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!


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


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.


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.


Excellent idea.


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.


Liked it!

david f

i completely agree.

should have happened a decade ago.

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


One other thing--add Lincoln's image to the dollar coin to quiet the Illinois lobby.

Arvin Bautista

My big question is with regards to all the parts of our economy that works in sub-5 cent percentages, like sales tax and gas. Are we just gonna round down?


Thats...startlingly simple. From a strictly consumer point of view, this certainly makes a lot of sense. The most obvious issue would be the sales taxes, as they often wouldn't come out rounded. You'd think that wouldn't be a big deal, but after working in retail for a couple years, a couple of pennies can be a big deal to someone.


Wouldn't it be easier to just make wider tills?

Mike B

FYI only poor countries lack singleton notes and 1/100th coins. The very fact that we are rich means we can use those forms of legal tender with pride.

Also $50's are NOT generally acceptable in exchange. What post hyper-inflation country are you living in? Anyway unless you're buying drugs purchases requiring $50 bills should be made using some form of card.

Eric M. Jones

Instead of coins, we should use coin-cell batteries as change. Then they would be of some use.

Ari Caroline

Strikes me as a brilliant, if somewhat anachronistic, solution. Unless you believe that physical currency has more than a 10-year lifespan before being largely replaced by digital currency, the time and cost of the transition wouldn't be justified.

Esteban G.

Follow the money. Paper currency is printed on expensive high tech fibers produced by Crane Paper Company, the sole source vendor of this "paper" (actually linen) for the past 200 years or so. It deteriorates quickly and must be replaced frequently, making one dollar bills very lucrative business for Crane. They literally print money.


Dr. Hammermesh you have spent too much time in Europe, I'm affraid. American consumers want to keep the dollor bill and the penny. Get rid of the $50, problem solved.


Wait - you people are still using paper money? Retro!


We could also drop 10s and not rock the boat. Swapping in 2 5s wouldn't affect anybody too adversely.


Nickels cost more than 5 cents to produce.
Americans don't like dollar coins; proved over and over again. Just look at the sacks full of billions of S.B.Anthony and "Squaw buck" coins in various vaults around the country.


Illinois will never go for it, unless you put Lincoln on the dollar coin. And then Virginia will be upset that Washington is cut out.

Jackson should've never been on our currency in the first place, let alone on the ubiquitous $20. So put Lincoln on the $20, put Washington on the dollar coin, and send Jackson down the memory hole.