Hundred Dollar Bills in Circulation Skyrockets, “Enough Evidence” Indicating Global Corruption


Since the financial crisis, the king among the cash, $100 bill involving the old and the new ones have doubled in numbers. Is it the low-interest rates, the drug trade or petty crimes that have led to these hundred-dollar bills in circulation to skyrocket?

Economists are Left Scratching their Heads

The surge in the amount of $100 bills has some economists scratching their heads. According to the latest data from the Federal Reserve, the number of outstanding US $100 bill has doubled since the financial crisis as now over 12 billion of them are circulating out there in the world. C-notes have surpassed $1 bills in circulation, said Torsten Slok, the chief international economist at Deutsche Bank, this week in a note to clients.

Generally, the US Treasury Department prints new currency either to meet the increased demand from the public or to replace destroyed bills. But, Slok further notes, “the stock of $100 bills outstanding is probably not driven by transaction needs given the average lifespan of a $100 note is much longer than for other notes.”

Moreover, according to a 2017 survey by the Federal Reserve Bank of Atlanta, an average consumer usually doesn’t carry $100 bills, US Consumers held on an average of $58.90 in cash each day with most common denomination being $1. This surge, generally economists believe is people around the world wanting to hoard cash.

High-Value Notes a Popular Choice among Criminals

High-denomination currency notes have been historically a preferred form of payment for criminals. Nicholas Colas, co-founder of DataTrek Research who has been on this topic for over a decade now says the growth of $100 bills in circulation is a sign that they are used as a store of value and are still used for international crime.

“It has nothing to do with the U.S. economy and nothing to do with interest rates. 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,” said Colas.

According to Colas, these hundred dollar bills began surging abroad after the Gulf War and US invasion of Afghanistan, as part of stabilizing the region.

These larger bills also have a longer shelf life than any other form of US cash. So, other factors behind the increase in C-notes are explained by Slok,

“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% of these $100 Bills are Overseas

As per the 2018 research paper from the federal reserve Bank of Chicago estimate, 60 percent of all US bills and 80 percent of $100 bills are now overseas. Economic and political stability might be driving this demand but projecting the future demand for US currency is “challenging.”

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

But, “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.”

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