#
Allow me. The real reason though is forcing people to go cashless.
There are more $100 bills in circulation than $1 bills, and it makes no cents
A puzzling surge in the number of $100 bills in circulation and the planned demise of the 500-euro bank note have resurrected debate on the need for three-digit currency at all — given their favor with criminals around the globe.
A decade ago, the number of $100 bills lagged well behind $1 and $20 notes. But the tally has doubled since the end of the financial crisis, according to data from the Federal Reserve; by 2017, the $100 note eclipsed the $1 to become the most widely distributed U.S. currency. Output is still climbing, and experts are perplexed.
“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,” Torsten Slok, chief international economist of Deutsche Bank, wrote in a note to investors last week.
The Benjamin Franklin-faced currency has been the largest U.S. bill since the $500, $1,000 and $5,000 were axed in 1969, but it’s not very popular for day-to-day transactions. The average American carries about $60 in cash, according to a 2017 study from the Federal Reserve Bank of Atlanta. A December study from Pew Research Center found that about 30 percent of Americans use no cash at all on a weekly basis, suggesting that, in the digital age, cash is going out of style altogether.
The U.S. Treasury Department is responsible for printing currency, and does so to replace bills that are old or damaged, or to meet increased demand. But the life span of $100 bills is about 15 years, compared with 8.5 years for a $50 bill, so they don’t need to be replaced very often.
The vast majority of these bills aren’t even here. A 2018 research paper from the Federal Reserve Bank of Chicago estimates as much as 80 percent of the 12 billion $100 bills in circulation live outside the country. Some of this growth is likely a result of the U.S. dollar supplanting local currencies in unstable economic environments.
“We think that the significance of foreign demand is unique to the dollar,” Ruth Judson, an economist at the Fed Board of Governors, said in a 2018 paper from the Federal Reserve Bank of Richmond. “Other currencies are also used outside their home countries, but as far as we can tell, the dollar has the largest share of notes held outside the country."
One possibility is an increase in global corruption and criminal activity. A 2016 paper published by Harvard’s Mossavar-Rahmani Center for Business and Government claimed that high denomination notes are the “preferred payment mechanism” of criminals, because of “the anonymity and lack of transaction record they offer, and the relative ease with which they can be transported and moved.”
The Harvard paper, by Peter Sands, former chief executive of Standard Chartered, puts the convenience of big bills for criminals in stark terms: $1 million in $20 bills would weigh more than 50 pounds. In 500 euro notes, it would be a little over two pounds.
Though exact figures aren’t available, the amount of cash that criminals launder each year could range from hundreds of billions of dollars to $1 trillion, the Financial Action Task Force, an intergovernmental body that combats illicit finance, said in a 2015 report. The U.S. dollar, the euro, the British pound and the Swiss franc are among criminals’ preferred currencies.
“In many cases, even when the proceeds of a crime are initially generated in electronic form (such as the theft of funds from a bank account), criminals choose to withdraw the funds from a bank account in cash, transport it to another country, and pay it into another account in order to break an audit trail,” the report said.
In the United States, cash from regional narcotics sales is usually funneled to a central counting house in a large city, such as Atlanta, Boston, Chicago and Los Angeles, where smaller notes are converted into $50 and $100 bills and then vacuum-sealed to reduce their bulk, according the report.
Tougher banking controls against money laundering may be driving criminals to rely more on cash, the report said.
It’s these arguments that led the European Central Bank to stop recirculating 500-euro notes, which were worth about $575, as of Jan. 27. At one point, these bills were called “Bin Laden notes” because of their rumored use in financing terrorism and money laundering. There also has been a broader push to eliminate big bills everywhere.
“A global agreement to stop issuing high denomination notes would also show that the global financial groupings can stand up against “big money” and for the interests of ordinary citizens,” former Treasury Secretary Lawrence Summers wrote in a Washington Post op-ed in favor of killing the $100 bill.
Plenty of law-abiding people still depend on cash. As of 2015, there were 2 billion adults worldwide who didn’t have access to banking services, making cash their only means of buying goods and services. Many of these people live in the world’s poorest countries.
