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posted by martyb on Friday March 01 2019, @12:43PM   Printer-friendly
from the think-global-act-local dept.

The amount of $100 bills in circulation is surging. And it's leaving some economists scratching their heads.

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.

[...] "By eliminating high denomination, high value notes we would make life harder for those pursuing tax evasion, financial crime, terrorist finance and corruption," [former Standard Chartered bank chief executive Peter] 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.

[...] "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."

https://www.cnbc.com/2019/02/27/theres-been-a-mysterious-surge-in-100-bills-in-circulation-possibly-linked-to-global-corruption.html

Superbills?
https://en.m.wikipedia.org/wiki/Superdollar


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  • (Score: 5, Insightful) by SomeGuy on Friday March 01 2019, @01:38PM (23 children)

    by SomeGuy (5632) on Friday March 01 2019, @01:38PM (#808667)

    Most people easily spend more than $100 per trip to a store just for basics, especially if they have a family. The prices of many things has skyrocketed out of the soloar system the last few years.

    So the implication is only "corrupt" people use cash? Reeally? This story was brought to you (in a huge annoying popover) by the fund to track every purchase you make.

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  • (Score: 0, Disagree) by Anonymous Coward on Friday March 01 2019, @02:03PM (10 children)

    by Anonymous Coward on Friday March 01 2019, @02:03PM (#808680)

    Inflation makes you richer though since it is easier to pay off your debts.

    • (Score: 2) by mhajicek on Friday March 01 2019, @03:37PM (1 child)

      by mhajicek (51) on Friday March 01 2019, @03:37PM (#808721)

      Only if you have negative wealth.

      --
      The spacelike surfaces of time foliations can have a cusp at the surface of discontinuity. - P. Hajicek
      • (Score: 3, Informative) by maxwell demon on Friday March 01 2019, @03:49PM

        by maxwell demon (1608) on Friday March 01 2019, @03:49PM (#808737) Journal

        Only if you have negative wealth.

        Wrong. The only condition is that your monetary wealth is negative, and the interest is below the inflation rate. Your material wealth can exceed your debt by an arbitrary large amount. Material goods won't lose value due to inflation.

        --
        The Tao of math: The numbers you can count are not the real numbers.
    • (Score: 0) by Anonymous Coward on Friday March 01 2019, @03:43PM (2 children)

      by Anonymous Coward on Friday March 01 2019, @03:43PM (#808731)

      Only if you actually get an annual pay increase equal to inflation. This has not been happening for the last decade for most people. That's why the middle class is shrinking.

      • (Score: 0) by Anonymous Coward on Friday March 01 2019, @05:51PM (1 child)

        by Anonymous Coward on Friday March 01 2019, @05:51PM (#808807)

        Only if you actually get an annual pay increase equal to inflation. This has not been happening for the last decade for most people.

        More like the last several decades. I can't be bothered to look it up but I remember reading somewhere that if minimum wage had kept up with inflation since the 1970s (1960s?) then it would now be around $22/hr. And some fat cats now scream bloody murder at the mere thought of raising minimum wage from $10/hr to $15/hr. And let's not mince words here: keeping minimum wage low is quite effective at keeping everyone else's wages lower too. Just imagine what your life could be like if your salary was roughly doubled.

        That's why the middle class is shrinking.

        Yes, indeed. More and more, I'm becoming convinced that what the CEOs really want is that all the rest of us work as serfs on their personal plantations!

        • (Score: 2) by Unixnut on Friday March 01 2019, @06:42PM

          by Unixnut (5779) on Friday March 01 2019, @06:42PM (#808841)

          > More like the last several decades. I can't be bothered to look it up but I remember reading somewhere that if minimum wage had kept up with inflation since the 1970s (1960s?) then it would now be around $22/hr.

          Wages decoupled from inflation roughly when the US went off the gold standard, which was the 1970s roughly. The ability to print money at whim and spend it like a drunken sailor was the start of the decoupling of asset prices from wages.

