United States dollar
The United States dollar is the official currency of the United States and its territories per the Coinage Act of 1792. One dollar is divided into 100 cents, or into 1000 mills for accounting and taxing purposes. The Coinage Act of 1792 created a decimal currency by creating the dime, nickel, and penny coins, as well as the dollar, half dollar, and quarter dollar coins, all of which are still minted in 2020.
Several forms of paper money were introduced by Congress over the years, the latest of which being the Federal Reserve Note that was authorized by the Federal Reserve Act of 1913. While all existing U.S. currency remains legal tender, issuance of the previous form of the currency was discontinued in January 1971. As a result, paper money that is in current circulation consists primarily of Federal Reserve Notes that are [|denominated] in U.S. dollars.
Since the convertibility of paper U.S. currency into any precious metal was suspended in 1971, the U.S. dollar is de facto fiat money. Not only is the U.S. dollar the world's primary reserve currency as the most used in international transactions, it is the official currency in several countries and the de facto currency in many others. Aside from the United States itself, the American dollar is also used as the sole currency in two British Overseas Territories in the Caribbean: the British Virgin Islands and Turks and Caicos Islands. A few countries use the Federal Reserve Notes for paper money while still minting their own coins, or also accepting U.S. dollar coins. As of January 31, 2019, there is approximately in circulation, of which is in the Federal Reserve Notes.
The U.S. dollar as a currency is sometimes referred to as the greenback by foreign exchange traders and the financial press in other countries, such as Australia, New Zealand, South Africa, and India.
Overview, of the U.S. Constitution provides that Congress has the power "o coin money." Laws implementing this power are currently codified in Title 31 of the U.S. Code, under Section 5112, which prescribes the forms in which the United States dollars should be issued. These coins are both designated in the section as "legal tender" in payment of debts. The Sacagawea dollar is one example of the copper alloy dollar, in contrast to the American Silver Eagle which is pure silver. Section 5112 also provides for the minting and issuance of other coins, which have values ranging from one cent to 100 dollars. These other coins are more fully described in Coins of the United States dollar.
of 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," which is further specified by Section 331 of Title 31 of the U.S. Code. The sums of money reported in the "Statements" are currently expressed in U.S. dollars, thus the U.S. dollar may be described as the unit of account of the United States. "Dollar" is one of the first words of Section 9, in which the term refers to the Spanish milled dollar, a coin that had a monetary value of 8 Spanish units of currency, or reales.
The ''Coinage Act''In 1792, the U.S. Congress passed the Coinage Act, of which Section 9 authorized the production of various coins, including:
or —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 designates the United States dollar as the unit of currency of the United States:
he 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.
DenominationsUnlike the Spanish milled dollar, the U.S. dollar has been based upon a decimal system of values since the time of the Continental Congress. This decimal system was again described in the Coinage Act of 1792, which, in addition to the dollar, officially established the following monetary units, with prescribed weights and composition of gold, silver, or copper for each:
- mill, or one-thousandth of a dollar;
- cent, or one-hundredth of a dollar;
- dime, or one-tenth of a dollar; and
- eagle, or ten dollars.
When currently issued in circulating form, denominations less than or equal to a dollar are emitted as U.S. coins, while denominations greater than or equal to a dollar are emitted as Federal Reserve Notes. 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 and gold coins were issued for circulation up to the value of $20. 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, i.e. fractional currency, was also sometimes pejoratively referred to as shinplasters.
In 1854, Secretary of the Treasury James Guthrie proposed creating $100, $50, and $25 gold coins, to be referred to as a union, half union, and quarter union, respectively, thus implying a denomination of 1 Union = $100. However, no such coins were ever struck, and only patterns for the $50 half union exist.
Physical attributesToday, USD notes are made from cotton fiber paper, as opposed to wood fiber, which is most often used to make common paper. U.S. coins are produced by the U.S. Mint. USD 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, while small-sized notes introduced that year measure.
When the current, smaller sized U.S. currency was introduced it was referred to as Philippine-sized currency, as the Philippines had previously adopted the same size for its legal currency, the Philippine peso.
