Penny Polemics and Pontifications

Penny Polemics and Pontifications
Profile photo of Chris Horlacher

No sooner does the Canadian penny gets axed, do the establishment chimps start flinging dung at the critics of this move.  In the latest from the National Post, anyone criticizing the government’s decision to drop the penny is casually labeled a “crackpot”.  This is pretty much par for the course when it comes to the defenders of the establishment; all they do is insult other people.  Who are we, the lowly peasants, to question the decisions of our masters after all?

Dropping the penny saves us money, they say.  Does it?  While it’s true that the cost of making a penny now exceeds its spending power, pontificating on why this is now the case is something we the public are apparently too stupid to engage in.  Better to listen to the writers at establishment media organizations, who have never been caught off guard by an economic event, for our daily dose of economic truth.

All of this reeks of a familiar stench though.  In the late 1960’s the quarter and dime were ended in the de-facto sense.  Those coins used to be made from 80% or more silver but after the price of silver began to exceed the face value of those coins they were quickly pulled from circulation and replaced by a nickel imposter.  After it became too expensive even to use nickel then the government turned to steel in 1999 in order to continue creating what now amounted to little more than a casino token.


The penny followed a similar trajectory.  It was made from nearly pure copper up until 1996, at which point the government turned to zinc in order to make them.  In only 2 years it could no longer even maintain the zinc penny-standard and has made them out of steel ever since.  Now it’s farewell to even that denomination of currency and for the first time in Canadian history there will no longer be such a thing as 1/100th of a dollar, all transactions will be rounded to the nearest nickel.  Don’t expect that to last very long at this pace.

What better example of Gresham’s law is there though?  Once people were forced to accept nickel coinage at the same value as the silver-made coins, all silver was quickly hoarded out of existence.  We are now seeing the same with the old copper pennies as well.  A glance through eBay reveals a thriving industry of private silver and copper coin traders.  Some entrepreneurial inventors are even marketing sophisticated coin sorting machines that will easily separate the copper and steel pennies.

Debasing coins with base metals is hardly a new trick; it’s the oldest one, in fact.  Before the printing press, all money had to essentially be coins and so debasement took on slightly different forms than today but the effects were nonetheless the same.  In order to sustain chronic budgetary deficits, the Roman Empire turned to debasing the silver denarius in order to fund their extravagant military and welfare state.

The consequences of doing this were very real; the Empire didn’t survive much longer after they ruined their primary means of exchange.

This is what the chimpanzees in the mainstream media are hiding behind their pile of excrement; the incremental destruction of the national unit of exchange.  Real commodities like copper, silver and gold have traditionally retained their values over long periods of time and keep a fairly stable exchange rate between one another.  The problem is that the currency unit of Canada (and every other nation) has become so eroded that it is scarcely a shadow of its former self.


Does anyone really believe that a 40-fold increase in the money supply isn’t going to come without some consequences?  No, I didn’t think so.  This is why the establishment can only toss insults at anyone that may object to what it is that they’re doing, because even a child can see the problem here.  The Great Wizard of Oz is being exposed for what he really is, a swindler and a cheat.  Only this time I don’t think he’ll be able to buy Dorothy off with a few trinkets and a free ride home.

The great irony in all of this is that while the government is trying to spin this as them looking to save taxpayers money, the cost of keeping the penny in its current, adulterated state isn’t even worth mentioning compared to the massive deficits incurred by the bloated bureaucracy that taxpayers have been saddled with.


You almost have to laugh at the sheer comedy of it all, but I’m then reminded of the monumental tragedy that most people are still feasting on a pile of chimpanzee dung, thinking it’s foie gras.

  • mstob

    Chris, isn't the GoC ceasing to mint the penny, in some twisted way, a roling back of government? I don't think that you would support the continued minting of a worthless denomination would you?

    While I agree that this shows the inflationary effects of government deficit spending, once those effects come about, isn't it futile to hold onto the penny? Why keep paying for it?

    • Chris Horlacher

      "Why keep paying for it?"

      I don't want the government to continue minting pennies at a loss just for the sake of having a penny. I'm illustrating what this means in the larger inflationary context.

  • Diogenes

    great article. Also in 2012 new Loonies will remove all their nickel and copper composition, which previously composed over 90% of the coin. Check how wikipedia tries to cover it up

    "using steel provides cost savings and avoids fluctuations in price or supply of nickel"

    not fluctuations, permanent year over year increases!

  • BladeMcCool

    Maybe Canadians should start using Bitcoin.

  • Ohhh Henry

    I'm not sure that the writer of the NP story was referring to critics of the government as crackpots, or if he was attempting to channel the government policy hacks as they try to put spin on the relentless inflation that is biting into the Canadian public's backsides.

    I was talking to a teenager about the disappearance of the penny the other day. I expressed the opinion that there is no clearer sign of the decay of a society than the devaluation of its money, and there is no clearer sign of the devaluation of its money than the debasement and then disappearance of its coins. Yet these simple facts are the last thing that any public school history curriculum would ever discuss … for the simple reason that devaluation of the money serves the interests of the people who also control the public school system.

    The kid told me that inflation was actually mentioned at two points in their grade 11 class covering the history of the 20th century. The first was to note that Weimar inflation led to the ruin of German citizens' savings and help lead to the rise of Hitler and WW2. The second item was that government money-printing is what saved Canadians from the worst effects of the Great Depression, and then led to eventual prosperity by paving the road to WW2 with IOUs. I challenge you to find a better example of doublethink than that.

    Another example of doublethink is the writer Den Tandt's casual reference to opponents of currency debasement as "crackpots" without actually clarifying who is calling them crackpots, or why. To back up the first insult, coin collectors are then casually compared to sexual perverts.

    If he made it clear that he himself thinks that critics of monetary inflation are crackpots and perverts then he would have to explain or defend the premise that inflation is a boon to society. If he meant that it is only the self-interested political hacks associated with the Prime Minister who think that the critics are deviants, then he might have to acknowledge that currency debasement is a clear sign of the corruption of government and the decay and ruin of society. Instead the insult is wafted out into the air without attribution and allowed to create the kind of stink that no polite person would ever deign to mention, let alone strike up a forthright debate about it.

    When the debate (or rather pseudo-debate) over the abolishing altogether of cash comes to Canada, and I have no doubt that it will soon, you can be sure that accusations against the defenders of cash will be wafted out there by the media in the same way. Who stands to gain the most by halting the prohibition of cash? Why nobody (*cough* except criminals). According to an attributed and unmentioned source, revealed in an ungrammatical and ambiguous non-sentence.

Profile photo of Chris Horlacher

Chris began his career as an auditor at a Big 4 firm and before the age of 30 was the CFO of a start-up stock brokerage that now manages over $4 billion in assets. He went on to found his own management consulting firm and has been instrumental in numerous successful multi-million dollar start-ups and strategic initiatives for Canada’s largest companies, SME's and non-profits. Possessing Chartered Accountant and Chartered Professional Accountant designations, Chris is also certified by the Canadian Securities Institute as a partner, director and chief financial officer. His company website is

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