| United States dollar |
|
|
| ISO 4217 code |
USD |
| Central bank |
Federal Reserve System |
| Website |
www.federalreserve.gov |
| Official user(s) |
 United States
 Panama[10]
 Ecuador[11]
 El Salvador[12]
14 U.S. and 4 non-U.S.
territories [show]
|
| Unofficial user(s) |
|
| Inflation |
3.39% Nov. 2011. |
| Source |
inflationdata.com |
| Method |
CPI |
| Pegged by |
|
| Subunit |
|
| 1/10 |
Dime |
| 1/100 |
Cent |
| 1/1000 |
Mill (used in accounting and by fuel stations) |
| Symbol |
$ |
| Nickname |
Buck, bean, paper, smackeroo, dead president, smacker, and greenback.
Plural: dough, green, bread, bones, simoleons, skrilla, bank clams.
Also, Washingtons, Jeffersons, Lincolns, Jacksons, Benjamins, Grants,
and Hamiltons are used based on denomination; also peso in Puerto Rico, and piastre in Cajun Louisiana. |
| Coins |
|
| Freq. used |
1¢, 5¢, 10¢, 25¢ |
| Rarely used |
50¢, $1 |
| Banknotes |
|
| Freq. used |
$1, $5, $10, $20, $50, $100 |
| Rarely used |
$2, $500, $1,000, $5,000, $10,000, $100,000 |
| Printer |
Bureau of Engraving and Printing |
| Website |
www.moneyfactory.gov |
| Mint |
United States Mint |
| Website |
www.usmint.gov |
The
United States dollar (
sign:
$;
code:
USD; also abbreviated
US$), also referred to as the
American dollar, is the official
currency of the
United States of America and its overseas territories. It is divided into 100 smaller units called
cents or
pennies.
The U.S. dollar is the currency most used in
international transactions and is one of the world's dominant
reserve currencies.
[14] Several countries
use it as their official currency and, in many others, it is the
de facto currency.
[15] It is also used as the sole currency in some
British Overseas Territories (
British Virgin Islands and
Turks and Caicos).
[edit] Overview
The
Constitution of the United States of America provides that the
United States Congress shall have the power "To coin Money".
[16]
Laws implementing this power are currently codified in Section 5112 of
Title 31 of the United States Code. Section 5112 prescribes the forms in
which the United States dollars shall be issued.
[17] Those coins are both designated in Section 5112 as "legal tender" in payment of debts.
[17] The
Sacagawea dollar is one example of the copper alloy dollar. The pure silver dollar is known as the
American Silver Eagle.
Section 5112 also provides for the minting and issuance of other coins,
which have values ranging from one cent to fifty dollars.
[17] These other coins are more fully described in
Coins of the United States dollar.
The Constitution provides that "a regular Statement and Account of
the Receipts and Expenditures of all public Money shall be published
from time to time".
[18] That provision of the Constitution is made specific by Section 331 of Title 31 of the United States Code.
[19] The sums of money reported in the "Statements" are currently being expressed in U.S. dollars (for example, see the
2009 Financial Report of the United States Government).
[20] The U.S. dollar may therefore be described as the
unit of account of the United States.
The word "dollar" is one of the words in the first paragraph of
Section 9 of Article 1 of the U.S. Constitution. In that context, "dollars" is a reference to the
Spanish milled dollar, a coin that had a
monetary value of 8 Spanish units of currency, or
reales. In 1792 the U.S. Congress adopted legislation titled
An act establishing a mint, and regulating the Coins of the United States.
Section 9 of that act authorized the production of various coins,
including "DOLLARS OR UNITS—each to be of the value of a Spanish milled
dollar as the same is now current, and to contain three hundred and
seventy-one grains and four sixteenth parts of a grain of pure, or four
hundred and sixteen grains of standard silver". Section 20 of the act
provided, "That the money of account of the United States shall be
expressed in dollars, or units... and that all accounts in the public
offices and all proceedings in the courts of the United States shall be
kept and had in conformity to this regulation". In other words, this act
designated the United States dollar as the
unit of currency of the United States.
