Our fiscal year ends tomorrow. Can you chip in $50, $25 or even $10 to help us reach our goal?
The wait is over. The new $100 bill goes into circulation today, and it’s plenty tricked out. It has a disappearing-reappearing bell in the inkwell, a blue 3-D security ribbon and a bunch of other hidden treasures designed to make it hard to counterfeit.
Over the next year or so, the Federal Reserve will release $350 billion in $100 bills into the money pool, as it pulls the old ones out. But where, exactly, all those bills will go is one of life’s great mysteries.
Right up there with the disappearing single socks, and the children who wake up early only on weekends.
You might be surprised to know that there’s $3,774 in cash, in circulation, for each of us here in the U.S.
So where is it all?
“We call this the currency enigma,” says Edgar Feige, an emeritus professor of economics at the University of Wisconsin, Madison. “It’s hard to figure out where this currency is and why so much of it is out there.”
The amount of cash has been climbing steadily, despite our love affair with plastic. But, according to Feige, we can account for only about 15 percent of the cash.
“Currency happens to be an anonymous means of payment,” Feige says, “so it happens to be the preferred means of payment in what we call the underground economy.”
As in everything from the tip money people don’t claim on their taxes and the cash they pay their housekeepers, to the real bad-guy stuff, like drugs and prostitution. The U.S. loses hundreds of billions of dollars in unpaid taxes every year.
Most of the rest of the missing cash is outside the country.
“If somebody comes here and gets paid here in Chicago and they take their savings back to their home village in Mexico, we don’t know that,” says Richard Porter, a senior policy advisor at the Federal Reserve Bank of Chicago.
He says there’s a lot of demand for American dollars from people in other countries looking for a safer currency than their own.
“People tend to say, ‘Well I’d rather save my money in something safer,’ and that’s often tended, pretty much around the world, to be the U.S. dollar,” says Porter.
Which brings us back to the new, more colorful, less counterfeit-able $100 bill.
Hundred dollar bills make up nearly 80 percent of the cash in circulation. There are more of them in the world than $20 bills.
But just because they are common, doesn’t make them a good idea says David Wolman, author of “The End of Money.”
Wolman thinks instead of printing new ones we ought to be getting rid of the $100 bill.
“They aren’t doing what cash is intended to do which is to grease commerce,” he says. “They’re really just being used to enable illicit transactions.”
And, Wolman says, we’ve killed currency before.
“In the late ’60s, Treasury finally decided to stop issuing $500 and $1,000 notes, precisely for this reason, to impede crime,” he says.
But discontinuing the c-note may be a tough sell. Demand is strong, even if we don’t know exactly where it’s coming from.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.