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38 Incredible Facts on the Modern U.S. Dollar

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38 Incredible Facts on the Modern U.S. Dollar

38 Incredible Facts on the Modern U.S. Dollar

The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

We’ve previously showed you 31 Fascinating Facts About the Dollar’s Early History, which highlighted the history of U.S. currency before the 20th century. This was a very interesting period in which we looked at the money used by the first colonists, the extreme bust of the Continental currency, the era of privately-issued bank notes, and Congress’ emergency issuance of the fiat “greenback” during the Civil War.

However, the modern era of the U.S. dollar is just as interesting. We have it starting in 1913, when the Federal Reserve Act was passed by Woodrow Wilson. Not only did it establish a new central bank, but it also gave the Fed the authority to issue the Federal Reserve Note, which is now the dominant form of U.S. currency both domestically and abroad.

A New Legal Tender

Leading up to the 20th century, there were four main forms of U.S. currency being used:

  • Gold and silver coins
  • Gold and silver certificates
  • Commercial bank notes, issued by private banks and backed by government bonds
  • “Greenbacks”, a fiat currency declared legal by Congress to help fund the Civil War

In 1913, however, the Federal Reserve Note was authorized as U.S. currency. The new notes were supposed to be backed by gold or other “lawful money”, based on the stipulations of the Federal Reserve Act of 1913.

However, this only lasted about 20 years. By the time of the Great Depression, the Fed considered itself to be in a tight spot. It simply did not have enough gold to back all Federal Reserve Notes and Gold Certificates in circulation, and at the same time wanted flexibility with monetary policy to fight deflation and unemployment.

In 1933, the Emergency Banking Act was passed by President Roosevelt, and Executive Order 6102 was also signed. The latter move famously criminalized monetary gold, and ended the gold standard.

After all, if gold can’t be legally owned, it can’t be legally redeemed.

Modern Paper Money

After a brief return to a pseudo gold standard after WWII, Nixon severed all remaining ties between gold and money in 1971. Since then, U.S. money has been purely fiat, and backed by the government rather than any physical commodity or precious metal.

Some facts on today’s paper money:

  • There is $1.54 trillion of U.S. currency in circulation, and 97% of that is Federal Reserve Notes
  • Over two-thirds of all $100 bills are held outside the U.S.
  • Dollar bills can be folded at least 8,000 times, which is 20x more than a normal sheet of paper
  • That’s because dollar bills are made of a special 75% cotton and 25% linen blend, patented by Crane & Co.
  • The U.S. Bureau of Engraving and Printing produces 38 million notes every day, worth $541 million
  • The two facilities, located in Washington, D.C. and Fort Worth, Texas use 9.7 tons of ink per day
  • For 2017, the Fed ordered 7.1 billion new notes, worth $209 billion
  • More than 70% of these notes are used to replace damaged ones
  • Notes with smaller denominations ($1, $5, $10) tend to last for shorter periods of time, due to more frequent usage

Coins

The coins used today are similar to U.S. Federal Reserve Notes in that their face values tend to greatly exceed their intrinsic values.

This is because cheaper metals such as copper, zinc, and nickel are used instead of gold or silver.

  • The average lifespan of a coin is 25 years, according to the U.S. Mint
  • It’s estimated that Americans throw away around $62 million of coins every year
  • In 2016, the U.S. Mint produced 16 trillion coins, valued at over $1.09 billion
  • The amount of copper in a penny has fluctuated over the years. It ranges from 0% (in WWII, pennies were made of steel so copper could be used for ammunition) to 95%.
  • Today’s pennies are 2.5% copper, with the remainder being 97.5% zinc

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Markets

Ranked: The Best and Worst Pension Plans, by Country

As the global population ages, pension reform is more important than ever. Here’s a breakdown of how key countries rank in terms of pension plans.

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Ranked: Countries with the Best and Worst Pension Plans

The global population is aging—by 2050, one in six people will be over the age of 65.

As our aging population nears retirement and gets closer to cashing in their pensions, countries need to ensure their pension systems can withstand the extra strain.

This graphic uses data from the Melbourne Mercer Global Pension Index (MMGPI) to showcase which countries are best equipped to support their older citizens, and which ones aren’t.

The Breakdown

Each country’s pension system has been shaped by its own economic and historical context. This makes it difficult to draw precise comparisons between countries—yet there are certain universal elements that typically lead to adequate and stable support for older citizens.

MMGPI organized these universal elements into three sub-indexes:

  • Adequacy: The base-level of income, as well as the design of a region’s private pension system.
  • Sustainability: The state pension age, the level of advanced funding from government, and the level of government debt.
  • Integrity: Regulations and governance put in place to protect plan members.

These three measures were used to rank the pension system of 37 different countries, representing over 63% of the world’s population.

Here’s how each country ranked:

CountryOverall ValueAdequacySustainabilityIntegrity
Argentina39.543.131.944.4
Australia75.370.373.585.7
Austria53.968.222.974.4
Brazil55.971.827.769.8
Canada69.27061.878.2
Chile68.759.471.779.2
China48.760.536.746.5
Colombia58.461.44670.8
Denmark80.377.58282.2
Finland73.673.260.792.3
France60.279.14156.8
Germany66.178.344.976.4
Hong Kong61.954.554.586.9
India45.839.944.956.3
Indonesia52.246.747.667.5
Ireland67.381.544.676.3
Italy52.267.41974.5
Japan48.354.632.260.8
Korea49.847.552.649.6
Malaysia60.650.560.576.9
Mexico45.337.557.141.3
Netherlands8178.578.388.9
New Zealand70.170.961.580.7
Norway71.271.656.890.6
Peru58.56052.464.7
Philippines43.73955.534.7
Poland57.462.545.366
Saudi Arabia57.159.650.562.2
Singapore70.873.859.781.4
South Africa52.642.34678.4
Spain54.77026.969.1
Sweden72.367.57280.2
Switzerland66.757.665.483
Thailand39.435.838.846.1
Turkey42.242.627.162.8
UK64.46055.384
U.S.60.658.862.960.4

The Importance of Sustainability

While all three sub-indexes are important to consider when ranking a country’s pension system, sustainability is particularly significant in the modern context. This is because our global population is increasingly skewing older, meaning an influx of people will soon be cashing in their retirement funds. As a consequence, countries need to ensure their pension systems are sustainable over the long-term.