The U.S. dollar bill uses the decimal system, consisting of 100 equal
cents (symbol ¢). It is also officially divided into 1,000
mills or ten
dimes, while ten dollars is equal to an
eagle. However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the name of the
coin
with the value of 10¢, while "eagle" and "mill" are largely unknown to
the general public, though mills are sometimes used in matters of
tax levies, and
gasoline prices are usually in the form of $X.XX9 per gallon, e.g., $3.599, sometimes written as $3.59
9⁄10. When currently issued in circulating form, denominations equal to or less than a dollar are emitted as
U.S. coins while denominations equal to or greater than a dollar are emitted as
Federal Reserve notes
(with the exception of gold, silver and platinum coins valued up to
$100 as legal tender, but worth far more as bullion). Both one-dollar
coins and notes are produced today, although the note form is
significantly more common. In the past, "paper money" was occasionally
issued in denominations less than a dollar (
fractional currency) and gold coins were issued for
circulation up to the value of $20 (known as the "
double eagle," discontinued in the 1930s). The term
eagle was used in the
Coinage Act of 1792 for the denomination of ten dollars, and subsequently was used in naming
gold
coins. Paper currency less than one dollar in denomination, known as
"fractional currency," was also sometimes pejoratively referred to as
"shinplasters." In 1854,
James Guthrie, then
Secretary of the Treasury, proposed creating $100, $50 and $25 gold coins, which were referred to as a "Union," "Half Union," and "Quarter Union,"
[21] thus implying a denomination of 1 Union = $100.
Today, USD notes are made from
cotton fiber paper, unlike most common
paper, which is made of wood fiber. U.S. coins are produced by the
United States Mint. U.S. dollar
banknotes are printed by the
Bureau of Engraving and Printing and, since 1914, have been issued by the
Federal Reserve. The "
large-sized notes" issued before 1928 measured 7.42 inches (188 mm) by 3.125 inches (79.4 mm);
small-sized notes,
introduced that year, measure 6.14 inches (156 mm) by 2.61 inches
(66 mm) by 0.0043 inches (0.11 mm). When the current, smaller sized U.S.
currency was introduced it was referred to as Philippine-sized currency
because the Philippines had previously adopted the same size for its
legal currency.
[edit] Etymology
In the 16th century, Count Hieronymus Schlick of
Bohemia began minting coins known as
Joachimstalers (from German
thal, or nowadays usually
Tal, "valley", cognate with "dale" in English), named for
Joachimstal, the valley where the silver was mined (St. Joachim's Valley, now Jáchymov; then part of the
Holy Roman Empire, now part of the
Czech Republic).
[22] Joachimstaler was later shortened to the German
Taler, a word that eventually found its way into Danish and Swedish as
daler, Dutch as
daalder, Ethiopian as ታላሪ (talari), Hungarian as
tallér, Italian as
tallero, and English as
dollar.
[22] Alternatively,
thaler is said to come from the German coin
Guldengroschen ("great guilder", being of
silver but equal in value to a
gold guilder), minted from the silver from Joachimsthal.
[edit] Nicknames
The
colloquialism "
buck" (much like the British word "
quid"
for the pound sterling) is often used to refer to dollars of various
nations, including the U.S. dollar. This term, dating to the 18th
century, may have originated with the colonial fur trade.
[23] "
Greenback" is another nickname originally applied specifically to the 19th century
Demand Note dollars created by
Abraham Lincoln to finance the costs of the
Civil War for the
North.
[24]
The original note was printed in black and green on the back side. It
is still used to refer to the U.S. dollar (but not to the dollars of
other countries). Other well-known names of the dollar as a whole in
denominations include "
greenmail", "
green" and "
dead presidents" (the last because late presidents are pictured on some of the bills).
"
Grand", sometimes shortened to simply "
G", is a common term for the amount of $1,000. The suffix "
K" or "
k" (from "
kilo-")
is also commonly used to denote this amount (such as "$10k" to mean
$10,000). In colloquial English, when someone refers to a "
large" or "
stack", it is usually a reference to an amount that is a multiple of $1,000 (such as "
fifty large" meaning $50,000). Banknotes' nicknames are the same as their values (such as "
five", "
twenty" etc.) The $100 bill is nicknamed "
Benjamin", "
Benji" or "
Franklin" (after
Benjamin Franklin, who is pictured on the note), "
C-note" (C being the
Roman numeral for 100), "
Century note" or "
bill" (e.g. "
two bills" being $200). The $20 bill has been referred to as "
double sawbuck", "
dub" or "
Jackson" (after
Andrew Jackson); the $10 bill—as "
sawbuck", "
ten-spot" or "
Hamilton" (after
Alexander Hamilton); the $5 bill—as "
fin", "
fiver" or "
five-spot". The $2 bill is sometimes called "
deuce", "
Tom", "
Jefferson" or "
T.J." (after
Thomas Jefferson); and the $1 bill—"
single" or "
buck". The dollar has also been referred to as a "
bone" and "
bones" in plural (e.g. "
twenty bones" is equal to $20) or a "
bean". The newer designs are sometimes referred to as "
Bigface" bills or "
Monopoly money". Some people refer to U.S. money as "
cha-chingers", "
bucks", "
green-backs" and "
smackers".
