Kojo Quartey: Money does not grow on trees
The expression “money does not grow on trees” was one of my father’s favorite expressions. When we asked him for money or when he saw us wasting valuable resources such as water and electricity, he would ask, “Do you think money grows on trees?” As a child, I never really pondered that, since whenever I heard that, it meant I was being denied something I wanted. In my later years, I did think about it and thought that we could have responded in the affirmative and said, “Yes, money does grow on trees, because it is paper.” Well, we would have been dead wrong!
Dad was right, money, at least U.S. currency, does not grow on trees, it comes from plants, not trees. U.S. currency is 25% linen (flax plant) and 75% cotton. It is fabric and not paper. So, while it does not grow on trees, it still grows, but we cannot just go and harvest or pluck the leaves. There is a process and cost to producing currency.
Personally, I have gotten to the point where I hardly ever use cash anymore. I use either my debit or credit card and make my payments by check or electronically, however cash is still a major part of our lives, especially when there is a surcharge for using a credit card.
Below are some facts/trivia about money.
Cost of money
Since money does not grow on trees, it has to be manufactured, and there is a cost to that. According to the Federal Reserve, each year, the Federal Reserve Board projects the likely demand for new currency and places an order with the Department of the Treasury's Bureau of Engraving and Printing, which produces U.S. currency and charges the board for the cost of production. The 2022 currency operating budget was $1.060 million. Here’s what it costs to print various currencies:
The $1 bill costs 2.75 cents per note, $5 bill costs 12.7 cents per note, $10 bill costs 12.4 cents per note, $20 bill is 13.8 cents per note, $50 bill is 13.3 cents per note, and the $100 is 17.0 cents per note.
These currencies are worth what they are worth because the government says so – a concept known as fiat money in economics. Even though a $50 bill, as noted above, costs less to print than a $20 bill, it is worth 2.5 times more by government decree.
Most common denomination
Believe it or not, as of 2020, there were 16.4 billion $100 bills, making it both the most issued banknote and the one with the most value in circulation. The second-most common is the $1 bill, with 13.1 billion in circulation. I never knew there were more $100 bills than $1 bills in circulation. I will take those $100 bills over the $1 bills any day.
Discontinued currencies
An article by James Chen in Investopedia.com states that, over time, the government may take certain money out of circulation for various reasons such as inflation eroding its face value, a lack of consumer demand for certain denominations, or being too similar in look or close in value to other common denominations.
There are still 1.4 billion $2 notes in circulation, although discontinued in 2017.
Today, a $500 or $1,000 bill may be worth more than its face value, they are mostly in the hands of dealers.
The $10,000 bill was the largest denomination ever to be printed for public use.
There are also $100,000 notes for official use only, so collectors cannot legally hold a $100,000 bill.
In addition to discontinued bills, the U.S. Mint has also stopped producing certain coins over time as they have lost value or usability. These include: half-cent coins, 2-cent coins, 3-cent coins, half-dimes (later replaced by nickels), 20-cent coins, dollar coins, gold dollar coins, the Eisenhower dollar, and the Susan B. Anthony dollar.
I wonder what a half-cent coin could get me now? If you happen to have a $500 or $1,000 bill, please send it my way and I will replace them with $100 bills.
Kojo Quartey, Ph.D., is president of Monroe County Community College and an economist. He can be reached at kquartey@monroeccc.edu.
This article originally appeared on The Daily Telegram: Kojo Quartey: Money does not grow on trees