Some experts say the staggering rise in $100 bills could reflect financial unease that’s causing some people to keep their assets outside the financial system. That same tension has fueled interest in cryptocurrency like bitcoin.
Fears of a recession have been growing, in the United States and abroad. A recent survey of nearly 800 top business leaders around the world listed global recession as their biggest concern for 2019.
In an interview Monday, Summers, now a Harvard University professor, said he doesn’t buy the idea that recession fears are driving demand for $100 bills. “I know a lot of people who plan for the next financial crisis. I don’t know anyone who is holding a big hoard of hundred dollar bills,” he said. “That suggests [the bills] are mostly being used as repositories of wealth for people who want to avoid taxes or who have committed crimes.”
He repeated his call to stop printing the bills. “I think the case is getting even stronger as the Europeans have eliminated the 500-euro note,” he said.
I guess I have to repost this. The US economy is transparently NOT the strongest in the world.
It is the most distorted economy in the world due to the fact that the world started using its govt debt as reserves after the US defaulted on the gold standard.
This moneterist system funnels untold amounts of debt money into the US. This debt money gets wasted on military and govt cronyism in Washington and gets ponzied up frauded away in NY and SiliCON valley. It gives the outward appearance of a strong economy while the tent cities circle the block.
The strongest economy in the World is China. The distorted US economy is really just socialism for the rich, and has run out of steam.
What does that mean?
Plus, if you factor in longevity then China isn't part of it, their manufacturing niche is already becoming increasingly uncompetitive and only the desire for a large market and previously invested operations are a factor for not seeing a mass exodus from there
Two completely different economies
The push upward for the yuan – and Monday was no less remarkable – reflected the strong Chinese 3rd quarter GDP number of 4.9% year-on-year, almost on par with pre-Covid 19 levels. The growth rate undershot the 5.5% expected by most economists; still, the year-to-date expansion of 0.7% shows that the economy has made up all the ground lost during the Covid period.
More relevant to the abiding strength of the yuan is the strength of domestic demand in the GDP composition. Imports grew by a wholly unexpected 13.2% in September. Retail sales were up by 3.3%, double of what economists had forecast.
Strengthening of domestic demand is, of course, the key element of the “dual circulation” economic policy strategy announced by the government in early August and once again emphasized by President Xi Jinping in Shenzhen during his recent southern tour.
And a strong currency is a key ingredient of the strategy.
China GDP, Ant IPO push yuan to new highs - Asia Times
Basically, it looks like we are in for a period of rising Yuan and USD weakness. Chinese domestic consumption is about to become as critical to the world economy as US consumption- but without the massive government debt and current account deficit. Or foreign wars. China may overtake the US as the worlds largest economy by 2030- earlier than expected. It is already the strongest economy.
But the Yuan- unlike USD- is not freely tradable, and the US has a virtual monopoly on international financial transfers with the SWIFT system- which it routinely uses to further it's political agendas. Perversely, until this is redressed, I cannot see the World's strongest economy even equalling the US as the World's strongest financial power. I think SWIFT's days as a de facto monopoly are numbered- and the sooner the better, if you ask me. It needs to be either duplicated, or replaced. However, even then anglo-american financial institutions & corporations will continue to hold enormous sway internationally, given the enormous amount of assets (and debt) they control.
Last edited by sabang; 23-10-2020 at 08:31 PM.
Germany’s pandemic recovery raises age-old questions about European economy
Germany's economy was starting to struggle before the pandemic but the country's response means it is powering ahead of the rest again. This raises questions about a two-speed European economy.
Germany’s pandemic recovery raises age-old questions about European economy | Business| Economy and finance news from a German perspective | DW | 29.09.2020
Duplicate or replace SWIFT. The latter is unlikely, given US hegemony over it. So duplicate- possibly based on far more efficient (and cheaper) Blockchain technology.provide solutions?
^ Good. Problem with blockchain is still the transparency and responsibility
Yup. Ain't anything near anything I can trust, it's almost as bad as the USD. It needs major sponsors. Major.
There are currently 1 users browsing this thread. (0 members and 1 guests)