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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!

Learn more about this author, Tom Koecke.
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