Obama Aims to Cheapen U.S. Currency, Literally

Posted by Brittany Stepniak - Tuesday, February 14th, 2012

In an effort to save money and reduce the $15+ trillion deficit, Obama plans to have traditional coins minted a bit differently...

Obama has agreed to debase the American coinage even more in order to “save money.”

According to the President's proposed budget cuts, the Department of Treasury will grant the Mint greater flexibility in the materials they may legally use to make coins “to reduce its losses on some coins and the production costs associated with volatile metals prices.”

Spot prices for copper and zinc have fluctuated more than 400 percent in the past decade alone. The price value of a nickel has taken off even more, exceeding 500 percent in the same amount of time.

These extreme fluctuations have greatly contributed to “volatile and negative margins” for both the penny and the nickel. On account of these metal-value increased, the true worth of a penny is actually about 2.4 cents and the nickel costs roughly “11.2 cents to produce .2.”

The volatility within the metal's market is expensive for the Mint; and it's completely out of their control...until now.

In line with 2013 Budget cut goals, officials seek to make the actual cost of coin (production and real market value) more sustainable.

The Budget enables the Department of the Treasury to explore, analyze, and approve new, less-expensive metals for all circulating coins based on factors that will result in the highest quality of coin production at the most cost-effective price. Such factors may include physical, chemical, metallurgical, and technical characteristics; material, fabrication, minting, and distribution costs; materials availability and sources of raw materials; durability; effects on sorting, handling, packaging and vending machines; and resistance to counterfeiting.

The added flexibility the Budget proposes will improve the minting process and enable the Mint to mitigate the high, volatile costs of commodity metals.

Additionally, the Budget would remove the current law requirement that twenty percent of all dollar coins produced be of the Native American design. Numismatic quality dollar coins would remain available for purchase, but eliminating the twenty percent requirement would increase the Mint’s flexibility to match the supply to consumer demand.

However, this certainly isn't the first time U.S. coins have undergone a serious round of debasement.

Since 1982, pennies are comprised of 97.5% zinc. It just goes to show that you can't always judge a book by its cover...Although the outer layer of the coin is coated in real copper, everything else underneath is a conglomeration of a much cheaper metal.

Fast forward 30 years later, and that much zinc is more valuable than the worth of the penny itself. Hence, another dose of debasement will soon take place...