In the latest episode of Money Metals Midweek Memo, host Mike Maharrey delves into the Federal Reserve's ever-changing stance on inflation, the reality behind rising consumer prices, and a seemingly unrelated but important development: the end of the U.S. penny. 

Through sharp analysis and historical comparisons, Maharrey explains why government monetary policy continues to erode the value of the dollar while reinforcing the importance of holding physical gold and silver.

Maharrey begins with a reference to Monty Python's famous Dead Parrot s ketch, drawing a humorous but telling analogy between the Federal Reserve's handling of inflation and the pet store owner's refusal to admit that the bird was dead.

He notes that, in 2022, Federal Reserve Chairman Jerome Powell and other officials insisted that inflation was "transitory." However, when consumer prices rose beyond expectations, the Fed was forced to change its tune. By mid-2023, officials hinted that inflation had been "beaten," and markets reacted with optimism.

However, Maharrey reminds listeners that he repeatedly warned against this overly optimistic view, arguing that the Fed never did enough to fully contain inflation. As recent CPI (Consumer Price Index) data show, inflation remains persistently high, proving that the supposed victory over rising prices was itself transitory.

Breaking down the CPI: price increases are hard to ignore

In reviewing the latest inflation data, Maharrey highlights several key figures from the December 2024 and January 2025 CPI reports:

Annual inflation rate (January 2025): 3.0%.

December 2024 CPI: 2.9%.

Peak monthly inflation (January 2025): increase of 0.5%.

December monthly increase: 0.4%.

The steady rise in the CPI in recent months calls into question the notion that inflation is under control. Notably, core CPI (which excludes volatile food and energy prices) rose 0.4% in January, bringing the annual core CPI to 3.3% , a level that has remained stubbornly high since mid-2024.

Despite these figures, Maharrey stresses that the official CPI underestimates actual inflation. If the government had used the methodology of the 1970s, current inflation would be closer to 6% or more, meaning that the cost of living is rising much faster than reported.

The Fed's dilemma: raise rates or cut them?

With inflation higher than expected, the Fed faces a difficult choice:

Raise interest rates further to combat inflation. Reduce rates to relieve pressure on the debt-laden economy.

So far, the Fed has taken an intermediate stance, pausing rate hikes, but delaying planned cuts. Markets had initially expected rate cuts by March 2025, but the latest CPI report has postponed that expectation until at least September.

Maharrey warns that while inflation data suggests that rates should rise, the economy remains addicted to artificially low interest rates. Ultimately, he predicts that when financial markets begin to crack under pressure, the Fed will revert to its old playbook of strategies: cutting rates and injecting liquidity through quantitative easing (QE), leading to even higher inflation.

The death of the penny: a symbol of a worthless dollar

In a move that might seem trivial at first glance, former President Donald Trump recently announced the end of the U.S. penny, citing the excessive cost of minting it . According to the U.S. Mint, producing each penny now costs 3.69 cents, which will result in an annual loss of more than $85 million by 2024.

According to Maharrey, the real issue is not the penny itself, but what it represents. The falling value of low denomination coins is a direct reflection of how inflation has eroded the purchasing power of the U.S. dollar. It recalls a time when a single penny could buy several pieces of chewing gum, whereas today, even a quarter barely covers the cost.

The U.S. government has taken similar steps in the past to devalue its currency:

1982: The pennies were stripped of most of their copper and replaced with cheaper zinc.

1965: Silver was eliminated from the quarters, dimes and fifty-cent coins, replacing them with base metals (scrap silver).

As inflation continues to undermine the value of the dollar, Maharrey predicts that other small currencies, such as the nickel, could also soon disappear.

The solution: gold and silver as hard currency

Maharrey closes the episode with a clear message: the best hedge against inflation and currency devaluation is physical gold and silver. Unlike fiat currency, which loses value over time, precious metals maintain purchasing power.

He points out that pre-1965 silver quarters (commonly known as junk silver quarters), once worth only 25 cents, are now worth 23 times their face value due to their silver content. With analysts predicting that gold could exceed $3,000 per ounce by 2025 , now is the time to secure real money before the next inflation-driven crisis unfolds .

For those interested in buying gold and silver, he directs listeners to Money Metals Exchange, where they can shop online or speak with a precious metals specialist at 1-800-800-1865.

Final thoughts

The latest mid-week memo from Money Metals highlights a sobering reality: inflation is far from under control and the Fed's actions suggest deeper economic trouble ahead. Meanwhile, the government's decision to eliminate the penny is yet another sign of the dollar's continued devaluation.

As Maharrey warns, the best way to protect wealth is to own real assets (gold and silver) before the next financial storm hits. 

Mike Maharrey, Money Metals