In another encroachment into Congressional power, President Donald Trump ordered the United States Mint to stop producing one cent coins—no more pennies!
For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful! I have instructed my Secretary of the US Treasury to stop producing new pennies. Let's rip the waste out of our great nations budget, even if it's a penny at a time.
Donald Trump, Truth Social
It should be noted that Trump once again missed the mark, as the five cent coin, the nickel, costs 13.78 cents to produce.
The underlying reason for the loss of seigniorage for these coins is the Federal Reserve monetary system and its constant inflation of the debt-based money supply. Inflation is necessary for debt payments and for the Federal Reserve system to continue. Since the creation of the Federal Reserve System in 1913, the value of one dollar has declined to approximately 2 cents relative to the 1913 value. Conversely, to match the value of one 1913 dollar, a person needs thirty-two dollars in 2024 Federal Reserve Notes. The chart, with data from inflationdata.com, based on the Consumer Price Index, shows the progress of dollar debasement under the Federal Reserve System.
Over the span of the Federal Reserve System, a financial royalty has grown and become ever more powerful. The means of enriching this oligarch class is monetary inflation and the unequal distribution of inflated money. The lower classes receive less than a proportionate share of inflated money, while the oligarch class receives a greater than proportionate share. The graph shows the relative changes in population, wages, and money supply since 1960. The U.S. population has grown from 179 million in 1960 to 339 million in 2024, an 89.4% increase. The average hourly wage of production and non-supervisory employees has grown from $2.50/hr in 1964 to $29.61 in 2024 an 1084% increase. The M2 money supply has grown from $312.4 billion in 1960 to $21,498.5 billion in 2024, an 6781% increase. (Data from FRED Federal Reserve Bank of St. Louis; series: POPTHM, M2NS, AHETPI)
If hourly wages had grown at the rate of the M2 money supply, adjusted for population growth, the 2024 average wage would be $89.70 per hour (2.5 * 67.81 / 1.89).
To paraphrase a quote from John Maynard Keynes:
By a continuing process of inflation, [the Federal Reserve Monetary System] can confiscate, secretly and unobserved, an important part of the wealth of … citizens. … The process … does it in a manner which not one man in a million is able to diagnose.
– John Maynard Keynes, The Economic Consequences of the Peace
The results of this continuing inflation appear in many, seemingly unrelated ways. For example, the United States has 1.9 million incarcerated prisoners, making the United States the world leader in both total prison population and incarceration rates per capita. As explained in the video Why America Solves Inequality with Prisons | John Clegg & Clara Mattei:
[M]ass incarceration and the prison-industrial complex aren't policy mistakes, they're how American capitalism protects wealth and manages inequality. Prisons become an austerity strategy: cheap for budgets and the wealthy, brutally costly for the poor and working class, who are kept scared, precarious, and easier to control. Fixing crime would mean taxing the rich and redistributing power and resources into real security and dignity — housing, healthcare, education, childcare, mental health care. Instead, the U.S. starves the safety net and uses prisons as the cheapest way to manage the fallout.
It was during the Reagan administration in the 1980's that the neo-liberal agenda of the financial elite and the Federal Reserve banking cartel was implemented as a matter of policy. The regulations and usury limits governing America's financial sector and banking cartel were considerably reduced or eliminated. The Federal Reserve, under chairman Paul Volker, raised interest rates to extremely high levels to induce a recession and transfer income to the financial elite, manufacturing was transferred to low wage countries, and the working class was undermined in many ways. Note that, as shown in the graph above, the M2 money supply continued to inflate in the 1980's despite the claim that this austerity was needed to combat inflation.
While the working class lost ground under a multi pronged assault, the financial elites gained new privileges and were hugely enriched by monetary inflation directed into financial markets by the banking cartel. The data is presented in a 2020 RAND working paper, Trends in Income From 1975 to 2018. Through deliberate policies against the working class and the device of directing monetary inflation to securities markets and the elites, the Federal Reserve played a vital role in creating a generation of billionaire oligarchs from the stolen wages of the American working class. Through inflation everyone's incomes increase, but some increase much more than others. As John Maynard Keynes said, the distributive role of inflation by the Federal Reserve is imperceptible—the most damaging impacts take decades to play out. Rather than a dramatic injustice, it is more like a slow-moving disaster.
As I have argued in other articles, replacing the Federal Reserve monetary system with a public money system as described in the NEED Act and the Green Party platform is a foundational issue which should be incorporated into nearly every progressive cause. It is fundamentally essential for the public to gain democratic control over the monetary system — the creation, issuance, and circulation of money — in order to achieve a lasting transition to a more just and sustainable society.