The nickel, the once popular US five-cent coin, is known for its nickel content (25 percent nickel and 75 percent copper). It originated as a type of fiat money in that its intrinsic metal value was far less than the purchasing power stamped on it. The final act in the illustrative monetary career of the nickel is expected to be extinction, as with the penny, as inflation increases the coin’s cost of production and reduces its real purchasing power.
Nickel is an important metal for many industrial purposes, and its hardening and anticoercive properties explain why it is used in many US and EU coins. There are a few thousand different nickel alloys used in commercial production and a few hundred thousand aerospace, architecture, consumer, industrial, and transportation products that require nickel. Its use is highlighted in military, monetary, and battery applications.
Despite nickel’s economic importance and even the recent chaos in its wholesale market, there is almost no media coverage or economic commentary on the metal. Most economists do not know anything about nickel and generally ignore it.
However, like many commodities, nickel can serve as a microcosm for economic analysis and improve our historical understanding of inflation. Despite its origins as a fiat money, nickel has ironically become a marker for price stability in more recent decades. However, in the end, economists are expected to sign off on nickel’s death sentence handed down by the Federal Reserve and its inflationary crusaders….