In French-speaking areas of
Louisiana, the dollar is referred to as "
piastre" (pronounced "pee-as") and the French holdover "
sous" (pronounced "soo") is used to refer to the cent.
In
Panama, the equivalent of buck is "
palo" (literally "stick").
In
Ecuador, the dollar is referred to as "
lata".
[citation needed]
In
Peru, a nickname for the U.S. dollar is "
coco", which is a pet name for
Jorge ("
George" in Spanish), a reference to the portrait of
George Washington on the $1 note.
Puerto Ricans, both living in
Puerto Rico and in the
United States, may refer to the dollar as "
peso".
In some places in
Mexico, prices in U.S. dollars are referred to as "
en americano" ("in American"), with the word "peso" used in Mexico primarily to refer to the
Mexican peso.
Cubans call the U.S. dollar "fula". Loosely translated from Cuban
jargon mean bad or not good. American money was not bad to have or use
by Cubans in the island, but its possession was penalized before the
mid-1990s, hence the nickname.
Cuban Americans many times call it "
pesos'.
[edit] Dollar sign
Main article:
Dollar sign
The symbol
$, usually written before the numerical amount, is
used for the U.S. dollar (as well as for many other currencies). The
sign was the result of a late 18th-century evolution of the
scribal abbreviation "p
s" for the
peso. The
p and the
s eventually came to be written over each other giving rise to
$.
[25][26][27][28]
Another popular explanation is that it comes from the
Pillars of Hercules on the
Spanish Coat of arms on the
Spanish dollars that were minted in the
New World mints in
Mexico City,
Potosí,
Bolivia, and in
Lima,
Peru. These
Pillars of Hercules on the silver
Spanish dollar coins take the form of two vertical bars (||) and a swinging cloth band in the shape of an "S".
Yet another fictional explanation suggests that the dollar sign was
formed from the capital letters U and S written or printed one on top of
the other. This theory, popularized by novelist
Ayn Rand in
Atlas Shrugged,
[29] does not consider the fact that the symbol was already in use before the formation of the United States.
[30]
[edit] History
Obverse of rare 1934 $500 Federal Reserve Bill, featuring a portrait of President
William McKinley.
The first dollar coins issued by the
United States Mint (founded 1792) were similar in size and composition to the
Spanish dollar.
The Spanish, U.S. silver dollars, and Mexican silver pesos circulated
side by side in the United States, and the Spanish dollar and Mexican
peso remained legal tender until
1857. The coinage of various English colonies also circulated. The
lion dollar
was popular in the Dutch New Netherland Colony (New York), but the lion
dollar also circulated throughout the English colonies during the 17th
century and early 18th century. Examples circulating in the colonies
were usually worn so that the design was not fully distinguishable, thus
they were sometimes referred to as "dog dollars".
[31]
The U.S. dollar was created by the Constitution and defined by the
Coinage Act of 1792.
It specified a "dollar" to be based in the Mexican peso at 1 dollar per
peso and between 371 and 416 grains (27.0 g) of silver (depending on
purity) and an "eagle" to be between 247 and 270 grains (17 g) of gold
(again depending on purity). The choice of the value 371 grains arose
from
Alexander Hamilton's
decision to base the new American unit on the average weight of a
selection of worn Spanish dollars (and later Mexican peso). Hamilton got
the treasury to weigh a sample of Spanish dollars and the average
weight came out to be 371 grains. A new Spanish dollar was usually about
377 grains in weight, and so the new
U.S. dollar was at a slight discount in relation to the Spanish dollar.
The
Coinage Act of 1792
set the value of an eagle at 10 dollars, and the dollar at 1/10 eagle.
It called for 90% silver alloy coins in denominations of 1, 1/2, 1/4,
1/10, and 1/20 dollars; it called for 90% gold alloy coins in
denominations of 1, 1/2, 1/4, and 1/10 eagles.
The value of gold or silver contained in the dollar was then
converted into relative value in the economy for the buying and selling
of goods. This allowed the value of things to remain fairly constant
over time, except for the influx and outflux of gold and silver in the
nation's economy.
The early currency of the USA did not exhibit faces of presidents, as
is the custom now. In fact, George Washington was against having his
face on the currency, a practice he compared to the policies of European
monarchs.
[citation needed]
The currency as we know it today did not get the faces they currently
have until after the early 20th century; before that "heads" side of
coinage used profile faces and striding, seated, and standing figures
from Greek and Roman mythology and composite native Americans. The last
coins to be converted to profiles of historic Americans were the dime
(1946) and the Dollar (1971).
