Economics, U.S. Economy

A dime is what a penny was

Image Credit: Shutterstock

Image Credit: Shutterstock

The Royal Canadian Mint recently ended its distribution of pennies. (A Canadian dollar is worth about the same as a US dollar and one Canadian cent the same as a US cent.) Australia and New Zealand have also dispensed with the penny.

Doing away with the penny is an excellent symbol of the long-term depreciation of the currency under contemporary central banking regimes. Sixty-five years ago, far less than an average lifespan these days, we had entered the post-World Wars era, and I was five years old. What was a penny then?

At the end of 1947, the US Consumer Price Index was 23.4. Today it is 231. In other words, US currency is worth about 10% of what it was then in purchasing power, so it takes about 10 times as much money to buy the same thing, on average. In other words, a dime now is what a penny was then.

Likewise, $2.50 is what a quarter was, $10 what a dollar was, and $100 dollars what $10 was when I started kindergarten. In 1947, nobody thought they needed a coin worth 1/10 of a cent. That is equivalent to a penny now. So it’s pretty clear that we, like the Canadians, don’t need pennies. Since a dime is what a penny was, we could also dispense with nickels (half a 1947 penny).

Continuous inflation has, over time, a remarkable cumulative effect. We can now look forward knowing that every central bank has perpetual inflation, at a moderate but ever-compounding rate, as its goal. So when my five-year old grandson is my age, what once was a penny will be a dollar, and the US and Canada can then dispense with dimes and quarters.

2 thoughts on “A dime is what a penny was

  1. Continuous inflation has, over time, a remarkable cumulative effect. We can now look forward knowing that every central bank has perpetual inflation, at a moderate but ever-compounding rate, as its goal. So when my five-year old grandson is my age, what once was a penny will be a dollar, and the US and Canada can then dispense with dimes and quarters.

    You are far too optimistic and underestimate inflation. By the time your five-year old grandson gets to be your age there may not be the same currency that you knew.

  2. ” We can now look forward knowing that every central bank has perpetual inflation, at a moderate but ever-compounding rate, as its goal. ”

    We could look forward to inflation ever since the 1913 Federal Reserve Act claimed the dollar was a supply instead of a standard of measurement, thus sabotaging the gold dollar in order to make way for the price-control scam known as fiat money. There is no money supply, people decide what money is worth, not how much there is. Deciding what money is worth depends, like everything else, on what it is. No fiat-money supporter can say what money is, they don’t care what money is worth, the goal of central bankers, besides robbery, is changing the subject, worries about the amount of inflation serve no other purpose. But central bankers have lost the war, the fiction they rely on evaporates, fiat money grows ever more out of place in the digital age.

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