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Title: There's been a mysterious surge in $100 bills in circulation, possibly linked to global corruption
Source: CNBC
URL Source: https://www.cnbc.com/2019/02/27/the ... nked-to-global-corruption.html
Published: Feb 28, 2019
Author: Kate Rooney
Post Date: 2019-02-28 12:58:30 by Hondo68
Keywords: None
Views: 370
Comments: 14

  • The number of hundred-dollar bills in circulation has skyrocketed in the past decade.
  • It could be a troubling indicator for global corruption as high-denomination bills remain a go-to for criminals, given the anonymity and lack of transaction record.
  • “There's certainly enough evidence to say it is an enabler of corruption, but it is also a way for people to keep assets outside of the financial system," says Nicholas Colas, co-founder of DataTrek research.

The number of outstanding U.S. $100 bills has doubled since the financial crisis, with more than 12 billion of them across the world, according to the latest data from the Federal Reserve. C-notes have passed $1 bills in circulation, Deutsche Bank chief international economist Torsten Slok said in a note to clients this week.

Generally, economists believe the surge is related to people around the world wanting to hoard cash, a similar force that's driven the interest in cryptocurrencies. High denomination, high value currency notes have historically been a preferred form of payment for criminals, given the anonymity, lack of transaction record and relative ease with which they can be brought across borders.

Nicholas Colas, co-founder of DataTrek Research, has been down the "rabbit hole of a topic" for more than a decade. He said the growth in $100 bills in circulation is a signal the world is relying on them as a store of value — and still using them for international crime.

"It has nothing to do with the U.S. economy and nothing to do with interest rates," said Colas. "There's certainly enough evidence to say it is an enabler of corruption, but it is also a way for people to keep assets outside of the financial system albeit in a kind of bulky way."

The number of hundred dollar bills abroad began surging after the Gulf War and U.S. invasion of Afghanistan, according to Colas. Part of stabilizing the region meant replacing local currencies with something, and "that something was the U.S. dollar."

Those larger bills also have a longer shelf life than any other form of U.S. cash. Still, Deutsche Bank's Slok said multiple factors could explain the increase in C-notes.

"It could be driven by a global fear of negative interest rates in Europe and Japan, or it could be a savings vehicle for U.S. households worried about another financial crisis, or it could be driven by more demand from the global underground economy," Slok said.

80% overseas

A 2018 research paper from the Federal Reserve Bank of Chicago estimates that 60 percent of all U.S. bills and almost 80 percent of all $100 bills are now overseas. That's up from 15 to 30 percent around 1980, according to research from Federal Reserve Board economist Ruth Judson. She found that economic and political instability contribute to this demand.

Projecting future demand for U.S. currency is "challenging" and depends on how quickly the economy grows, interest rates, new payments technologies, and on whether people in other countries continue to see U.S. dollar bills as a useful asset — "all factors that are, to say the least, uncertain," according to the Chicago Fed.

A surge in digital payments may be contributing to the lessening demand for lower denomination bills. Rising smartphone use, a shift toward online shopping and improvements in network bandwidths pushed global digital commerce volume above the $3 trillion mark in 2017, according to a recent McKinsey report. That is on track to more than double by 2022, according to McKinsey.

There has been pressure to get rid of high denomination notes to curb international crime. Lawrence Summers, former Treasury secretary and director of the National Economic Council in the White House, has argued for abolishing $100 bills. Summers wrote an op-ed in The Washington Post in 2016 titled, "It's time to kill the $100 bill."

"A moratorium on printing new high denomination notes would make the world a better place," Summers said, citing its potential for crime. "Here is a step that will represent a global contribution with only the tiniest impact on legitimate commerce or on government budgets. It may not be a free lunch, but it is a very cheap lunch."

He referenced a Harvard research paper written by former Standard Chartered bank chief executive Peter Sands, who argued to eliminate high denomination, high value currency notes.

"By eliminating high denomination, high value notes we would make life harder for those pursuing tax evasion, financial crime, terrorist finance and corruption," Sands wrote.

The global illicit money flows were "staggering" and fuel crimes from drug trafficking and human smuggling to theft and fraud, Sands said. He estimated that depending on the country, tax evasion robs the public sector of anywhere between 6 percent and 70 percent of what authorities estimate they should be collecting. And despite "huge investments in transaction surveillance systems, and intelligence, less than 1 percent of illicit financial flows are seized.

Soon after that paper was published in 2016, the European Central Bank announced it would stop producing the 500 euro note, citing concerns it could facilitate illegal activities. Despite similar pressure on the Fed, Colas isn't optimistic it will take the same steps as long as cash distribution is still profitable.