          > And some fat cats now scream bloody murder at the mere thought of raising minimum wage from $10/hr to $15/hr.

          While I loathe to defend "fat cats", I will point out that the population of the world in 1970 was around 4 billion, but now is around 8 billion. At the same time the push for gender equality has resulted in more females working, while automation and productivity enhancements has reduced the need for jobs, so the population has doubled, the working percentage of the population has increased, but the number of jobs hasn't. As such, the value of an individuals labour has reduced.

          So yes, I can imagine $22/hr being the correct inflation adjusted minimum wage, but that assumes everything else stays the same, from the number of jobs available, to the population, to the %age of population working, none of which has happened. Peoples labour is worth less now than in the 1970s, and if the AI revolution really reaches its promises, wages will drop further, as there will be even less demand for human labour.

          > And let's not mince words here: keeping minimum wage low is quite effective at keeping everyone else's wages lower too. Just imagine what your life could be like if your salary was roughly doubled.

          Life would be exactly the same, because prices would roughly double to compensate. If everybodies wages doubled tomorrow, prices would double too, and nobody would be better off.

    • (Score: 3, Insightful) by Unixnut on Friday March 01 2019, @04:24PM (4 children)

      by Unixnut (5779) on Friday March 01 2019, @04:24PM (#808763)

      > Inflation makes you richer though since it is easier to pay off your debts.

      Not really. as debt usually has an interest rate in excess of inflation (usually magnitudes higher), so inflation does not make it easier to pay off debt. The bankers aren't stupid, they won't let you get away with inflating away what you owe.
      It also inflates away your wages, and your savings, so in fact I'd argue that at best you stay the same, but the vast majority of people get poorer.

      You may have assets that are inflation proof (so they will go up in price to offset inflation), but their value is the same.

      For example, You happen to own a house that is worth £100,000, if inflation makes that house worth £200,000, you are not richer, if you sold that house, you could still only buy that same house again, you could not upgrade. The value has stayed the same, but the price has changed.

      However, if you are working for £50,000 a year, and want to buy the £100,000 house, inflation will make the house cost £200,000, but your wages are still £50,000. You are now poorer, because inflation has pushed your purchasing power down. Even if you own the house that is now worth 200k, you are still poorer, because your wages can no longer afford to buy a house like the one you already have, if you needed to.

      Inflation is a stealth tax really, the slow siphoning off of your wealth in such a way that is very hard to notice, and even harder to know who is doing it and where the money is going.

      • (Score: 2) by JoeMerchant on Friday March 01 2019, @06:37PM

        by JoeMerchant (3937) on Friday March 01 2019, @06:37PM (#808835)

        Inflation is a stealth tax

        for people who hold cash, and in that respect it's a good thing. If you don't invest your cash hoard, you're losing it to inflation. Of course, if you do invest your cash hoard you are putting it at risk in the markets.

        --
        🌻🌻 [google.com]
      • (Score: 0) by Anonymous Coward on Friday March 01 2019, @10:02PM (1 child)

        by Anonymous Coward on Friday March 01 2019, @10:02PM (#808954)

        For example, You happen to own a house that is worth £100,000, if inflation makes that house worth £200,000, you are not richer, if you sold that house, you could still only buy that same house again, you could not upgrade. The value has stayed the same, but the price has changed.

        But, if you borrow £100,000 to buy the house, then inflation makes that house worth £200,000. Then, you now owe half what you owed before.
        You could sell the house and be £100,000 richer than you were before you bought it.

        • (Score: 0) by Anonymous Coward on Saturday March 02 2019, @10:20AM

          by Anonymous Coward on Saturday March 02 2019, @10:20AM (#809088)

          You forgot the usury.

      • (Score: 1) by Gault.Drakkor on Saturday March 02 2019, @12:43AM

        by Gault.Drakkor (1079) on Saturday March 02 2019, @12:43AM (#809026)

        Interest rate is set more additive then multiplicative. If inflation is say 0% general mortgage rate will start at something like 0+4% if inflation is 4% general mortgage rate will start at 4+4%(yearly compounded rate). I you are talking orders of magnitude as x10.... there is absolutely no way you will see 100% interest rates when inflation is 1%. Nobody reasonable could afford that.