EtymologyIn the 16th century, Count Hieronymus Schlick of Bohemia began minting coins known as joachimstalers, named for Joachimstal, the valley in which the silver was mined. In turn, the valley's name is titled after Saint Joachim, whereby thal or tal, a cognate of the English word, is German for 'valley.' The joachimstaler was later shortened to the German taler, a word that eventually found its way into many languages, including:
- Danish and Swedish as daler;
- Norwegian as dalar and daler;
- Dutch as daler or daalder;
- Ethiopian as talari;
- Hungarian as tallér;
- Italian as tallero; and
- English as dollar.
The leeuwendaler was popular in the Dutch East Indies and in the Dutch North American New Netherland Colony, and circulated throughout the Thirteen Colonies during the 17th and early 18th centuries. It was also separately popular throughout Eastern Europe, where it led to the current Romanian and Moldovan currency, leu.
Among the English-speaking community, the Dutch coin came to be popularly known as lion dollar—what would become the origin of the English dollar. The modern American-English pronunciation of dollar is still remarkably close to the 17th-century Dutch pronunciation of daler. By analogy with this lion dollar, Spanish pesos—with the same weight and shape as the lion dollar—came to be known as Spanish dollars. By the mid-18th century, the lion dollar had been replaced by the Spanish dollar, famously known as the 'piece of eight,' which was distributed widely in the Spanish colonies of the New World and in the Philippines.
Eventually, dollar became the name of the official American currency.
Dollars in generalThe colloquialism 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 leather trade, or it may also have originated from a poker term. Likewise, the $1 note has been nicknamed buck, as well as single.
Greenback is another nickname, originally applied specifically to the 19th-century Demand Note dollars, which were printed black and green on the back side, created by Abraham Lincoln to finance the North for the Civil War. It is still used to refer to the U.S. dollar. The term greenback is also used by foreign exchange traders in reference to the U.S. dollar as a currency, and by the financial press in other countries, such as Australia, New Zealand, South Africa, and India.
Other well-known names of the dollar as a whole in denominations include greenmail, green, and dead presidents, the latter of which referring to the deceased presidents pictured on most bills. Dollars in general have also been known as bones. The newer designs, with portraits displayed in the main body of the obverse, upon paper color-coded by denomination, are sometimes referred to as bigface notes or Monopoly money.
Piastre was the original French word for the U.S. dollar, used for example in the French text of the Louisiana Purchase. Calling the dollar a piastre is still common among the speakers of Cajun French and New England French. Modern French uses dollar for this unit of currency as well. The term is still used as slang for U.S. dollars in the French-speaking Caribbean islands, most notably Haiti.
Specific to denominationThe infrequently-used $2 note is sometimes called deuce, Tom, or Jefferson. Contrastly, the $5 bill has been called Lincoln, fin, fiver, and five-spot. The $50 bill is occasionally called a yardstick, or a grant, after President Ulysses S. Grant, pictured on the obverse. The $20 note has been referred to as a double sawbuck, Jackson, and double eagle. The $10 note can be referred to as a sawbuck, ten-spot, or Hamilton.
Benjamin, Benji, Ben, or Franklin, refers to the $100 bill, which features the likeness of the eponymous Benjamin Franklin. Other nicknames include C-note, century note, and bill.
A grand is a common term for the amount of $1,000, though the thousand-dollar note is no longer in general use. The suffix K or k is also commonly used to denote this amount. Likewise, a large or stack usually references to a multiple of 1,000.
Dollar signThe symbol, usually written before the numerical amount, is used for the U.S. dollar. The sign was the result of a late 18th-century evolution of the scribal abbreviation ps for the peso, the common name for the Spanish dollars that were in wide circulation in the New World from the 16th to the 19th centuries. These Spanish pesos or dollars were minted in Spanish America, namely in Mexico City; Potosí, Bolivia; and Lima, Peru. The p and the s eventually came to be written over each other giving rise to $.
Another popular explanation is that it is derived from the Pillars of Hercules on the Spanish Coat of arms of the Spanish dollar. 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 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, does not consider the fact that the symbol was already in use before the formation of the United States.