For articles on the currencies of the colonies and states, see
Connecticut pound,
Delaware pound,
Georgia pound,
Maryland pound,
Massachusetts pound,
New Hampshire pound,
New Jersey pound,
New York pound,
North Carolina pound,
Pennsylvania pound,
Rhode Island pound,
South Carolina pound and
Virginia pound.
[edit] Continental currency
Continental One Third Dollar Bill (obverse)
In 1775, the United States and the individual states began issuing
"Continental Currency" denominated in Spanish dollars and (for the
issues of the states) the £sd currencies of the states. The dollar was
valued relative to the states' currencies at the following rates:
The continental currency suffered from printing press inflation and
was replaced by the silver dollar at the rate of 1 silver dollar = 1000
continental dollars.
[edit] Silver and gold standards
From 1792, when the
Mint Act was passed, the dollar was defined as 371.25
grains (24.056 g) of silver. Many historians
[who?]
erroneously assume gold was standardized at a fixed rate in parity with
silver; however, there is no evidence of Congress making this law. This
has to do with
Alexander Hamilton's
suggestion to Congress of a fixed 15:1 ratio of silver to gold,
respectively. The gold coins that were minted however, were not given
any denomination whatsoever and traded for a market value relative to
the Congressional standard of the silver dollar. 1834 saw a shift in the
gold standard to 23.2 grains (1.50 g), followed by a slight adjustment to 23.22 grains (1.505 g) in 1837 (16:1 ratio).
[citation needed]
In 1862, paper money was issued without the backing of precious metals, due to the
Civil War.
Silver and gold coins continued to be issued and in 1878 the link
between paper money and coins was reinstated. This disconnection from
gold and silver backing also occurred during the
War of 1812.
The use of paper money not backed by precious metals had also occurred
under the Articles of Confederation from 1777 to 1788. With no solid
backing and being easily counterfeited, the continentals quickly lost
their value, giving rise to the phrase "not worth a continental". This
was a primary reason for the "No state shall... make any thing but gold
and silver coin a tender in payment of debts" clause in article 1,
section 10 of the United States Constitution.
The
Gold Standard Act
of 1900 abandoned the bimetallic standard and defined the dollar as
23.22 grains (1.505 g) of gold, equivalent to setting the price of 1
troy ounce
of gold at $20.67. Silver coins continued to be issued for circulation
until 1964, when all silver was removed from dimes and quarters, and the
half dollar was reduced to 40% silver. Silver half dollars were last
issued for circulation in 1970.
Gold coins were confiscated by
Executive Order 6102
issued in 1933 by Franklin Roosevelt. The gold standard was changed to
13.71 grains (0.888 g), equivalent to setting the price of 1 troy ounce
of gold at $35. This standard persisted until 1968. Between 1968 and
1975, a variety of pegs to gold were put in place. The price was at
$42.22 per ounce before August 15, 1971
[citation needed] saw the U.S. dollar freely float on
currency markets.
According to the
Bureau of Engraving and Printing,
the largest note it ever printed was the $100,000 Gold Certificate,
Series 1934. These notes were printed from December 18, 1934 through
January 9, 1935, and were issued by the Treasurer of the United States
to Federal Reserve Banks only against an equal amount of gold bullion
held by the Treasury. These notes were used for transactions between
Federal Reserve Banks and were not circulated among the general public.
Official United States coins have been produced every year from 1792 to the present.
Collector coins for which everyday transactions are non-existent.
[32]
- American Eagles
originally were not available from the Mint for individuals but had to
be purchased from authorized dealers. In 2006 The Mint began direct
sales to individuals of uncirculated bullion coins with a special
finish, and bearing a "W" mintmark.
Technically, all these coins are still legal tender at face value, though some are far more valuable today for their
numismatic value, and for gold and silver coins, their
precious metal value. From 1965 to 1970 the
Kennedy half dollar was the only
circulating coin with any silver content though the Mint still makes what it calls Silver Proof sets for collectors.
In addition, an experimental
$4.00 (Stella)
coin was also minted, but never placed into circulation and is properly
considered to be a pattern rather than an actual coin denomination.
The $50 coin mentioned was only produced in 1915 for the
Panama-Pacific International Exposition (1915) celebrating the opening of the
Panama Canal.
Only 1,128 were made, 645 of which were octagonal; this remains the
only U.S. coin that was not round as well as the largest and heaviest
U.S. coin ever.
From 1934 to present the only denominations produced for circulation
have been the familiar penny, nickel, dime, quarter, half dollar and
dollar. The nickel is the only coin still in use today that is
essentially unchanged (except in its design) from its original version.