"The Federal Reserve and Treasury make 99 dollars for every $100 dollar bill they print and sell offshore," Colas said. "There's a natural desire to keep printing these things — the U.S. government makes a lot of money selling them."


Poster Comment:

Probably due to sanctions. Fedgov can cut off digital transactions, but $100 FRN's are good to go.

Dear Leader, Kim Jong Un stuffs his mattress with them. (2 images)

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#1. To: hondo68 (#0)

The number of hundred-dollar bills in circulation has skyrocketed in the past decade.

Probably everything cost more so little bills just will not cover cost of buying stuff you want.

Same issue with the penny. For the average joe its a waste of coin.

Justified  posted on  2019-02-28   15:09:13 ET  Reply   Trace   Private Reply  


#2. To: All (#1)

I bought a coke the other week and it cost damn near $2 for something that I paid less than a $1 a few years ago. Things just cost more thanks to crony crapitalist ie socialist demoncrats.

Justified  posted on  2019-02-28   15:14:15 ET  Reply   Trace   Private Reply  


#3. To: Justified, D 'n R crooks, End the FED, *The Two Parties ARE the Same* (#2) (Edited)

Used to get a bottle of Coke for a nickel from the vending machine. Long time ago. Dimes were REAL Silver.

End the FED! Ruined the value of the dollar. The difference between what you paid for a Coke and 5 cents, is only a portion of how much your taxes have been raised,

The biggest tax hike is inflation.


Hondo68  posted on  2019-02-28   15:25:40 ET  Reply   Trace   Private Reply  


#4. To: hondo68 (#0)

The number of outstanding U.S. $100 bills has doubled since the financial crisis, with more than 12 billion of them across the world, according to the latest data from the Federal Reserve. C-notes have passed $1 bills in circulation, Deutsche Bank chief international economist Torsten Slok said in a note to clients this week.

That's 1.2 trillion just in C-notes. Amazing.

I'm not surprised. I may be hoarding a few of these myself.

Tooconservative  posted on  2019-02-28   17:46:31 ET  Reply   Trace   Private Reply  


#5. To: hondo68 (#3)

Long time ago. Dimes were REAL Silver.

Weren't those mercury dimes from '64 or '65 the last of them? I seem to recall that.

People still keep an eye out for those old dimes.

Tooconservative  posted on  2019-02-28   17:47:44 ET  Reply   Trace   Private Reply  


#6. To: hondo68 (#0)

Maybe some of your Paultard buddies, from LP, who posted just 10 years ago that the economy was going to COLLAPSE and we’d be trading canned beans for money within five years... might chime in on your fear mongering Paultard article.

What ever happened to all those fucking KOOKS that screamed the world was gonna end, that you Paultards rubbed elbows with?

I'm the infidel... Allah warned you about. كافر المسلح

GrandIsland  posted on  2019-02-28   17:50:00 ET  Reply   Trace   Private Reply  


#7. To: GrandIsland, Banana Republicans (#6)

By the time the 2020 election rolls around you'll be wiping your arse with C notes.

The end is near, repent!


Hondo68  posted on  2019-02-28   17:55:30 ET  Reply   Trace   Private Reply  


#8. To: hondo68 (#7)

Hopefully after Trump wins four more years, you take the ONLY way out.

lol

I'm the infidel... Allah warned you about. كافر المسلح

GrandIsland  posted on  2019-02-28   18:00:44 ET  Reply   Trace   Private Reply  


#9. To: Tooconservative (#5)

mercury dimes from '64 or '65 the last of them? I seem to recall that.

Yes, LBJ dimes. Tricky Dicky killed off PM based currency in '71.

That got Ron Paul PO'd and into sound money and politics.


Hondo68  posted on  2019-02-28   18:05:20 ET  Reply   Trace   Private Reply  


#10. To: hondo68, Tooconservative (#9)

Now wasn't it the LBJ and demoncrats that over spent for the welfare state and a prolonged war that caused France to demand gold instead of USD that forced US off the precious metal? I could not have been more than 8 or so back then.

To me it always seems the repugnants are forced to clean up the demoncrats mess and get all the blame because they kept US from collapsing? Then again what do I know?

Tooconservative its nice to see you back here.

Justified  posted on  2019-02-28   18:59:28 ET  Reply   Trace   Private Reply  


#11. To: Justified, Chairman Mao, Tricky Dicky, Republicans (#10) (Edited)

Tricky Dicky at Chairman Mao's Silver & Gold Exchange.

I remember when those cheep Nixon GOP coins first came out where you could see copper on the edge.

Disgraceful!

