure (1948), JFK came in 1964, and Eisenhower in 1971. He was followed in 1979 by Susan B. Anthony – essentially an activist – on a token coin that soon disappeared from circulation.

The biggest fraud came in 1964, when the silver was removed from dimes, quarters, and half dollars. Since then, they have been made of copper with a silver coating – like in the late Roman era. Technically, they are no longer coins, but tokens. Coins have intrinsic value – tokens do not.

I.M.: The nickel now costs almost 14 cents to produce. Is it next?

D.C.: Yes, the nickel will disappear for the same reason the penny did. A nickel is made of 25% nickel and 75% copper – both more expensive than ever. Historically, that’s cheap – but not cheap enough. The nickel will soon be history.

In fact, all US coins have become worthless. Quarters are still in use, but they have little purchasing power. You can no longer play an arcade game with a quarter.

It’s a shame – children used to collect coins and learn the value of money. Today? No intrinsic value, no collectability – soon there will be no coins at all. And what will cool uncles use to perform coin tricks then?

I.M.: The highest-value US banknote since 1969 has been the $100 bill – now worth only a tenth of its original value. Why aren’t there larger bills, despite decades of inflation?

D.C.: It reminds me of Argentina. The government didn’t want to admit how bad the inflation was. You needed suitcases full of bills to pay in cash – the largest bill was actually a dollar.

In the US, there used to be $500 and $10,000 bills. But the government wants to get rid of cash – and with it, any form of financial privacy. We’re clearly moving toward a digital currency. A nightmare. With cash, you at least had something physical that you could move privately. With digital money, you’re completely at the mercy of others – every transaction is centrally monitored and controlled.

I.M.: What does all this mean for investors – and for the future of the dollar?

D.C.: The dollar will share the fate of all fiat currencies: It will disappear. Either through inflation or digitalization.

The U.S. budget deficit is at two trillion dollars – soon to be three, then four. No one will want to finance that anymore. So the Federal Reserve will monetize it. Inflation will become extreme.

At some point, people will lose trust – both at home and abroad. And then we’ll have a disaster on all levels.

 

yogaesoteric
July 3, 2025

 

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