Noll, Franklin (2008): The Total Value of the $1 Federal Reserve Note: Factoring in Physicality and the Consumer.
Download (135Kb) | Preview
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.
|Item Type:||MPRA Paper|
|Original Title:||The Total Value of the $1 Federal Reserve Note: Factoring in Physicality and the Consumer|
|Keywords:||Federal Reserve Note; physicality; payment instruments; micropayments; small value transactions; network economics; collectibles; symbolic value; dollar bill; consumers|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D85 - Network Formation and Analysis: Theory
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E41 - Demand for Money
|Depositing User:||Franklin Noll|
|Date Deposited:||15. Apr 2010 06:54|
|Last Modified:||12. Feb 2013 16:07|
Geoffrey R. Gerdes, et al, “Trends in the Use of Payment Instruments in the United States,” Federal Reserve Bulletin (Spring 2005): 180-201
Marianne Crowe, “Changing Payments Landscape: A Federal Reserve Bank Perspective,” Treasury Management Association of New England Annual Conference, May 9, 2007
Paul W. Bauer and Daniel Littman, “Are Consumers Cashing Out?,” Economic Commentary, Federal Reserve Bank of Cleveland, October 1, 2007
James C. McGrath, “Micropayments: The Final Frontier for Electronic Consumer Payments,” Discussion Paper, Federal Reserve Bank of Philadelphia, June 2006.
Remarks by Alan Greenspan before the National Automated Clearinghouse Association Annual Meeting, April 10, 2000
Viviana A. Zelizer, The Social Meaning of Money (New York: Basic Books, 1994)
Heinz Tschlachler, “Dollar Bill” in Dennis R. Hall and Susan Hall, eds., American Icons: An Encyclopedia of the People, Places, and Things that Have Shaped our Culture (Westport, CT: Greenwood Press, 2006)
John Schmeltzer, “The Dangers of Deep-Sixing Dollar Bills,” Chicago Tribune, May 12, 1995
Christopher Georges, “House Republicans, Believing Change is Due, Consider Plan to Insert Coin in Place of $1 Bill,” The Wall Street Journal, April 18, 1995
Daniel D. Garcia-Swartz, Robert W. Hahn, and Anne Layne-Farrar, “The Move Toward a Cashless Society: A Closer Look at Payment Instrument Economics,” Review of Network Economics, 5, 2 (June 2006)
Brian Mantel, “Why Don’t Consumers Use Electronic Banking Products? Towards a Theory of Obstacles, Incentives, and Opportunities,” Emerging Payments Occasional Paper Series, Federal Reserve Bank of Chicago, September 2000.
Arthur L. and Ira S. Friedberg, The Official Red Book: A Guide Book of United States Paper Money (Atlanta: Whitman Publishing, 2006)
Dean Oakes, et al., Standard Guide to Small-Size U.S. Paper Money, 1928 to Date, 5th ed., (Iola, WI: Krause Publications, 2004)
Marc and Tom Hudgeons, Official Blackbook Price Guide to United States Paper Money, 34th ed. (New York: Crown Publishing Group, 2001)
Arthur L. and Ira S. Friedberg, Paper Money of the United States, 17th ed. (Clifton, NJ: The Coin and Currency Institute, 2004)