This week, officials from advocacy group Citizens Against Government Waste came to Capitol Hill to argue for a radical change in our currency: They want to kill the dollar bill and replace it with a dollar coin.
Their reasoning is simple. Coins last a lot longer in circulation — 30 years on average. Bills tend to fall apart and need to replaced after around four. Making the switch, they say, would save us a nice chunk of change — close to $14 billion over the next 30 years. The government has tried to introduce dollar coins in the past with little success, despite the fact that coins of similar value are used in nations around the world. The difference? Those countries got rid of the equivalent bills. So it’s clear that we need to eliminate the dollar bill altogether if we’re going to get Americans to change their ways.
But why stop with killing of the dollar bill? From pennies to dollars to credit cards, there are plenty of ways that American money could be improved. Here are a few ideas that have been kicking around.
There was a time when the penny was a useful denomination of currency, but at this point inflation has progressed to the point that a single cent is insignificant. So why not kill it?
That’s what Canada did, and its currency is virtually identical in value to ours. Last year, it minted its last penny, and while Canadian pennies are still in circulation, stores are being encouraged to round charges to the nearest five cents.
Let’s do that here. Sure, you’ll occasionally lose out on a couple cents, but isn’t that better than having dirty coins worth next to nothing clanking around in your pocket? Many people already ditch their pennies at the take-a-penny-leave-a-penny tray, so it’s no great loss. And it could be a great gain: It costs about 2.4 cents to make one penny, which means the nation is losing money with every one that we mint.
There are downsides of course: Many stores will probably choose to round prices up if the penny disappears. And killing the penny means more reliance on the nickel, which actually costs about 11 cents to produce. Still, we have to ask ourselves: How worthless does the penny have to get before we decide to stop using it?
If both the penny and nickel cost more to produce than their face value, perhaps the solution is to just make them out of different metals.
Well, it’s not that simple. The cost of minting coins is only partly due to the cost of their materials. Pennies are already 97 percent zinc, so the cost of the coin’s materials is only a half-cent; the rest of the cost is tied up in production and distribution.
Still, that doesn’t mean we can’t save some money on metal. The Mint is continuing to test out new materials for its coins in the face of rising metal costs, though it hasn’t hit on a solution that would make everyone happy. Slightly reducing the nickel content of nickels, dimes and quarters would save some money, but more radical changes to the composition would require the vending machine industry to spend hundreds of millions of dollars recalibrating its machines.
We agree with the number-crunchers testifying on Capitol Hill this week: The dollar bill has got to go.
No, a dollar isn’t useless like the penny is. Far from it: There are still a great many things you can buy for a buck, from MP3 downloads to notebooks to a slice of pizza. But why use a bill when we could use a coin? Other countries already do: In England, a single pound (which is worth about $1.54), comes in a convenient coin; the EU likewise has 1- and 2-Euro coins.
As the government waste experts have testified, making the switch would save taxpayers a lot of money. On a practical level, you could stop worrying about $1’s getting destroyed in the laundry. And you’d never have to flatten out a bill for a vending machine again.
There are downsides, of course: They’re heavier in your pocket. And previous attempts to put dollar coins into circulation didn’t really catch on. But once they become the only option, we’re sure people will warm up to using coins instead of bills to buy pizza and tip bartenders.
On the front of the $1 bill you’ve got George Washington, which makes sense. On the back of the dollar bill you’ve got a pyramid with a glowing eye floating above it, which leaves people a bit more confused.
Some theories hold that the symbol has something to do with the Illuminati, the Knights Templar or some other kooky long-running conspiracy theory. In fact, it’s just your basic religious iconography — a design known as the “Eye of Providence.” (The designers had also considered a depiction of the “Children of Israel in the Wilderness” as an alternate design to convey the same religious themes.)
Since the significance of the pyramid is lost on most people, why not switch things up?
A few years ago, a competition to propose radical new designs for our currency caused a stir after one mock-up depicted Obama on the dollar bill. But we were more interested in the proposed redesign of the $10 bill, which put the Bill of Rights on the back of the bill. Why not turn America’s most common banknote into a portable civics lesson?
It seems every redesign of American bills brings new features and colors intended to make counterfeiting harder. But what about the shape and texture?
Unlike coins, all U.S. banknotes have the same shape, size and feel. And when you think about it, that’s exactly the opposite of how it should be: While mixing up a penny and a quarter only costs you 24 cents, mixing up a Washington and a Benjamin costs you $99.
And that’s bad news for the blind, who have to rely on the honesty of strangers to make sure they’re paying with the right bills. With that in mind, the American Council of the Blind won a lawsuit in 2008 to make the government start producing bills that can be distinguished on touch alone. We’re looking forward to seeing what kind of blind-friendly bills the government can come up with.
It’s not just our cash that needs to change. Our credit cards also need to get with the times.
Most credit cards in this country have their information encoded on a magnetic strip. Security precautions to guard against stolen or copied cards are minimal: When you swipe, you may be asked to sign your name or show ID, but that’s it.
It’s different in Europe. There, they generally use a system known as Chip and PIN, which swaps out the stripe for a microchip and requires the user to punch in a code to verify their identity. It’s more secure than our cards, which are easily cloned by scammers, who can steal the information on the strip with a skimming device. And in addition to making us more vulnerable to card fraud, it’s also a pain for American travelers, who often find themselves stymied by the different card readers when they go to Europe.
Hopefully the U.S. will get with the times and transition to this safer technology.
Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.