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!