Time to Invest in Plastic Pennies?
If I want 100 pennies, all I have to do is go to my local bank and plop down a $1 bill.
But if I want plastic pennies, now that will cost me some real dough – $3.49 to be exact.
Who would have thought there was money to be made in toy pennies?
A company called Learning Advantage is cashing in on the plastic penny market, selling bags of the fake currency for more than three times the value of the real thing.
Nice work if you can get it, right?
Of course, we all get a little chuckle out of the absurdity. But the fact that plastic money is worth more than real money indicates a deep problem with the United States monetary system.
As we reported last fall, with a production cost of 1.6 cents each, it actually costs more to produce a penny than its worth. Currency debasement has eroded the value of the dollar to the extent that the penny has become less than worthless.
US monetary policy debases currency when it relies heavily on “printing” money through quantitative easing. Simply put, that means your money has less purchasing power. Currency debasement explains why the US ditched the copper penny in 1982, as well as silver half-dollars, quarters, and dimes in 1964. Today, we call old silver coins “junk silver.” However, they’re anything but junk – they actually contain a useful commodity that has held its value for centuries. It’s not that zinc or copper or silver have become “too expensive” – it’s that those coins have lost some of their purchasing power.
We see the impact of currency debasement in terms of wages. As we reported last month, in 1964 a minimum wage worker earned $1.25 per hour. That’s five silver quarters for every hour worked. Today, you can’t even buy a cup of coffee with those five quarters. But the melt-value of those silver quarters today stands close to $15 – the number minimum wage advocates throw around as the ideal.
So, what can you do?
Well, you could invest in plastic quarters. But you might be better off putting some of your money into physical gold or silver. Precious metals have historically held their value, even as government and central bank policies debase the currency.
Three-cent plastic pennies are pretty funny, but they reveal a very important truth – we need to fix our money!
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