by Tom Koecke

Created on: August 25, 2007   Last Updated: July 15, 2011

Of course pennies are worth the same as before!

Worth is best thought of as its component parts. In the case of a penny, it is a mining, smelting, and minting process which results in a coin bearing the value of one one-hundredth of a dollar. The purity of the alloy, and the weight of the coin, are the same as before.

There is no market fluctuation for a penny, unlike other metals. A penny's value relative to a dollar is fixed. Someone one time estimated that picking up a penny is the same as making $37 per hour. If it was then, it still is.

The reason a penny appears to be worth less today is its relative value for exchange purposes. The exchange value has diminished so much that it now costs more than a penny to produce a penny!

This is the result of inflation. Inflation, as it implies, is artificial growth of the money supply. Since there are more dollars out there, each penny is one one-hundredth of more and more dollars.

In the end, a penny is still worth one cent, but one cent does not have the exchange value as when there were fewer artificial dollars in the money supply!

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