Every year since 1866, the nickel has been 75% copper and 25% nickel,
except for 4 years during
World War II when nickel was needed for the war.
[edit] Collector coins
The United States Mint produces Proof Sets specifically for collectors and speculators.
Silver Proofs
tend to be the standard designs but with the dime, quarter, half
dollar, and in some cases the dollar having silver content. Another type
of proof set is the Presidential Dollar Proof Set where four special $1
coins are minted each featuring a president.
- 2007 had George Washington, John Adams, Thomas Jefferson, and James Madison
- 2008 had James Monroe, John Quincy Adams, Andrew Jackson, and Martin Van Buren
- 2009 had William Henry Harrison, John Tyler, James K. Polk, and Zachary Taylor
- 2010 had Millard Fillmore, Franklin Pierce, James Buchanan, and Abraham Lincoln
- 2011 is to have Andrew Johnson, Ulysses S. Grant, Rutherford B. Hayes, and James A. Garfield
[edit] Dollar coins
The first United States dollar was minted in 1794. Known as the
Flowing Hair Dollar, it contained 416
grains of "standard silver" (89.25%
silver and 10.75%
copper), as specified by Section 13
[33] of the
Coinage Act of 1792. It was designated by Section 9 of that Act as having "the value of a
Spanish milled dollar".
Dollar coins have not been very popular in the United States.
[34] Silver dollars were minted intermittently from 1794 through 1935; a copper-nickel dollar of the same large size, featuring President
Dwight D. Eisenhower, was minted from 1971 through 1978. Gold dollars were also minted in the 19th century. The
Susan B. Anthony dollar
coin was introduced in 1979; these proved to be unpopular because they
were often mistaken for quarters, due to their nearly equal size, their
milled edge, and their similar color. Minting of these dollars for
circulation was suspended in 1980 (collectors' pieces were struck in
1981), but, as with all past U.S. coins, they remain
legal tender.
As the number of Anthony dollars held by the Federal Reserve and
dispensed primarily to make change in postal and transit vending
machines had been virtually exhausted, additional Anthony dollars were
struck in 1999. In 2000, a new $1 coin, featuring
Sacagawea, (the
Sacagawea dollar)
was introduced, which corrected some of the mistakes of the Anthony
dollar by having a smooth edge and a gold color, without requiring
changes to vending machines that accept the Anthony dollar. However,
this new coin has failed to achieve the popularity of the still-existing
$1 bill and is rarely used in daily transactions. The failure to
simultaneously withdraw the dollar bill and weak publicity efforts have
been cited by coin proponents as primary reasons for the failure of the
dollar coin to gain popular support.
[35]
In February 2007, the
U.S. Mint, under the
Presidential $1 Coin Act of 2005,
[36] introduced a new $1 U.S. Presidential dollar coin. Based on the success of the "
50 State Quarters" series, the new coin features a sequence of presidents in order of their inaugurations, starting with
George Washington, on the obverse side. The reverse side features the
Statue of Liberty. To allow for larger, more detailed portraits, the traditional inscriptions of "
E Pluribus Unum",
"In God We Trust", the year of minting or issuance, and the mint mark
will be inscribed on the edge of the coin instead of the face. This
feature, similar to the edge inscriptions seen on the
British £1
coin, is not usually associated with U.S. coin designs. The inscription
"Liberty" has been eliminated, with the Statue of Liberty serving as a
sufficient replacement. In addition, due to the nature of U.S. coins,
this will be the first time there will be circulating U.S. coins of
different denominations with the same president featured on the obverse
(heads) side (
Lincoln/
penny,
Jefferson/
nickel,
Franklin D. Roosevelt/
dime,
Washington/
quarter and
Kennedy/
half dollar/
dollar). Another unusual fact about the new $1 coin is
Grover Cleveland
will have two coins with his portrait issued due to the fact he was the
only U.S. President to be elected to two non-consecutive terms.
[37]
Early releases of the Washington coin included
error coins
shipped primarily from the Philadelphia mint to Florida and Tennessee
banks. Highly sought after by collectors, and trading for as much as
$850 each within a week of discovery, the error coins were identified by
the absence of the edge impressions "E PLURIBUS UNUM IN GOD WE TRUST
2007 P". The mint of origin is generally accepted to be mostly
Philadelphia, although identifying the source mint is impossible without
opening a mint pack also containing marked units. Edge lettering is
minted in both orientations with respect to "heads", some amateur
collectors were initially duped into buying "upside down lettering
error" coins.