        For example, You happen to own a house that is worth £100,000, if inflation makes that house worth £200,000, you are not richer, if you sold that house, you could still only buy that same house again, you could not upgrade. The value has stayed the same, but the price has changed.

        I will ignore the cost/benefit via paying mortgage rather then rent.

        Where inflation really starts being noticeable is say inflation of 5%.
        Scenario: Twenty year amortization, 9% interest rate ( chunked in numbers into online amortization thing).
        So after twenty years that house will be worth about 270K£. But over that 20 years ~116K£ interest +100K£ principle would be paid. I payed less then what the house is currently worth.
        Not including property taxes and some of the other fees.
        If inflation was zero, house would be still worth 100K£ after 20 years but 216K£ would have been spent on mortgage and payment. I payed twice what the house is worth.

        So that is where people say inflation helps if you are paying off debt. Because once you get the loan, that is what you are paying off a fixed value when you purchase the house.

  • (Score: 3, Interesting) by urza9814 on Friday March 01 2019, @03:43PM (2 children)

    by urza9814 (3954) on Friday March 01 2019, @03:43PM (#808728) Journal

    My thoughts exactly. Can't even take the girlfriend out for dinner at a casual chain restaurant without the bill getting near (or sometimes breaking) $100. This "corruption" crap is just a ploy to get rid of cash.

    • (Score: 0) by Anonymous Coward on Friday March 01 2019, @04:20PM

      by Anonymous Coward on Friday March 01 2019, @04:20PM (#808761)

      That is not posible if you live in the US, #SoMuchBullshit

      I might have believed you if you said a nice restaurant, but even then it has to be a swanky restaurant not just nice.

    • (Score: 2) by JoeMerchant on Friday March 01 2019, @04:23PM

      by JoeMerchant (3937) on Friday March 01 2019, @04:23PM (#808762)

      I don't deny that there are strong ploys at work to get rid of cash.

      On the other hand, I wouldn't be surprised at all if the recent massive influx of C notes is the result of a group of actors taking them out from under the mattress, safe deposit boxes, etc. and spending them. The types of actors who hold large quantities of C notes aren't usually your "color inside the lines" types.

      What this means to me, if the data isn't just fabricated, is that one or more groups recently converted their cash hoards to power plays - making people do things in exchange for the cash instead of saving it for a rainy day, and the interesting question is: what big activities did all this cash fund?

      Another thing this means to me is: like last year's economic "BOOM" which was, in part, funded by the IRS under-deducting from the majority of US workers, resulting in something like an 8% average decrease in income tax refunds this year - this cash influx is either a short term and temporary economic stimulus, or it is the result of massive counterfeiting, which will be even worse in the long run.

      --
      🌻🌻 [google.com]
  • (Score: 4, Informative) by Runaway1956 on Friday March 01 2019, @03:58PM (4 children)

    by Runaway1956 (2926) Subscriber Badge on Friday March 01 2019, @03:58PM (#808745) Journal

    That wasn't the impression I got at all. People who have been hoarding $100 notes are suddenly putting them back into circulation. The question is, "Why?" Apparently, the hoarders are losing faith in the Federal Reserve Dollar. If people start demanding Greenbacks, or similar, that will clinch it. No faith in the Federal Reserve.

    • (Score: 2) by AthanasiusKircher on Friday March 01 2019, @04:16PM (2 children)

      by AthanasiusKircher (5291) on Friday March 01 2019, @04:16PM (#808760) Journal

      That wasn't the impression I got at all. People who have been hoarding $100 notes are suddenly putting them back into circulation.

      Try reading again. That is NOT what's happening. The amount "in circulation" is simply the number that have been printed by the Treasury and have not been returned to the Treasury for destruction (for bills that are too worn, very damaged, etc.).

