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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."
Superbills?
https://en.m.wikipedia.org/wiki/Superdollar
(Score: 0, Disagree) by Anonymous Coward on Friday March 01 2019, @02:03PM (10 children)
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)
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
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)
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)
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.
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
> 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)
> 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
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)
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
You forgot the usury.
(Score: 1) by Gault.Drakkor on Saturday March 02 2019, @12:43AM
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.
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.