[38]
Some cynics also erroneously point out that the Federal Reserve makes
more profit from dollar bills than dollar coins because they wear out in
a few years, whereas coins are more permanent. The fallacy of this
argument arises because new notes printed to replace worn out notes
which have been withdrawn from circulation bring in no net revenue to
the government to offset the costs of printing new notes and destroying
the old ones. As most
vending machines are incapable of making change in
banknotes, they commonly accept only $1 bills, though a few will give change in dollar coins.
[edit] Mint marks
Most U.S. coins bear a
mint mark as part of the design, usually found on the
front of the coin near the date although in the past it was more commonly found on the
reverse. The
Philadelphia Mint issues coins bearing a letter P (or no mark at all), while the
Denver Mint uses a letter D. The
San Francisco Mint
uses an S, though no coins have been released from that mint for
general circulation since 1980. It does, however, continue to strike
proof coins for collectors. The
West Point Mint
uses a W, though this is rarely seen as the West Point mint generally
only makes high denomination coins (with face values over $1.00) which
are not meant for everyday use. A CC mark, for the
Carson City Mint, was used from 1870 to 1893, but the mint at that location was only a temporary establishment. The
New Orleans Mint
used a mint mark O. It operated from 1838 until Louisiana seceded from
the Union in 1861, and again from 1879 to 1909. The letter D was also
used for coinage of the
Dahlonega Mint from 1837 to 1861, and C was used for the
Charlotte Mint during the same timespan. The latter two mints struck gold coins only.
[edit] Banknotes
The U.S. Constitution provides that Congress shall have the power to "borrow money on the credit of the United States".
[39] Congress has exercised that power by authorizing
Federal Reserve Banks to issue
Federal Reserve Notes.
Those notes are "obligations of the United States" and "shall be
redeemed in lawful money on demand at the Treasury Department of the
United States, in the city of Washington, District of Columbia, or at
any Federal Reserve bank."
[40] Federal Reserve Notes are designated by law as "
legal tender" for the payment of debts.
[41] Congress has also authorized the issuance of more than 10 other types of banknotes, including the
United States Note[42] and the
Federal Reserve Bank Note. The Federal Reserve Note is the only type that remains in circulation since the 1970s.
Currently printed denominations are
$1,
$2,
$5,
$10,
$20,
$50, and
$100.
Notes above the $100 denomination stopped being printed in 1946 and
were officially withdrawn from circulation in 1969. These notes were
used primarily in inter-bank transactions or by
organized crime; it was the latter usage that prompted
President Richard Nixon to issue an executive order in 1969 halting their use. With the advent of electronic banking, they became less necessary.
[citation needed] Notes in denominations of $500, $1,000, $5,000, $10,000, and $100,000 were all produced at one time; see
large denomination bills in U.S. currency for details. These notes are now collector's items and are worth more than their face value to collectors.
[citation needed]
Though still predominantly green, post-2004 series incorporate other
colors to better distinguish different denominations. As a result of a
2008 decision in an accessibility lawsuit filed by the
American Council of the Blind, the
Bureau of Engraving and Printing
is planning to implement a raised tactile feature in the next redesign
of each note, except the $1 and the version of the $100 bill already in
process. It also plans larger, higher-contrast numerals, more color
differences, and distribution of currency readers to assist the visually
impaired during the transition period.
[43]
[edit] Means of issue
Currently, the US government maintains over 800 billion US dollars in
cash money (primarily Federal Reserve Notes) in circulation.
[44][45] The amount of cash in circulation is increased (or decreased) by the actions of the
Federal Reserve System. Eight times a year, the 12-person
Federal Open Market Committee meet to determine US
monetary policy.
[46] Every business day, the Federal Reserve System engages in
Open market operations to carry out that monetary policy.
[47] If the Federal Reserve desires to increase the money supply, it will buy securities (such as US Treasury Bonds) anonymously
[citation needed]
from banks in exchange for dollars. Conversely, it will sell securities
to the banks in exchange for dollars, to take dollars out of
circulation.
[48]
When the Federal Reserve makes a purchase, it credits the seller's
reserve account (with the Federal Reserve). This money is not
transferred from any existing funds—it is at this point that the Federal
Reserve has created new
high-powered money.
Commercial banks can freely withdraw in cash any excess reserves from
their reserve account at the Federal Reserve. To fulfill those requests,
the Federal Reserve places an order for printed money from the US
Treasury Department.
[49] The Treasury Department in turn sends these requests to the Bureau of Engraving and Printing (to print new
dollar bills) and the Bureau of the Mint (to stamp the coins).