      TFA says the Treasury has been printing more and more $100 bills, and they haven't been returning. So, they're out there. Unless someone is burning up $100 bills in 55-gallon drums somewhere, chances are either (1) hoarding is increasing, or (2) most of these are still being used both inside and outside the U.S. in illicit transactions, or both.

      Apparently, the hoarders are losing faith in the Federal Reserve Dollar.

      Not even close. If anything, this indicates more use of the dollar, which frankly, I find a bit surprising. (Though I shouldn't be surprised: even when the U.S. was threatening to not uphold its financial commitments a few years back, T-note auctions indicated steady or even increased demand for dollars. It's all irrational.)

      • (Score: 2) by Unixnut on Friday March 01 2019, @04:50PM (1 child)

        by Unixnut (5779) on Friday March 01 2019, @04:50PM (#808783)

        > Not even close. If anything, this indicates more use of the dollar, which frankly, I find a bit surprising.

        Well, seeing as every single country that tried to move away from the dollar got some "humanitarian bombing", it doesn't surprise me at all. Off the top of my head:

        Attempted:
        Iraq - in 2003, Saddam decides to stop selling Oil in USD and switch to Euro. Result - bombed and overthrown, Saddam hanged by the US installed government.
        Syria - in 2006, Assad decides to switch away from USD to EUR for all trade. Result - bombed, but Russia and China step in to stop the overthrow. However the country has been pretty much destroyed and will take a generation of hard work at least to bring back to pre-war life, if divisions can ever really be healed post conflict.
        Libya - in 2011, Gadaffi decides to move away from USD and form a gold backed Dinar as a common currency for the African Union. Result - bombed, overthrown, Gadaffi sodomised to death with a machete

        In progress:
        Venezuela - Maduro to move away from trading oil in USD, and to towards currency swaps, and/or Petro crypto currency. Result: overthrow in progress, no certainty of success at the moment

        Maybe:
        Iran - Attempting to move off USD, but has not fully done so (despite sanctions). Attempting to make use of non USD trading through the EU clearing house in Euros, but the US is threatening to sanction any EU country that trades with Iran. US has made plenty of threats and plans to bomb Iran and overthrow the government, but have yet to actually do it. Seem to be considering giving nukes to Saudi Arabia, maybe let them and Israel do the dirty work?

        A bit too big to swallow:
        Russia - Moving away from USD for trade, primarily currency swaps and gold swaps. Result: Has nuclear weapons, so a bit tricky to bomb and overthrow. However constant demonisation and attempts to sanction and isolate them until they fold is being attempted
        China - Moving away from USD for trade, primarily currency swaps and gold swaps. Result: Has nuclear weapons, so a bit tricky to bomb and overthrow. However constant demonisation and attempts to sanction and isolate them until they fold is being attempted

        Moral of the story? Don't even think of moving off the USD unless you got a large nuclear arsenal. As that is only 5 countries on earth, of which 3 (US, UK, France) are allies, it isn't surprising most others just shut up and accept whatever they are told to. However if other smaller countries start joining things like the Eurasian Union, the SCO or CSTO, then they can consider dumping the USD without getting destroyed in the process. At that point, you will see a large increase of USD in circulation, as people start dumping them for hard assets or other currency.

        • (Score: 2) by AthanasiusKircher on Saturday March 02 2019, @02:47AM

          by AthanasiusKircher (5291) on Saturday March 02 2019, @02:47AM (#809045) Journal

          At that point, you will see a large increase of USD in circulation, as people start dumping them for hard assets or other currency.

          Can no one here read? If your scenario came true and people dumped their U.S. cash, there would be LESS cash "in circulation" according to TFA, because the Treasury would stop printing money and the number of old bills destroyed when returned to the Treasury would exceed new production, due to increased demand.

          Some of you seem to read "in circulation" as though it means people are running around actively throwing these bills around. That's not what the term means in reference to currency. Bills "in circulation" are opposed to bills that are pulled out for the Treasury for destruction and/or held in reserve by the Treasury for future release.

