Yet there are at least a few signs that U.S. officialdom is rethinking coins. “What’s a Penny (or a Nickel) Really Worth?” was the title of a 2007 paper published by the Federal Reserve Bank of Chicago. Since medieval times, the traditional ﬁx when minting costs surpassed the face value of the coinage was to “debase the threatened coin, that is, make it of a cheaper material.” Noting that this isn’t possible under current law, the author’s advice to Congress is to either give the Treasury the green light to ﬁnd some cheaper substance for future pennies, or “discontinue the one-cent denomination and rebase pennies to be worth ﬁve cents.”
Discontinue. That is unusually decisive, if not subversive, language for a Fed official. Why? Because eliminating the penny is an admission of inﬂation. “You just don’t do that,” a seasoned ﬁnancial journalist once told me, as if I’d just suggested toppling the government. “What does a formal acknowledgement of the worthlessness of 1¢ say about the worth of $1?” In other words, it doesn’t help the economy to remind people that prices are continually rising, while the purchasing power of their money is continually falling, even though both are true. Acknowledging inﬂation makes people doubt, and as any priest, rabbi, imam, or shaman will tell you, doubt and faith don’t go well together. Even though research suggests that killing the penny would beneﬁt the economy, how can we be sure? All of a sudden, the seemingly small idea of ending pennies isn’t merely about inconvenient objects or the various uses for zinc. It’s about the whole damn economy.