Inflation killed the penny. Now it’s coming for your dollar.

The retirement of the penny has been framed as a tidy bit of housekeeping: a coin costing more to make than it is worth. But the underlying driver is inflation, which erodes the purchasing power of each unit of currency over time. The penny simply reached the point where its metal value and production cost exceeded its face value. That same erosion does not stop at one cent.

For markets, the relevant question is not whether small denominations disappear, but what persistent inflation means for the value of money itself. When prices rise faster than wages or returns, cash holdings and fixed-income payments lose real value, and investors typically reassess how much purchasing power their portfolios will retain over time.

What to watch: inflation readings, central bank policy decisions, and any further changes to currency production or composition. The penny's exit is a visible symptom of a broader, quieter process — the steady erosion of the dollar's buying power.