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.