Usually, the short term goal of open market operations is to achieve a
specific short term interest rate target. In other instances, monetary
policy might instead entail the targeting of a specific exchange rate
relative to some foreign currency or else relative to gold. For example,
in the case of the USA the Federal Reserve targets the
federal funds rate,
the rate at which member banks lend to one another overnight. The other
primary means of conducting monetary policy include: (i)
Discount window lending (as
lender of last resort);
(ii) Fractional deposit lending (changes in the reserve requirement);
(iii) Moral suasion (cajoling certain market players to achieve
specified outcomes); (iv) "Open mouth operations" (talking monetary
policy with the market).
Buying power of one U.S. dollar compared to 1774 USD
| Year |
Equivalent buying power |
| 1774 |
$1.00 |
| 1780 |
$0.59 |
| 1790 |
$0.89 |
| 1800 |
$0.64 |
| 1810 |
$0.66 |
| 1820 |
$0.69 |
| 1830 |
$0.88 |
| 1840 |
$0.94 |
| 1850 |
$1.03 |
| 1860 |
$0.97 |
|
| Year |
Equivalent buying power |
| 1870 |
$0.62 |
| 1880 |
$0.79 |
| 1890 |
$0.89 |
| 1900 |
$0.96 |
| 1910 |
$0.85 |
| 1920 |
$0.39 |
| 1930 |
$0.47 |
| 1940 |
$0.56 |
| 1950 |
$0.33 |
| 1960 |
$0.26 |
|
| Year |
Equivalent buying power |
| 1970 |
$0.20 |
| 1980 |
$0.10 |
| 1990 |
$0.06 |
| 2000 |
$0.05 |
| 2007 |
$0.04 |
| 2008 |
$0.04 |
| 2009 |
$0.04 |
| 2010 |
$0.03 |
|
U.S. Consumer Price Index 1913–2006
The 5th paragraph of
Section 8
of Article 1 of the U.S. Constitution provides that the U.S. Congress
shall have the power to "coin money" and to "regulate the value" of
domestic and foreign coins. Congress exercised those powers when it
enacted the
Coinage Act of 1792. That Act provided for the minting of the
first U.S. dollar and it declared that the U.S. dollar shall have "the value of a
Spanish milled dollar as the same is now current".
[50]
The table to the right shows the equivalent amount of goods that, in a
particular year, could be purchased with $1. The table shows that from
1774 through 2009 the U.S. dollar has lost about 96.4% of its buying
power.
[51]
The decline in the value of the U.S. dollar corresponds to
price inflation, which is a rise in the general level of prices of goods and services in an economy over a period of time.
[52] A
consumer price index (CPI) is a measure estimating the average price of consumer goods and services purchased by households. The
United States Consumer Price Index, published by the
Bureau of Labor Statistics, is a measure estimating the average price of consumer goods and services in the United States.
[53] It reflects inflation as experienced by consumers in their day-to-day living expenses.
[54] A graph showing the U.S. CPI relative to
1982-1984 and the annual year-over-year change in CPI is shown at right.
The value of the U.S. dollar declined significantly during wartime, especially during the
American Civil War,
World War I, and
World War II.
[55] The
Federal Reserve,
which was established in 1913, was designed to furnish an "elastic"
currency subject to "substantial changes of quantity over short
periods," which differed significantly from previous forms of
high-powered money such as gold, national bank notes, and silver coins.
[56]
Over the very long run, the prior gold standard kept prices stable—for
instance, the price level and the value of the U.S. dollar in 1914 was
not very different from the price level in the 1880s. The Federal
Reserve initially succeeded in maintaining the value of the U.S. dollar
and price stability, reversing the inflation caused by the First World
War and stabilizing the value of the dollar during the 1920s, before
presiding over a 30% deflation in U.S. prices in the 1930s.
[57]
Under the
Bretton Woods system established after
World War II,
the value of the U.S. dollar was fixed to $35 per ounce, and the value
of the U.S. dollar was thus anchored to the value of gold. Rising
government spending in the 1960s, however, led to doubts about the
ability of the United States to maintain this convertibility, gold
stocks dwindled as banks and international investors began to convert
dollars to gold, and as a result the value of the dollar began to
decline. Facing an emerging
currency crisis
and the imminent danger that the United States would no longer be able
to redeem dollars for gold, gold convertibility was finally terminated
in 1971 by
President Nixon, resulting in the "
Nixon shock."
[58]
The value of the U.S. dollar was therefore no longer anchored to
gold, and it fell upon the Federal Reserve to maintain the value of the
U.S. currency. The Federal Reserve, however, continued to increase the
money supply, resulting in
stagflation
and a rapidly declining value of the U.S. dollar in the 1970s. This was
largely due to the prevailing economic view at the time that inflation
and real economic growth were linked (the
Phillips curve), and so inflation was regarded as relatively benign.