HistoryThe American dollar coin was initially based on the value and look of the Spanish dollar or piece of eight, used widely in Spanish America from the 16th to the 19th centuries. The first dollar coins issued by the United States Mint were similar in size and composition to the Spanish dollar, minted in Mexico and Peru. The Spanish, U.S. silver dollars, and later, Mexican silver pesos circulated side by side in the United States, and the Spanish dollar and Mexican peso remained legal tender until the Coinage Act of 1857. The coinage of various English colonies also circulated. The lion dollar was popular in the Dutch New Netherland Colony, 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".
On the 6th of July 1785, the Continental Congress resolved that the money unit of the United States, the dollar, would contain 375.64 grains of fine silver; on the 8th of August 1786, the Continental Congress continued that definition and further resolved that the money of account, corresponding with the division of coins, would proceed in a decimal ratio, with the sub-units being mills at 0.001 of a dollar, cents at 0.010 of a dollar, and dimes at 0.100 of a dollar.
After the adoption of the United States Constitution, the U.S. dollar was defined by the Coinage Act of 1792, which specified a "dollar" to be based in the Spanish milled dollar and of 371 grains and 4 sixteenths part of a grain of pure or of standard silver and an "eagle" to be 247 and 4 eighths of a grain or of gold. 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. 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 same coinage act also set the value of an eagle at 10 dollars, and the dollar at eagle. It called for 90% silver alloy coins in denominations of 1,,,, and dollars; it called for 90% gold alloy coins in denominations of 1,,, and 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 United States did not exhibit faces of presidents, as is the custom now; although today, by law, only the portrait of a deceased individual may appear on United States currency. In fact, the newly formed government was against having portraits of leaders on the currency, a practice compared to the policies of European monarchs. 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 and the Dollar.
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.
Continental currencyDuring the American Revolution the thirteen colonies became independent states. Freed from British monetary regulations, they each issued £sd paper money to pay for military expenses. The Continental Congress also began issuing "Continental Currency" denominated in Spanish dollars. The dollar was valued relative to the states' currencies at the following rates:
- 5 shillings – Georgia
- 6 shillings – Connecticut, Massachusetts, New Hampshire, Rhode Island, Virginia
- shillings – Delaware, Maryland, New Jersey, Pennsylvania
- 8 shillings – New York, North Carolina
- shillings – South Carolina
Silver and gold standardsFrom 1792, when the Mint Act was passed, the dollar was defined as 371.25 grains of silver. The gold coins that were minted were not given any denomination and traded for a market value relative to the Congressional standard of the silver dollar. 1834 saw a shift in the gold standard to, followed by a slight adjustment to in 1837.
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 of the United States Constitution.
In order to finance the War of 1812, Congress authorized the issuance of Treasury Notes, interest-bearing short-term debt that could be used to pay public dues. While they were intended to serve as debt, they did function "to a limited extent" as money. Treasury Notes were again printed to help resolve the reduction in public revenues resulting from the Panic of 1837 and the Panic of 1857, as well as to help finance the Mexican–American War and the Civil War.
In addition to Treasury Notes, in 1861, Congress authorized the Treasury to borrow $50 million in the form of Demand Notes, which did not bear interest but could be redeemed on demand for precious metals. However, by December 1861, the Union government's supply of specie was outstripped by demand for redemption and they were forced to suspend redemption temporarily. The following February, Congress passed the Legal Tender Act of 1862, issuing United States Notes, which were not redeemable on demand and bore no interest, but were legal tender, meaning that creditors had to accept them at face value for any payment except for public debts and import tariffs. However, silver and gold coins continued to be issued, resulting in the depreciation of the newly printed notes through Gresham's Law. In 1869, Supreme Court ruled in Hepburn v. Griswold that Congress could not require creditors to accept United States Notes, but overturned that ruling the next year in the Legal Tender Cases. In 1875, Congress passed the Specie Payment Resumption Act, requiring the Treasury to allow US Notes to be redeemed for gold after January 1, 1879. The Treasury ceased to issue United States Notes in 1971.
The Gold Standard Act of 1900 abandoned the bimetallic standard and defined the dollar as 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, 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, eventually culminating in a sudden end, on August 15, 1971, to the convertibility of dollars to gold later dubbed the Nixon Shock. The last peg was $42.22 per ounce before the U.S. dollar was allowed to 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.
CoinsOfficial United States coins have been produced every year from 1792 to the present. 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 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.
