Why does the US print lots of paper money?

Answer 1

There are several reasons, some good, some not so good.

First, the US has a large and dynamic economy. High levels of economic activity produce many transactions using electronic payment methods, checks, and currency. The volume of electronic transactions is essentially invisible to the ordinary consumer, and checks usually disappear into a single slot or even under the cash drawer in a register, while bill usage is pretty obvious to anyone standing in line in a store, at an ATM, etc.

Second, that "obviousness" of cash makes it helpful for some people to budget their spending. It's all too easy to add extra dollars here and there on a credit-card balance and checkbooks have to be reconciled. However if a person starts each week/month/etc. with a fixed amount of cash in hand they can be absolutely certain at any point how much they've spent and how much remains.

Third, some people use cash because it's relatively anonymous. They're concerned about the ability of both financial institutions and the government to track other forms of payment and don't wish to have their spending habits profiled.

Finally, the most unusual reason that the US prints so much paper money is that, unlike nearly every other major industrialized country, its banknote denominations haven't been revised in nearly three-quarters of a century. Those countries have all replaced their low-denomination bills with coins, but for political reasons the US both continues to print $1 bills and does not have a widely-circulated $2 denomination. As a result enormous numbers of $1 bills are needed for making change, to the point where they account for almost half of all bills printed each year.