here's an old saying that goes, "Money makes the world go around." If you think about it, this statement is � well � on the money.
Pretty much everything you do every day costs money. It might not seem like it -- because you probably aren't physically handing out cash every second of the day. Nevertheless, someone at some time has dispensed the dollars. Take an average school day. You wake up and get ready for school. The uniform or clothes you put on cost money. The breakfast you eat and the lunch you pack cost money. The gas for the car (or school bus) that takes you to school costs money. The school you attend costs money. If it's a private school, someone is paying tuition for you to go there. If it's a public school, people pay taxes that keep it running. Your books cost money. And the list goes on. So you know money is crucial, but have you ever wondered where it comes from? How is it made? And why is some of it paper?
Currency (money) is a medium of exchange, a substitute for goods or services. It doesn't have to be the coins or bills in your pocket. In fact, through the ages, everything from large stone wheels to knives to slabs of salt has been used as money. Anything that people agree represents value is currency. Today, we use coins, paper money and electronic currency like credit cards and bank cards. (Economists estimate that only 8 percent of the world's currency exists as physical cash. The rest exists only on a computer hard drive, in electronic bank accounts around the world.) The United States Mint produces coins worth 1, 5, 10, and 25 cents, as well as the Sacagawea Golden Dollar Coin, which replaced the Susan B. Anthony Dollar Coin in 2000. The U.S. Mint produces nearly 30 billion coins for general circulation each year.
 Image � John Lund/CORBIS http://pro.corbis.com/ |
The U.S. Bureau of Engraving and Printing currently produces $1, $2, $5, $10, $20, $50, and $100 bills. Not all of these bills are on a regular printing schedule - $2 bills are printed whenever necessary, and were last printed in 2003. While $500, $1,000, $5,000, and $10,000 bills do exist and are still in circulation, they are very rare. These notes were printed prior to World War II. In the 1930s, a series of $100,000 bills were printed -- the largest denomination in U.S. history. These bills were used only for transactions between Federal Reserve banks; they were never circulated publicly.
| Did you know? According to the U.S. Mint, it only takes a few cents to mint a quarter, but the quarter is instantly worth 25 cents. The difference between the coin's value and its production cost pays to keep the mint running. |
| Lincoln Gets a Facelift A new and improved $5 bill hits the streets on March 13, 2008 complete with several security features. Among them are two new watermarks and an improved -and repositioned- security thread. One new watermark is a large number "5," which sits to the right of Abraham Lincoln's portrait. Joining it is the new security thread, which was previously located on the left side. The second watermark is a column of three small number "5" digits, which sit to the left of Lincoln. Besides the new security features, the $5 bill is also getting a little color. Small yellow number "5" digits are clustered on the left side on the face of the bill and on the right side on the back of the bill. On the face of the bill are several purple items, including an arc of purple stars. Purple is also prominent on the back side of the bill - an extra large, purple number "5" should prove helpful to people with visual impairments. |
Circulating Currency
If you were to follow a batch of newly printed notes, here's the path they would take. After being printed, they're shipped to one of the 12 Federal Reserve Banks. From there, the money is moved to credit unions, commercial banking institutions, savings and loans and other financial institutions. People go to the financial institutions and withdraw money from their accounts. From there, the cash circulates throughout a series of commercial businesses as people exchange cash for services or products. Those businesses, in turn, deposit the cash they earn into their accounts at a financial institution and the money continues to circulate.
If you were to follow a batch of newly printed notes, here's the path they would take. After being printed, they're shipped to one of the 12 Federal Reserve Banks. From there, the money is moved to credit unions, commercial banking institutions, savings and loans and other financial institutions. People go to the financial institutions and withdraw money from their accounts. From there, the cash circulates throughout a series of commercial businesses as people exchange cash for services or products. Those businesses, in turn, deposit the cash they earn into their accounts at a financial institution and the money continues to circulate.
| Did you know? The Chinese were the first to use paper money. They used stag skins, bark, or parchment marked with the imperial seal as "bills of payment." |
So, what happens when a bill is past its physical prime? Financial institutions collect worn or damaged bills and send them to a Federal Reserve Bank. In turn, the Federal Reserve Bank sends new bills to replace the old ones. Then, the Federal Reserve Bank processes the worn cash to figure out if it's truly ready for retirement or if it can go back into circulation for a little while longer. The money that is still fit for circulation goes back into the big pool of useable money. The money that's not OK to go back out is destroyed. Back before the mid 1990s, the Federal Reserve would shred and then bury the retired bills. But as landfills started to pose a national concern, the Federal Reserve started to think about creative ways to reuse their refuse. Today, the government recycles the shredded cash. Most often, it is combined with other materials to create something like roofing, packing material and insulation. But sometimes it is used in unique gift items like pens and key rings.
Try this:
 Image � iStockphoto.com/Perrush http://www.istockphoto.com |