Due to the penny's low value, some efforts have been made to eliminate the penny as circulating coinage.
|Denomination||Common name||Front||Reverse||Portrait and design date||Reverse motif and design date||Weight||Diameter||Material||Edge||Circulation|
|penny||Abraham Lincoln||Union Shield||97.5% Zn covered by 2.5% Cu||Plain||Wide|
|nickel||Thomas Jefferson||Monticello||75% Cu|
|dime||Franklin D. Roosevelt||olive branch, torch, oak branch||91.67% Cu|
|quarter||George Washington||Various; five designs per year||91.67% Cu|
|half||John F. Kennedy||Presidential Seal||91.67% Cu|
|dollar coin, golden dollar||Profile of Sacagawea with her child, Jean Baptiste Charbonneau||Bald eagle in flight, Various; new design per year||88.5% Cu|
Discontinued and cancelled denominationsand canceled coin denominations include:
- Half cent: ¢, 1793–1857
- Silver center cent: 1¢, 1792
- Ring cent: 1¢, 1850–1851, 1853, 1884–1885
- Two-cent billon: 2¢, 1836
- Two-cent bronze: 2¢, 1863–1873
- Two and a half cent piece: 2.5¢
- Three-cent bronze: 3¢, 1863
- Three-cent nickel: 3¢, 1865–1889
- Trime : 3¢, 1851–1873
- Half dime: 5¢, 1792–1873
- Twenty-cent piece: 20¢, 1875–1878
- Gold dollar: $1.00, 1849–1889
- Two dollar piece: $2.00
- Quarter eagle: $2.50, 1792–1929
- Three-dollar piece: $3.00, 1854–1889
- Stella: $4.00, 1879–1880
- Half eagle: $5.00, 1795–1929
- Eagle: $10.00, 1795–1933
- Double eagle: $20.00, 1849–1933, 2009
- Half-union: $50.00, 1877
- Union : $100.00
- 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.
- *American Silver Eagle $1 Silver bullion coin 1986–present
- * American Gold Eagle $5, $10, $25, and $50 Gold bullion coin 1986–present
- * American Platinum Eagle $10, $25, $50, and $100 Platinum bullion coin 1997–present
- *American Palladium Eagle $25 Palladium bullion coin 2017–present
- United States commemorative coins—special issue coins
- * $50.00 1915
- * Presidential Proofs 2007–present
In addition, an experimental $4.00 coin was also minted in 1879, 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 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 produced. A $100 gold coin was produced in High relief during 2015, although it was primarily produced for collectors, not for general circulation.
Proof SetsThe United States Mint produces Proof Sets specifically for collectors and speculators. Silver Proofs tend to be the standard designs but with the dime, quarter, and half dollar containing 90% silver. Starting in 1983 and ending in 1997, the Mint also produced proof sets containing the year's commemorative coins alongside the regular coins. Another type of proof set is the Presidential Dollar Proof Set where the four special $1 coins are minted each year featuring a president. Because of budget constraints and increasing stockpiles of these relatively unpopular coins, the production of new Presidential dollar coins for circulation was suspended on December 13, 2011, by U.S. Treasury Secretary Timothy F. Geithner. Presidential dollars minted from 2012 onward were made solely for collectors.
- 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 had Andrew Johnson, Ulysses S. Grant, Rutherford B. Hayes, and James A. Garfield
- 2012 had Chester A. Arthur, Grover Cleveland, Benjamin Harrison, and Grover Cleveland
- 2013 had William McKinley, Theodore Roosevelt, William Howard Taft, and Woodrow Wilson
- 2014 had Warren G. Harding, Calvin Coolidge, Herbert Hoover, and Franklin D. Roosevelt
- 2015 had Harry S. Truman, Dwight D. Eisenhower, John F. Kennedy, and Lyndon B. Johnson
- 2016 had Richard Nixon, Gerald Ford, James E. Carter and Ronald Reagan.
Dollar coins have not been very popular in the United States. 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, 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 dollar coin featuring Sacagawea was introduced, which corrected some of the problems 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 dollar 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.