[58] Between 1965 and 1981, the U.S. dollar lost two thirds of its value.
[51]
In 1979,
President Carter appointed
Paul Volcker Chairman of the Federal Reserve.
The Federal Reserve tightened the money supply and inflation was
substantially lower in the 1980s, and hence the value of the U.S. dollar
stabilized.
[58]
Over the thirty-year period from 1981 to 2009, the U.S. dollar lost over half its value.
[51]
This is because the Federal Reserve has targeted not zero inflation,
but a low, stable rate of inflation—between 1987 and 1997, the rate of
inflation was approximately 3.5%, and between 1997 and 2007 it was
approximately 2%. The so-called "
Great Moderation" of economic conditions since the 1970s is credited to monetary policy targeting price stability.
[58]
There is ongoing debate about whether central banks should target
zero inflation (which would mean a constant value for the U.S. dollar
over time) or low, stable inflation (which would mean a continuously but
slowly declining value of the dollar over time, as is the case now).
Although some economists are in favor of a zero inflation policy and
therefore a constant value for the U.S. dollar,
[57] others contend that such a policy limits the ability of the central bank to control
interest rates and stimulate the economy when needed.
[59]
Contrary to some urban legends, there is not now, nor has there ever
been, any skins of animals contained in US monies. The term frog skin,
in reference to the bill, is in regards to the coloration of the bill's
back.
[edit] Exchange rates
[edit] Historical exchange rates
Currency units per U.S. dollar, averaged over the year.[60] * = value at start of year. 1864
|
1970* |
1980* |
1985* |
1990* |
1993 |
1999 |
2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
| Euro |
— |
— |
— |
0.8343 |
0.8551 |
0.9387 |
1.0832 |
1.1171 |
1.0578 |
0.8833 |
0.8040 |
0.8033 |
0.7960 |
0.7293 |
0.6791 |
0.7176 |
0.6739 |
| Japanese yen |
357.6 |
240.45 |
250.35 |
146.25 |
111.08 |
113.73 |
107.80 |
121.57 |
125.22 |
115.94 |
108.15 |
110.11 |
116.31 |
117.76 |
103.39 |
93.68 |
87.78 |
| Pound sterling |
0.4164 |
0.4484[61] |
0.8613[61] |
0.6207 |
0.6660 |
0.6184 |
0.6598 |
0.6946 |
0.6656 |
0.6117 |
0.5456 |
0.5493 |
0.5425 |
0.4995 |
0.5392 |
0.6385 |
0.4548 |
| Canadian dollar |
1.081 |
1.168 |
1.321 |
1.1605 |
1.2902 |
1.4858 |
1.4855 |
1.5487 |
1.5704 |
1.4008 |
1.3017 |
1.2115 |
1.1340 |
1.0734 |
1.0660 |
1.1412 |
1.0298 |
| Mexican peso |
— |
2.801 |
2.671 |
2.501 |
3.1237 |
9.553 |
9.459 |
9.337 |
9.663 |
10.793 |
11.290 |
10.894 |
10.906 |
10.928 |
11.143 |
13.498 |
12.623 |
| Renminbi yuan |
— |
1.7050 |
2.9366 |
4.7832 |
5.7620 |
8.2783 |
8.2784 |
8.2770 |
8.2771 |
8.2772 |
8.2768 |
8.1936 |
7.9723 |
7.6058 |
6.9477 |
6.8307 |
6.7696 |
| Indian rupee |
- |
0.0213 |
0.024 |
0.029 |
0.021 |
0.021 |
0.026 |
0.024 |
0.027 |
0.021 |
0.026 |
0.021 |
0.025 |
0.027 |
0.021 |
0.029 |
0.026 |
| Singapore dollar |
— |
— |
2.179 |
1.903 |
1.6158 |
1.6951 |
1.7361 |
1.7930 |
1.7908 |
1.7429 |
1.6902 |
1.6639 |
1.5882 |
1.5065 |
1.4140 |
1.4543 |
1.24586 |
| South African Rand |
0.7182 |
0.7780 |
2.2343[62] |
2.5600 |
3.2729 |
6.1191 |
6.9468 |
8.6093 |
10.5176 |
7.5550 |
6.4402 |
6.3606 |
6.7668 |
7.0477 |
8.2480 |
8.4117 |
11.73161 |
| Source: Last 4 years 2005-2002 2003-2100 1996-1999 1993-1996 1990 1970-1992 1970-1985 Canada, China, Mexico
1. Mexican peso values prior to 1993 revaluation. |
Estados Unidos
