United States dollar

The U.S. dollar (logographically, $; code: USD) is the currency of the United States and has been the de facto worldwide reserve currency since soon after World War II. This international prominence reflected the nation's new-found economic might, due mostly to not having its heavy industry bombed out of existence as was the case with most of the rest of the developed world.

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“”The dollar is the weakest currency, except for all the others.
—That noted commie George Soros[1]

History

The origin of the US dollar can be traced all the way back to the Massachusetts Bay Colony, which issued paper currency to pay for things like military expeditions.[2] It was named after, and valued upon, the Spanish Milled Dollar -- the famous "piece of eight" (so called because one Spanish Dollar was worth 8 Spanish Reals), which contained 0.82 Troy ounces of silver. Note that these "dollars" were called "pesos" by the Spanish who made them; they got the name "dollar" because they were made to the specifications of the Joachimsthaler, a Central European coin the Habsburgs had introduced to Spain in the 16th century. Joachimsthalers were known colloquially as thalers in German, which became "dollar" in English; these Spanish pesos which looked exactly like thalers were therefore called "dollars." If you're wondering why the Americans didn't base their currency on the good old pound sterling — those were hard to come by for reasons to do with mercantilism and the difficulty of travel between Britain and colonial America, while Spain was pumping out pesos like there was no tomorrow from its mint in Mexico City, which flowed into the hands of America's innumerable smugglers.

During the American Revolution, the Continental Congress issued the Continental currency but that succumbed to frequent counterfeiting and poor financial backing. The dollar as a unit for American money was established in 1785 and was made into an organized monetary system seven years later. The greenback paper notes weren't introduced until the Civil War.

The U.S. was on a gold standard through much of its history, but the value of the dollar has thankfully not been tied to gold in any way since 1971. 1932[note 2] was the last year any gold coins were minted for circulation. Since 1963, all paper money issued in the United States has been Federal Reserve notes. Since 1970, no coin minted for circulation in the U.S. has contained any silver. Currently, the dollar is fiat currency.

Denominations

Coins come in...

  • Pennies[note 3] ($0.01) with Abraham Lincoln on them
  • Nickels ($0.05) with Thomas Jefferson on them
  • Dimes ($0.10) with Franklin Roosevelt on them
  • Quarters ($0.25) with George Washington on them
    • Quarters with a state-specific image on the back (fairly common)
  • Half-dollars ($0.50) with John F. Kennedy on them (last minted for circulation in 2001)
  • Dollars with Susan B. Anthony, Sacagawea, or the U.S. presidents on them (uncommon in the US, common in Ecuador)

Coins previously in circulation included the half cent, the 2-cent piece, the 3-cent piece, the 20-cent piece, and, prior to 1874, the half dime in place of the nickel. There were also coins denominated at $2.50, $5 (half eagles), $10 (eagles), and $20 (double eagles).

The Susan B. Anthony, Sacagawea, and Presidential dollar coins represent three (failed) attempts by the federal government to encourage people to stop using the paper $1 bill. Paper dollars typically last 18 months in circulation before they need to be replaced, while coins can last for upwards of thirty years. Other countries (e.g. Canada and the UK) circumvented this issue by just not printing low-denomination paper money any more; the U.S. continued to print $1 bills alongside the $1 coins, and as a result the coins utterly failed to catch on each time. However the presidential dollar was in a sense hurt by its own success. Many people liked the design of them and especially collectors withdraw them from circulation to put them into their collection rather than spending them. A coin that does not circulate is of course worthless from a broader point of view. Maybe dollar coins will only be common once they are common enough to cease being collectors' items.

Bills come in...

After $100, there are/were a number of bills that existed with higher numbers largely for trading large amounts of money[4]

  • $500: William McKinley
  • $1,000: Grover Cleveland
  • $5,000: James Madison
  • $10,000: Salmon P. Chase, last printed in 1945. (Chase was the Chief Justice appointed by Lincoln. He was a member of the Whig, Liberty, Free Soil, Republican, and Democratic parties, in that order. He was also married three times.)
  • $100,000: Woodrow Wilson (only traded between banks, never circulated)

Oops...

President George W. Bush aptly managed the decline of the dollar. Apparently oil-fueled trade deficits and abominably expensive and unnecessary wars weren't a good idea.[5] During his term, the dollar dropped a whopping 41% against the Euro.[6] Heckuva job.

By late 2007, the US dollar had slid to being worth less than the Canadian dollar (US$1.10 = Can $1.00!), and the British pound was back up to US$2.10, from lows in the US$1.50 range in "the worst of times."[7]

However when running up a huge trade deficit, the currency is sometimes devalued on purpose to make exports cheaper for countries buying them in other currencies. This is precisely the thing that hurt Greece the most in the 2010-15 sovereign debt crisis as they – for obvious reasons – could not devalue their currency.

Conservatism's BFF

The dollar is an important staple of conservatism. It is a primary factor in the success of large corporations (another BFF) and its unhindered accumulation is a great motive for corporate abuse economic prosperity.

Not to be confused with
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See also

Notes
  1. That's one story, anyway. See What does the S in the dollar sign represent? on The Straight Dope.
  2. A few gold eagles were minted in 1933, but they were all seized and melted down shortly after Franklin Roosevelt took office.
  3. Strictly speaking, pennies are "cents," nickels are "five cent pieces," and quarters are "quarter dollars." Dimes are officially called dimes, though, from the French disme (tenth).
  4. Neither Alexander Hamilton nor Benjamin Franklin were ever president of the U.S., so referring to paper money as "dead presidents" is somewhat inaccurate.

References
  1. Imagining the Dollar Without Its Privilege, The New York Times
  2. ADVFN: US dollar
  3. http://www.snopes.com/business/money/twodollar.asp
  4. Government source (Yes, the Bureau of Engraving and Printing calls itself the Money Factory.)
  5. The Nation: Wall Street, Iraq and the Declining Dollar (2007)
  6. Bloomberg: Bush's Dollar Drop Maps Loss of U.S. Clout at Final G-8 Summit (2008)
  7. Telegraph: Pound could fall to $1.50, analysts predict
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