In February 2007, the U.S. Mint, under the Presidential $1 Coin Act of 2005, 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 side. Another unusual fact about the new $1 coin is Grover Cleveland will have two coins with two different portraits issued due to the fact he was the only U.S. president to be elected to two non-consecutive terms.
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. 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.
|Mint||Mint mark||Metal minted||Year established||Current status|
|Denver||D||All metals||1906||Facility open|
|Philadelphia||P or none||All metals||1792||Facility open|
|San Francisco||S||All metals||1854||Facility open|
|West Point||W or none||Gold, Silver, Platinum and Palladium||1973||Facility open|
|Carson City||CC||Gold and Silver||1870||Facility closed, 1893|
|Charlotte||C||Gold only||1838||Facility closed, 1861|
|Dahlonega||D||Gold only||1838||Facility closed, 1861|
|Manila||M or none||All metals||1920||Facility closed, 1922; re-opened 1925–1941|
|New Orleans||O||Gold and Silver||1838||Facility closed, 1861; re-opened 1879–1909|
|Denomination||Front||Reverse||Portrait||Reverse motif||First series||Latest series||Circulation|
|One Dollar||George Washington||Great Seal of the United States||Series 1963|
|Two Dollars||Thomas Jefferson||Declaration of Independence by John Trumbull||Series 1976||Series 2017A||Limited|
|Five Dollars||Abraham Lincoln||Lincoln Memorial||Series 2006||Series 2017A||Wide|
|Ten Dollars||Alexander Hamilton||U.S. Treasury||Series 2004A||Series 2017A||Wide|
|Twenty Dollars||Andrew Jackson||White House||Series 2004||Series 2017A||Wide|
|Fifty Dollars||Ulysses S. Grant||United States Capitol||Series 2004||Series 2013||Wide|
|One Hundred Dollars||Benjamin Franklin||Independence Hall||Series 2009||Series 2017A||Wide|
The U.S. Constitution provides that Congress shall have the power to "borrow money on the credit of the United States." 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". Federal Reserve Notes are designated by law as "legal tender" for the payment of debts. Congress has also authorized the issuance of more than 10 other types of banknotes, including the United States Note 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. 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. With the exception of the $100,000 bill, these notes are now collectors' items and are worth more than their face value to collectors.
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 current version of the $100 bill. It also plans larger, higher-contrast numerals, more color differences, and distribution of currency readers to assist the visually impaired during the transition period.
Means of issueThe monetary base consists of coins and Federal Reserve Notes in circulation outside the Federal Reserve Banks and the U.S. Treasury, plus deposits held by depository institutions at Federal Reserve Banks. The adjusted monetary base has increased from approximately 400 billion dollars in 1994, to 800 billion in 2005, over 3000 billion in 2013. The amount of cash in circulation is increased by the actions of the Federal Reserve System. Eight times a year, the 12-person Federal Open Market Committee meets to determine U.S. monetary policy. Every business day, the Federal Reserve System engages in Open market operations to carry out that monetary policy. If the Federal Reserve desires to increase the money supply, it will buy securities anonymously from banks in exchange for dollars. Conversely, it will sell securities to the banks in exchange for dollars, to take dollars out of circulation.
When the Federal Reserve makes a purchase, it credits the seller's reserve account. 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 U.S. Treasury Department. The Treasury Department in turn sends these requests to the Bureau of Engraving and Printing and the Bureau of the Mint.
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 United States 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: Discount window lending ; Fractional deposit lending ; Moral suasion ; "Open mouth operations".
ValueThe 6th 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".
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 2012 the U.S. dollar has lost about 97.0% of its buying power.
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. A consumer price index 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. It reflects inflation as experienced by consumers in their day-to-day living expenses. 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. 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. 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.
Under the Bretton Woods system established after World War II, the value of gold 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".
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, and so inflation was regarded as relatively benign. Between 1965 and 1981, the U.S. dollar lost two thirds of its value.
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.
Over the thirty-year period from 1981 to 2009, the U.S. dollar lost over half its value. 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.
There is ongoing debate about whether central banks should target zero inflation or low, stable inflation. Although some economists are in favor of a zero inflation policy and therefore a constant value for the U.S. dollar, others contend that such a policy limits the ability of the central bank to control interest rates and stimulate the economy when needed.
Historical exchange rates
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