Cutting the Currency Gordian Knot

I got two $50 bills from the bank. Today, fifties are money-generally acceptable in exchange. Yet each time I give a shop a fifty, the cashier has to lift up the tray and place the bill in a separate location. There are trays for singles, fives, tens, and twenties only. Many people have argued for getting rid of the dollar bill. This would make a place for the fifty, would save substantial resources in printing money (shifting the U.S. production possibility frontier outward) and would stop us from being the only rich country with a low-value basic paper currency.

But we do need a dollar coin; and if we make one, there will be insufficient places in cash registers for pennies. So, get rid of pennies-few rich countries have a coin so worthless; and no other coin costs more to manufacture than it is worth. The problem is America’s strong penny lobby, apparently partly driven by the zinc industry. The solution is a simple politico-economic compromise: Make a dollar coin at least partly out of zinc! Abolish the dollar bill and the penny, keep the industry happy, and economize on resources!

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  1. Tumbolian says:

    Alternatively, we could set a deflationary monetary policy until the penny and $1 bill are no longer resource-inefficient :-P

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  2. Jeff says:

    What happened to the effort a few years ago to promote the new “golden dollar” coin, with the idea of eventually phasing out the dollar bill? The dollar coins were advertised and circulated a bit, but you hardly see them any more.

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  3. Orin says:

    When you make the one dollar coin can you put a hole in the middle? Would make it really easy to distinguish from other coins and really convenient for me to string a couple together and put them on my kids wrist, or backpack strap.

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  4. Donnie says:

    Excellent idea.

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  5. Tzimiskes says:

    I believe if this were ever proposed that the zinc lobby is sufficiently clever to mobilize those who go ballistic at any thought of change to fight to retain the penny. Then we’ll end up with both the penny and the world’s ugliest dollar coin.

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  6. ryan says:

    Liked it!

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  7. david f says:

    i completely agree.

    should have happened a decade ago.

    btw… another reason to do it is the additional seniorage (profit) the government would make.

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  8. Frank says:

    One other thing–add Lincoln’s image to the dollar coin to quiet the Illinois lobby.

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