What the Demise of the Lowly Penny Really Means
The new administration announced that the U.S. Mint will stop producing the penny coin.
The penny, a mainstay piece of American currency, costs too much to produce. Treasury officials say it takes 3.7 cents to make the copper-coated coin. Thus, the nickel will eventually become the lowest denomination to make change.
The suppression of the penny is considered a casualty in the war on governmental waste. To save money, Americans are told to abandon it without regret or sentimentality.
However, the move represents more than just an exercise in saving money. It is an indicator of an economy in trouble that needs to be addressed.
Eternal and Natural Law: The Foundation of Morals and Law
The Purpose of Money
Saint Thomas Aquinas says money is “invented by the art of man, for the convenience of exchange, and as a measure of things salable.”1 It also serves as a store of value, allowing people to put away savings.
In fulfilling its functions, money facilitates the practice of commutative justice, whereby one receives what is due for a good or service. Unlike barter, money makes it easier to receive one’s due in transactions more precisely by creating units of value.
Money also allows people to estimate what things are worth in those units and to arrive at exact prices that satisfy the demands of justice.
The Reason for Currencies
Thus, nations issue currencies, which are tokens that serve as measures of value. The monetary unit is like a yardstick that allows a person to calculate a thing’s worth. To make this calculation easier, governments divide the monetary unit into smaller fractions to approximate the true value of goods and services closer.
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Thus, the American government uses the dollar unit and divides it up into a hundred cents. It mints coinage reflecting this division, including the penny. The closer the price is to the actual value of something, the more complete is the practice of commutative justice. Both sides leave the transaction satisfied.
The Penny as an Expression of a Passion for Justice
The role of the lowly penny is an expression of a nation’s passion for justice. It takes the desire to give each what is due to a height since even the smallest fractional value is considered important in the transaction.
The penny is a symbol of a healthy economy that considers the true and most accurate value of things. It shows that the government is zealous in satisfying the demands of justice.
The Suppression of the Penny
The suppression of the penny signals that something has gone wrong with the American economy. It signals that the economy has reached a point where the system is not allowing the coin to do its job.
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The main culprit is inflation, which has brought down the value of the penny to insignificance. Nothing can be bought with a single penny anymore. Gone are the days of penny sales, penny candy or other such goods. A penny saved is barely a penny earned. The dime store has been replaced with the dollar store, where the penny counts for little.
Thus, the penny’s diminished fractional value makes it harder, not easier, to calculate how strict commutative justice might be exercised. It is like including an almost microscopic unit of measure on the yardstick.
Replacing the Penny
The suppression of the penny will make the nickel the smallest denomination of American currency. This will force the merchant and consumer to round off prices to the nearest five-cent increment. In this case, the jump is a bit too abrupt, and the approximation of true value is hampered—albeit slightly.
The suppression of the penny marks the first time in modern American history that a fractional monetary unit is taken out of use. It prepares the way for further changes, which will corrode the dollar further.
In the present climate of inflation, it is easy to see how the nickel might be replaced with the dime or higher units.
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The Penny as a Source of Stability
A penny suppression will affect the stability of the currency. One characteristic of money is that it must be a stable measure of value and means of exchange. Consumers must have confidence in the currency as a condition for its use.
The psychological dependability of the omnipresent penny helps foster the needed stability even with its reduced worth due to inflation. The reassuring visage of Abraham Lincoln has long been part of American coinage. Should the coin fade away, something of this stability will also fade.
Thus, the penny suppression should be a red flag that says something is terribly wrong with the economy. American money is no longer stably serving its threefold functions of means of exchange, measure of worth and store of value.
It has reached a point of no return that prepares the way for yet more suppressions if changes are not made to the system.
The Dangers of Frenetic Intemperance
Indeed, frenetically intemperate forces have long entered the economy and markets, inflating prices, increasing debt and creating financial uncertainty. This mixture is a recipe for disaster.
Major changes are needed to address these issues. These changes must restrain the intemperance of consumers who accept no limits and a government that spends beyond its means.
Tweaking the system will not resolve the problem. Indeed, things are really dire when not even the lowly penny can survive.
Photo Credit: © trekandphoto – stock.adobe.com
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