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The Total Value of the $1 Federal Reserve Note: Factoring in Physicality and the Consumer

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  • Noll, Franklin

Abstract

Consumers are using cash less often. This is especially the case in high-value transactions. However, the $1 Federal Reserve Note continues to hold its ground in the realm of micropayments, transactions having a value of less than $5. Economists argue that the staying power of the $1 bill is largely the result of there being no economically efficient electronic method of executing micropayments. This paper argues that the reason for the continued existence of the $1 Federal Reserve Note lies elsewhere—in the physical nature of the note. Economists see the note as merely a marker or token for purchasing power, which is continually declining. Based on this view, they logically predict the imminent death of the note. This view is simplistic as it does not consider the $1 Federal Reserve Note as a thing in itself, as an object bearing a value all its own. As physical objects, notes carry economic, social, collectible, and symbolic values unrelated to what the note can buy.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 22081.

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Date of creation: 03 Nov 2008
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Handle: RePEc:pra:mprapa:22081

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Related research

Keywords: Federal Reserve Note; physicality; payment instruments; micropayments; small value transactions; network economics; collectibles; symbolic value; dollar bill; consumers;

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  1. Hahn, Robert W. & Layne-Farrar, Anne & Swartz, Daniel D. Garcia, 2004. "The Move toward a Cashless Society: A Closer Look at Payment Instrument Economics," Working paper 247, Regulation2point0.
  2. Geoffrey R. Gerdes & Jack K. Walton II & May X. Liu & Darrel W. Parke, 2005. "Trends in the use of payment instruments in the United States," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Spr, pages 180-201.
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