The days of penny candy and traditional mom-and-pop shops are fading memories for many Americans. These days, you might still come across classic treats like Tootsie Rolls, Mary Janes, jelly beans, red hots, and chewable wax lips at specialty stores around the nation.

However, the future may not hold pennies anymore. President Trump has instructed the U.S. Mint to halt penny production, highlighting the fact that taxpayers lose over two cents for every new penny minted. In the fiscal year 2024, the Mint recorded an $85.3 million loss on the approximately 3.2 billion pennies produced.

This decision is well overdue, but it wasn’t Trump who eradicated the penny – it was inflation. The crux of the issue lies in the fact that while the penny’s value has remained at one cent by definition, the prices of everything else, including the zinc that constitutes 97.5 percent of the coin, have risen. This inflation is mainly due to the Federal Reserve’s monetary policies post the U.S. switch to fiat money. Although this shift happened officially in August 1971, an argument can be made to trace it back to 1933 when the U.S. departed from the gold standard.

In 1971, the penny had some buying power – a gumball at the grocery store, for instance. The Consumer Price Index hit 40.7 in 1971, but as of January this year, it soared to over 319, showing nearly an eightfold price increase while the penny’s value plummeted by around 87 percent. The Fed is significantly responsible for these hikes.

Late economist Milton Friedman articulated that inflation occurs when the money supply rises faster than the value of goods and services produced. Had the Fed not increased the money supply more than the economy’s growth, the penny would still possess value, and its production cost would be approximately half a cent, instead of 3.7 cents.

It’s no surprise that people nowadays tend not to bother picking up a penny or even take the time to exchange their jar of pennies at a Coinstar machine. There is currently about $240 billion worth of pennies circulating, averaging 700 per individual, which is equivalent to $7.

Despite all this, our time is considered more precious even though median hourly earnings touched roughly $20. This is slightly more than a penny every two seconds. So, even if pennies were magically produced, without taxpayer finance, the value of our time surpasses that of pennies.

When the penny vanishes and cash prices are rounded to the nearest nickel, there might be concerns about consumers being cheated due to the prices ending in nines. This likelihood is marginal because purchases generally involve multiple items, and most states impose sales taxes.

Thus, the final digits on cash register receipts are pretty arbitrary. As proven by data from thousands of convenience store transactions, when consumers stack pennies in jars, retailers generally gain more from their banks.

As the Treasury and the Mint cease production, it will eventually lead to a scarcity of pennies with stores, potentially informing customers to bring them in the future. However, when penny supplies dwindle, retailers might inform customers about cash payments being rounded up or down to the nearest nickel.

Over time, as observed in other nations like Australia, Canada, and the Netherlands, people adapt quickly to the removal of one-cent coins. This transition period will not be immediate; it might take several years. As the Fed continuously diminishes the value of money, the insignificance of pennies will become more apparent, and our daily transactions will no longer involve them.