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Cash Is Dying. Long Live Dollars.

The United States Treasury didn’t print any $US10 bills last year. Shocking, but true. It’s because we use less and less cash every year. Which doesn’t mean we’re going to be a cashless society anytime soon. That’s great.

A story in the New York Times reveals some fascinating data about the business of printing money. In addition to not printing up any new $US10 bills, the Treasury printed fewer $US5 bills in 2010 than in any other year over the last three decades. Dollar bills now circulate much longer than ever before, an average of 40 months. Thanks to better printing, scanning and processing technology, today the Treasury only replaces 21 per cent of currency returned to it by banks, down from 46 per cent in 1989. In short: we’re using less cash and holding onto it longer.

And then there’s Ben Franklin.

The $US100 bill is more popular than ever all over the world. In 2010, the Treasury printed more C-notes than dollar-dollar bills (y’all). It’s hoarded everywhere currency is unstable, and the government makes a tidy profit on it to boot. As the New York Times notes:

This is very profitable for the United States. Currency is printed by the Treasury and issued by the Federal Reserve. The central bank pays the Treasury for the cost of production – about 10 cents a note – then exchanges the notes at face value for securities that pay interest. The more money it issues, the more interest it earns. And each year the Fed returns to the Treasury a windfall called a seigniorage payment, which last year exceeded $US20 billion.

All of which is to say, the dollar isn’t going anywhere anytime soon. And that makes me very happy.

I love that dollars lets me make anonymous transactions. I’m not at all sold on virtual currencies that promise to do the same. BitCoin, for example, is a joke. I tend to buy into Adam Cohen’s description of it on Quora:

Bitcoin is a ludicrously bad idea. It is a scam. A Scam. It is not a currency. The economic assumptions underpinning the Bitcoin ecosystem are laughable, and ignore hundreds of years of accumulated understanding of how currencies work with each other.

I love that dollars lets me buy whatever I want, pretty much anywhere. While the Times cites some examples of places that don’t take cash (and I do bump into that on aeroplanes quite a bit) for the most part American dollars are good all over the world. They take them in Canada, Cuba, Laos and London too. Unlike the thousands of Vietnamese Dong and Laotian Kip I’ve got leftover that I basically can’t use anywhere outside of those countries.

Dollars are great in case of an emergency. I live in San Francisco, where the Big One is essentially a certainty. Can you guess what’s in my earthquake kit? It’s not a BitCoin or a a Visa card. In a disaster situation, I want something in my hand. I want something that’s easy to convert into goods and services if all the lights are out and there’s no network connection to be found.

Look, I’m eager to use all kinds of next-generation payment technologies. Smart companies like Square and Google and PayPal are all working on ways to let me pay for something without handing over cash, or whipping out my credit card. That’s great! Especially since I’m often running late.

But the dollar is my old steady. And I’m glad to see it’s not going aywhere anytime soon.


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