<== Site of the Week for 2011-03-28 ==>

Coin Inflation

This is interesting. At the time of this review, the copper inside a 1981 penny is worth about three cents. The metal used in a nickel is worth about seven cents. You can triple your money simply by putting your pre-1982 pennies in a jar!

The site Coin Inflation calculates the current "melt value" of common US coins.

It is illegal to melt US currency in the US; However, since the metal value of the coin is greater than the face value, older pennies and nickels are likely to start disappearing from common usage as they are secreted away by collectors.

The web site Coin Inflation provides an interesting starting point for a discussion about the Federal Reserve and inflation. Currently US currency is printed by a central bank called the Federal Reserve. The site US Inflation Calculator shows that US currency lost over 95% of its value from the creation of the Federal Reserve since 1913.

Monetary inflation has the exact same effect on the economy as taxes. Each year, the money in your wallet and investment accounts decreases by the rate of inflation set by the Federal Reserve. This money gets spent by the Federal Reserve in ways that favor large banks. So, the Federal Reserve is a primary component in growing gap between rich and poor.

As the centennial of the Federal Reserve roles around, I suspect that there will be a great deal of debate about monetary policy and inflation. Following the melt price of pennies and nickels provides a fun way to engage in that debate.