Why Are Paper Bills Trash (Literally)

The United States Federal Reserve plans to spend approximately $931.4 million on printing banknotes in 2024, but it faces challenges due to the lack of modernization of the currency for over 100 years. Despite the growth of technologies such as FedNow, electronic transactions, and cryptocurrencies, 41% of Americans did not use cash during certain periods in 2023.

Although the demand for cash is increasing, experts assert that cash will not disappear. Inflation has led to a significant increase in cash production, with historical inflation rates reaching 9.1% in 2022. This inflation has reduced the purchasing power of Americans by 10%, exacerbated by increases in fuel prices, used cars, and housing.

Countries like Australia, Canada, and New Zealand have adopted polymer banknotes, which are more durable and cheaper to produce than American paper bills. Despite the Federal Reserve increasing banknote production, the efficiency of its manufacturing is questioned.

Despite the growing circulation of $100 bills, some suggest that this could be related to avoiding taxes or illegal activities due to the anonymous exchange capability of cash. The lack of modernization and the use of toxic ink to prevent counterfeiting make banknote production costly, inefficient, and environmentally polluting.

Although cash remains popular among Americans, digital alternatives pose challenges. The 2024 budget allocated to paper banknote production reveals that the current manufacturing process is inefficient. Despite alternatives such as polymer banknotes, the Federal Reserve considers the transition costly and inefficient. Despite criticism, cash will continue to play a significant role in transactions until digital forms completely replace it.

Produced by: Samantha Harvey
Edited by: Jacob Smith
Animation: Charlotte Brown

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