Large bills in outside currencies are indeed known to be a problem. These include the illegal trade in drugs, arms and human trafficking as well as the amount of 'unreported' income, that is, income not properly reported to the fiscal authorities due to noncompliance with the tax code. Knowledge of its location and usage is required to estimate the origins and volume of illicit transactions. US currency is a preferred medium of exchange for facilitating clandestine transactions, and for storing illicit and untaxed wealth. The bills might circulate as payments in more developed countries, however. Payments for what? Well, that touches on any number of elements of what has been elegantly named "the informal economy." That is, the markets that function without the costs (taxes) and benefits (legal protections) of the state. This is especially so in developing countries, where problems with unstable currencies and inflation often mean the purchasing power of local currency gradually-or not so gradually-erodes over time. No, most economists seem to believe $100 bills are most often used as stores of value-almost something like mini-Treasury bills that don't pay any interest. But more recent estimates hover around 25%-30%.Īnd while there are plenty of reasons folks outside the US might want to hold dollars, the thinking is that most people are not using these $100 bills to buy milk and bananas. In the 1990s, one high-profile estimate pegged the number at as much as 70%. Somewhat surprisingly, it's unclear exactly how much American money is floating around outside the US. A typical shipment is a pallet containing 640,000 such bills, or $64 million, according to a recent Fed paper. An overwhelming majority of the $100 bills come from the Federal Reserve Cash Office in New York City, which handles the bulk of foreign shipments of US currency. The cognoscenti look at the share of $100 bills as something of a proxy for foreign demand for US currency. The short answer is that a lot of money is spending a lot of time outside the United States. So what the heck is going on here? Inflation may have something to do with it-there just weren't as many things to buy in 1970 that might require one to slap down a $100 bill-but that still wouldn't explain why their proportion today has nothing to do with what people see in their wallets. The declining trendline in vivid fuchsia, is the share of currency in 10s and 20s | Edgar Feige. The cost of the examination process for the new notes is not disclosed, but the Federal Reserve estimates that the NexGen $100 note costs 12.6 cents each to produce, making the printing cost of the entire series under $4 million.Ī request for comment to the Bureau of Engraving and Printing was directed to the Federal Reserve Public Affairs office, which has not responded.That ugly blue line shows the share of currency in $100 bills. A star note from Atlanta is also reported. Thus far, notes are reported from Atlanta (F), Chicago (G) and Richmond (E). The second letter signifies the Federal Reserve district. Series 2009 notes all have the letter J as the first letter in the serial number. In the interim, Series 2009A notes were produced under a corrected production process and entered circulation on Oct. In total, $110 billion worth of the notes were printed, and with estimates that as much as 30 percent of the printing could be defective, the entire issue was quarantined for further inspection. Later, a problem that was called “mashing” was also reported, where too much ink was applied to the paper so the lines of the artwork were not as crisp as they should be.
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