Thursday, January 15, 2009

The dollar fades, but refuses to die

One result of all the recent economic chaos and tumult has been a dramatic change in the value of the US dollar on international exchange rates. It has dipped against the yen, swung both ways against the euro, and soared against the sickly sterling. But the value of the physical one dollar bill - the banknote rather than the currency - never seems to change. Immune to the ravages of time and inflation, it holds a special place in the hearts of an American public that can't seem to let it go.

These strange, battered pieces of paper seem like a relic of a bygone age to someone from the UK. The Bank of England withdrew the higher-value £1 note from circulation over 20 years ago. Britain's lowest denomination banknote these days, the fiver, is worth around $7.25, and at one point last year it leapfrogged even the US $10 bill in value.

There have been several efforts to replace the humble greenback with $1 coins over the years, but all have failed. And little wonder: the most recent version looks and feels more like a car-wash token than a unit of currency. But that alone can't fully explain the reluctance to part with paper dollars. Perhaps it has something to do with bar culture here. Tipping serving staff just wouldn't be the same using small change rather than small notes (although at least dollar coins wouldn't get as soggy when left on wet bars). Or maybe Americans simply prefer fat wallets to bulging pockets: A thick billfold always feels nice, even if it is largely padded out with ones and not one-hundreds.

Whatever the reason, the original George Dubya (Washington, whose portrait graces the dollar bill) looks set to stay with us for at least a while longer.