ABC News reports that the U.S. Mint has now made it illegal to melt pennies and nickels. The practice became popular after the value of the metals in the coins surpassed their denominational value.

In fact, copper prices are up more than 180 percent since mid-2003, selling for just more than $3 a pound.

That means the modern penny (made after 1982) is worth 1.73 cents with production costs included. The nickel, which is made of copper and nickel, is actually worth 8.34 cents when production costs are included.

This is an interesting consequence of our money representing less goods and services than in the past. Money may seem like a measurement, but it can operate like a commodity. A higher euro against the dollar can cause investors to put their money in euros and drop demand for the dollar even further. Prices for gold, platinum, and other precious metals have soared because their real value remains the same until there is a new use for those materials.

The government actually has some incentive for inflation because it makes existing debt worth less (but not worthless :) ). Prolonged government deficit spending against a public who won’t say “no” devalues money.

The pennies and nickels that used to buy a ticket at the movie theater have become nearly worthless. We can accept it as a sign of the times, kill the currency, flood the market with copper and nickel for other uses, and not bother saving another dime. Otherwise, we can elect people committed to bringing government spending under revenue levels and thus reduce the meltdown of our savings.