          If there are more bills in circulation -- again, that just means "not contained within the Treasury" -- without apparent increase in economic activity to justify it, it means people are holding onto and hoarding dollars (or using then for illicit or foreign transactions).

    • (Score: 2) by krishnoid on Friday March 01 2019, @11:32PM

      by krishnoid (1156) on Friday March 01 2019, @11:32PM (#808990)

      Apparently, the hoarders are losing faith in the Federal Reserve Dollar.

      Um, no. Cassette tapes, vinyl, handlebar mustaches, fixies, and now paper money ... the whole driver behind this was obvious to me as soon as I read the headline.

  • (Score: 4, Interesting) by JoeMerchant on Friday March 01 2019, @04:15PM

    by JoeMerchant (3937) on Friday March 01 2019, @04:15PM (#808759)

    In the 1970s, it was a rare bi-weekly trip to the grocery store for our family of four (with my parents) that would top $100 at the register. Today, we go to the grocery at least once a week, more often twice, and it is a rare trip for our family of four (with my children) that doesn't top $100 at the register. Effective food costs have nearly quadrupled. Then we can talk about the gasoline that cost $0.32 per gallon in 1972 which has increased 10x, although it's still rare to top $100 in a single tank, I think it's not unreasonable to pay for a $70 gas bill with a C note, whereas the same bill in 1971 would have been under $10 - fuel mileage has increased a small fraction in the meantime, not nearly to keep pace with the cost of fuel, though, and miles driven on average have increased.

    I feel the same way about the $10K maximum transaction limit without nosy people wanting to track what it's all for. When that law was passed, you could buy a nice new house for less than $10K, today a decent used car is more. We recently bought a boat for $16K cash and the process to transfer the money was agonizing.

    --
    🌻🌻 [google.com]
  • (Score: 2) by dry on Saturday March 02 2019, @06:48AM

    by dry (223) on Saturday March 02 2019, @06:48AM (#809081) Journal

    Does that explain the number of American $100 bills in other nations? Here they're not too useful due to the fear of them being counterfeit.

  • (Score: 2) by Phoenix666 on Saturday March 02 2019, @03:50PM

    by Phoenix666 (552) on Saturday March 02 2019, @03:50PM (#809168) Journal

    Sometimes I question the average citizen's ability to manage his money. When I walk into a grocery store, 90% of the place is full of processed food. That stuff is expensive. It's also full of stuff that's not good for you. Meanwhile the produce section has stuff that is much less expensive; within that section, there are items that are shipped from Chile and are expensive, and items which are local and in season and dirt cheap. So of course people buy the expensive stuff because it's what they want, now. But they could create menus with the cheaper stuff perfectly well and be perfectly happy with the result, in terms of taste and nutrition. But people just want what they want, when they want it and damn the cost. Except as soon as they have done paying for it they complain, complain, complain about the cost. People could save tons of money by curbing those impulses.

    I walk down the street and see all kinds of great furniture put out on the sidewalk. Sometimes it might need to be re-upholstered, re-finished, or repaired a bit, but with a little time and elbow-grease you can have a fine piece whose acquisition didn't cost you a mint.

    Same thing with clothing, electronics, etc. I've given my kids several iterations of laptops without spending a dime, because I picked them up, tuned them up, installed linux, and told them, "here's your new computer!"

    As long as a person has an ample portion of DIY, creativity, and the social confidence to not give a damn what the talking-heads and fashionistas have to say (they're all shilling, BTW), it's quite possible to dramatically re-define his cost of living.

    --
    Washington DC delenda est.
  • (Score: 2) by Bot on Saturday March 02 2019, @11:20PM

    by Bot (3902) on Saturday March 02 2019, @11:20PM (#809270) Journal

    BTW a good way to 'convince' people to abandon cash would be to flood them with fake bills, blame $enemy_of_the_day for it. One small drawback is that people would momentarily benefit by the infusion of cash, which becomes fake only when you take it to a bank.

    --
    Account abandoned.