There are several factors that affect a pension system’s sustainability, including a region’s private pension system, the state pension age, and the balance between workers and retirees.

The country with the most sustainable pension system is Denmark. Not only does the country have a strong basic pension plan—it also has a mandatory occupational scheme, which means employers are obligated by law to provide pension plans for their employees.

Adequacy versus Sustainability

Several countries scored high on adequacy but ranked low when it came to sustainability. Here’s a comparison of both measures, and how each country scored:

Ireland took first place for adequacy, but scored relatively low on the sustainability front at 27th place. This can be partly explained by Ireland’s low level of occupational coverage. The country also has a rapidly aging population, which skews the ratio of workers to retirees. By 2050, Ireland’s worker to retiree ratio is estimated to go from 5:1 to 2:1.

Similar to Ireland, Spain ranks high in adequacy but places extremely low in sustainability.

There are several possible explanations for this—while occupational pension schemes exist, they are optional and participation is low. Spain also has a low fertility rate, which means their worker-to-retiree ratio is expected to decrease.

Steps Towards a Better System

All countries have room for improvement—even the highest-ranking ones. Some general recommendations from MMGPI on how to build a better pension system include:

  • Increasing the age of retirement: Helps maintain a more balanced worker-to-retiree ratio.
  • Enforcing mandatory occupational schemes: Makes employers obligated to provide pension plans for their employees.
  • Limiting access to benefits: Prevents people from dipping into their savings preemptively, thus preserving funds until retirement.
  • Establishing strong pension assets to fund future liabilities: Ideally, these assets are more than 100% of a country’s GDP.
  • Pension systems across the globe are under an increasing amount of pressure. It’s time for countries to take a hard look at their pension systems to make sure they’re ready to support their aging population.

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Money

How COVID-19 Has Impacted Black-White Financial Inequality

COVID-19 has worsened Black-White financial inequality, with Black Americans more likely to see negative impacts to their job and income.

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Black-White Financial Inequality

How COVID-19 Impacted Black-White Financial Inequality

COVID-19 has disrupted everything from economic markets to personal finances, but not everyone feels its effects equally. When compared with White Americans, Black Americans’ financial situations have been disproportionately affected by the pandemic.

In this infographic from McKinsey & Co., we outline the financial vulnerabilities of Black Americans, their increased usage of financial services since the onset of the pandemic, and their lower satisfaction levels with those services.

Financial Vulnerabilities of Black Americans

Compared to White Americans, more Black Americans say their job and income have been negatively impacted by COVID-19.

 My job has been negatively impacted by COVID-19My income has been negatively impacted by COVID-19
White Americans29%24%
Black Americans36%31%

Looking forward, Black Americans also report greater job security concerns and have less savings to protect themselves financially. In the event of a job loss, 57% of Black Americans report their savings would last four months or less, compared with 44% of White Americans.

With less of a cash buffer on hand, Black consumers are also more likely to have missed a recent bill payment.

 Skipped at least 1 paymentPartially paid at least 1 billPaid in full
White Americans16%22%62%
Black Americans51%22%27%

This includes being unable to pay for basic items such as utilities, telephone and internet, and mortgage payments.

How do they begin to manage these challenges?

Use of Financial Services

Black Americans increased their use of financial services more than White Americans.

Banking activities in the past two weeks, per March-June 2020 surveys

 Withdrew cashDeposited cashDeposited checksContacted bank for service on accountOpened new accountsReceived advice on digital tool usage
White Americans35%20%40%9%3%4%
Black Americans47%31%30%15%7%7%

For example, Black Americans were about twice as likely to request account service, open an account, or receive advice on digital tools. In addition, Black families were more likely to leverage a fintech platform and have been more active in opening fintech accounts since the start of the COVID-19 crisis.

However, as Black Americans seek out more financial help, some are not happy with the service they receive.

Satisfaction with Financial Services

Overall, Black families are less satisfied than White families across all types of financial activities. These differences were most pronounced for digital tool advice, where 38% of Black Americans were dissatisfied or very dissatisfied, compared with just 12% of White Americans.

Even though Black people were less satisfied with banking services, they were more likely to say that bank performance was above their expectations. This may suggest that expectations are lower for Black families than they are for White families.

Black Americans were also much less likely to trust their financial advisor.

 Do not trust/losing trustIndifferentGaining trust/trust
White Americans10%9%81%
Black Americans32%9%59%

From March-June 2020, the percentage of Black people distrusting their advisors rose from 12% to 32%. Over the same time period, White people’s distrust of financial advisors remained stable at 10%.

A notable exception: White and Black Americans were both satisfied with fintech providers. Only 5% of White Americans and 8% of Black Americans expressed some level of dissatisfaction with fintech companies.

Time to Examine the Financial System?

COVID-19 has perpetuated Black-White financial inequality. Data shows that Black families are more likely to be financially vulnerable, and increase their use of financial services during the COVID-19 crisis. However, they are less likely to feel satisfied with these services.

Financial institutions can urgently review their remote and in-person customer service procedures to ensure the needs of all families are being met.

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