Rachael Mockalis
I’ve seen plenty of gold dollar coins and a handful of half-dollars, but I’ve only ever seen one $2 bill. My grandfather kept it beneath a sheet of glass at my grandmother’s house. I’d always assumed it was a novelty, a rarity, a remnant of the past.
In reality, there are over 774 million $2 bills in circulation, and they’re all valid currency. The Federal Reserve has been printing $2 regularly since 1976, after ending a decade-long hiatus. You can walk up to the teller at your bank, ask to withdraw a $2 bill, and they will give it to you.
So why are $2 bills so rare? Why do people think they’re discontinued?
A Discontinuance and Too-Triumphant Return
During the Great Depression, you could buy a lot with a dollar. One dollar in 1945 was worth about fifteen in today’s currency, so the difference between one dollar and two was more significant. Then inflation closed the gap between one and two dollars. A $2 bill became the awkward bill between the $1 and $5 notes. To make matters worse, the $2 bill garnered a bad reputation as the denomination (the term for the type of bill) used for bribes, bets, and prostitution. Naturally, these factors made the $2 note fall out of favor.
People used the bill less and less, so the United States Treasury Department discontinued the bill in 1966. However, it costs the same to print the $2 bill as it does to print a $1 note, so printing the former is actually more cost-effective. Due to this, the U.S. Federal Reserve decided to start printing the $2 bill again in 1976 with a redesigned reverse side.
The new reverse side—which featured John Trumbell’s iconic painting Declaration of Independence—led people to believe the note was a limited-edition bicentennial bill. Collectors and commonfolk began to hoard the new $2 notes instead of spending them. Since the bills weren’t being spent, they didn’t circulate through the economy.
Irregular Printing
The $2 bill is still legal tender, and the Federal Reserve placed an order for some in 2020. The bill isn’t out of print; if they wanted to order more this year, the Bureau of Engraving and Printing (BEP) would make them next year. It’s just that the Federal Reserve hasn’t placed a large order in recent years.
They print other bills in significantly greater quantities. The Federal Reserve determines how much paper money to print based on expected demand and how many bills they need to replace. The number of notes replaced depends on how many bills the Federal Reserve Banks determine are unfit for circulation. Bills deemed unfit for recirculation are destroyed and they order a new bill to replace it.
The demand depends on how much each denomination has grown. In this context, the Federal Reserve determines “growth” based on how many bills they distributed versus how many they got back. When a bank has more cash on hand than they need, they return the excess to the Federal Reserve Banks. If people are frequently using a denomination more than others, it’s sent back at a lower rate. If banks return a denomination less often than anticipated, then it’s experiencing growth.
Because other bills see more use they’re more likely to get torn, faded, worn down, etc, and they’re more likely to grow. Since consumers don’t often use the $2 note, there’s very little demand and what is used doesn’t experience the same wear and tear as other bills. The latter fact makes it unlikely a Federal Reserve Bank would deem a $2 bill unfit for recirculation, and the former means there’s no need to put more into the world.
A Self-Perpetuating Cycle
From what this blog’s discussed so far, you might’ve already figured it out. People think the $2 bill is a collector’s item or invalid currency because they don’t see it often, so consumers don’t use it, so the BEP prints it less often, so it doesn’t get seen, and so on and so forth.
Ultimately the only reason the $2 bill is rare is because people think it’s rare. If everybody suddenly started using the $2 bill as often as they use other denominations, then the Federal Reserve would order more, and it would become as common as any other note. A $2 bill is worth just that: $2.
So if you’re a collector who’s been hoarding these “Bicentennial Bills” since the 70s, I’m sorry to inform you your “investment” was for nought. On the upside, you can now comfortably spend those bills without the fear you’re losing something rare. You can take your $2 notes and put them towards your retirement fund, buy a few knick-knacks, or give them away. Because in the end, it’s just money.