Fake. Poor Ike, stabbed in the back by his former VP. I have a '71 version of that Eisenhower Dollar, it's FAKE too.

I believe that LBJ started minting fake coins in the 60's. All in the D&R family.


Hondo68  posted on  2019-02-28   19:26:00 ET  (2 images) Reply   Trace   Private Reply  


#12. To: All (#11)

In the early 1960’s, the silver supply for the nation’s coinage was dwindling rapidly. As Congress and the Administration debated over silver’s future role in coinage, the silver market jumped 10% immediately, and another 30% by 1962. This set the stage for the complete elimination of silver from our coinage by the end of 1964. Any United States dime, quarter, half dollar or dollar that is dated 1964 or earlier is made of 90% silver.

coinsite.com/us-silver-co...ed-and-what-theyre-worth/


Hondo68  posted on  2019-02-28   19:49:49 ET  Reply   Trace   Private Reply  


#13. To: hondo68 (#9) (Edited)

That got Ron Paul PO'd and into politics.

So pissed off, that his political legacy was ZERO. Lost all presidential elections BY A LANDSLIDE... wrote how many bills?

It’s not all bad, though. America’s population consists of about 8% assholes. 6% of that 8%, got fired up by Ronny Paultard. That is an achievement.

lol

I'm the infidel... Allah warned you about. كافر المسلح

GrandIsland  posted on  2019-02-28   19:55:55 ET  Reply   Trace   Private Reply  


#14. To: Justified (#2)

I bought a coke the other week and it cost damn near $2 for something that I paid less than a $1 a few years ago. Things just cost more thanks to crony crapitalist ie socialist demoncrats.
[....] In 1886, a bottle of Coke cost a nickel. It was also a nickel in 1900, 1915 and 1930. In fact, 70 years after the first Coke was sold, you could still buy a bottle for a nickel.

Three wars, the Great Depression, hundreds of competitors — none of it made any difference for the price of Coke. Why not?

In 1899, two lawyers paid a visit to the president of Coca-Cola. At the time, Coke was sold at soda fountains. But the lawyers were interested in this new idea: selling drinks in bottles. The lawyers wanted to buy the bottling rights for Coca-Cola.

The president of Coca-Cola didn't think much of the whole bottle thing. So he made a deal with the lawyers: He'd let them sell Coke in bottles, and he'd sell them the syrup to do it. According to the terms of the deal, the lawyers would be able to buy the syrup at a fixed price. Forever.

Andrew Young, an economist at West Virginia University, says the president of Coke may have signed the contract just to get the guys out of his office.

"Anytime you've got two lawyers in your office, you probably want them to leave," Young says. "And he's saying, 'I'll sign this piece of paper if you'll just please leave my office.' "

Bottled drinks, of course, took off. And Coca-Cola was in a bind. If the bottlers or a corner store decided to raise the price of a bottle of Coke, Coca- Cola wouldn't get any extra money.

So, if you're Coca-Cola, you want to somehow keep the price down at 5 cents so you can sell as much syrup as possible to the bottlers. What do you do?

"One thing you do is blanket the entire nation with Coca-Cola advertising that basically has '5 cents' prominently featured," Young says.

The company couldn't actually put price tags on the bottles of Coke saying "5 cents." But it could paint a giant ad on the side of a building right next to the store that says, "Drink Coca-Cola, 5 Cents."

"Since everybody was brainwashed — people saw these ads all over — it was hard for anyone to increase the price," says Daniel Levy, a professor of Economics at Bar-Ilan University in Israel and at Emory University in Atlanta.

That contract with the bottlers eventually got renegotiated. But the price of Coke stayed at a nickel. That was partly due to another obstacle: the vending machine.

The Coca-Cola vending machines were built to take a single coin: a nickel.

Levy says the folks at Coca-Cola thought about converting the vending machines to take a dime. But doubling the price was too much. They wanted something in between.

So they asked the U.S. Treasury to issue a 7.5-cent coin. At one point, the head of Coca-Cola asked President Eisenhower for help. (They were hunting buddies.) No luck.

In the end, inflation killed the nickel Coke. The price of the ingredients rose. In the late 1940s, some stores sold Cokes for 6 cents. The last nickel Coke seems to have been in 1959.

The nickel price had lasted over 70 years. And in retrospect, Andrew Young says, it wasn't a bad thing for the company. It's one reason Coke is everywhere today. The company couldn't raise the price. So it did the only thing it could: It sold as many Cokes as possible.

https://www.npr.org/sections/money/2012/11/15/165143816/why-coke-cost-a- nickel-for-70-years.

Gatlin  posted on  2019-02-28   20:39:21 ET  Reply   Trace   Private Reply  


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