Big government war on big bills?

An issue that has long fascinated me is high denomination currency. There used to be quite a bit of it in circulation, but it died out. In the late 1960s:

The Federal Reserve began taking high-denomination bills out of circulation in 1969. As of May 30, 2009, there were only 336 known $10,000 bills in circulation; 342 remaining $5,000 bills; and 165,372 $1,000 remaining bills.[2] Due to their rarity, collectors will pay considerably more than the face value of the bills to acquire them.
That is no understatement. There is a web site devoted to collecting high denomination currency, and they explain:
Highdenomination.com is all about U.S bank notes of denominations $500, $1000, $5,000 and $10,000. - These high value United States Federal Reserve Notes and Gold Certificates are out of print and prized by both collectors and investors. Unlike many other currency issues, U.S. small size high denomination notes are Federal issues. By law, they still carry legal tender status. It is specifically this legal tender status, rarity and of course high face value that offer an unparalleled draw. This desirability makes high denomination notes, arguably, the most exciting area in collectible US paper money.
Even a completely trashed $500 bill with burn holes through it sells for $545.00.

In the United States, high denomination paper money dates back to 1861 (the "very beginning of U.S. Government issue") and it always included notes with face values as high as $10,000. Considering that the inflation-adjusted value of $10,000 would be $235,942.42 in today's money, that's a heck of a large bill, today. Almost a quarter of a million dollars.

So why is it that we can't obtain high-denomination notes if we want them? The highest value note is the $100.00 bill, but that was also the highest value note in 1969 when they decided to withdraw the higher-denomination notes, so I guess the government thought no one would need anything larger. But what about inflation since 1969? That hundred dollar bill would be $578.63 in today's money. So why hasn't the government at least re-introduced the $500.00 bill, just to keep up with inflation?

The answer seems to be the drug war.

Up until the mid-70s, and possibly later (I no longer recall the date), there were at least $500 and $1000 bills available to the public. They were withdrawn as part of the so-called "war on drugs"; the theory was that if large bills were unavailable, it would be more difficult to move large amounts of cash. In recent years, some people have suggested that since the change made no visible dent at all, the $100 and even the $50 should be withdrawn as well.
He's right about that; in 2008 the Providence Journal suggested that the $100 bill be withdrawn:
When was the last time that you had any need for a $100 bill or perhaps a $50 bill? Indeed, most purchases that Americans conduct over $20 are in the form of a check, wire transfer, credit or debit card. This begs the question: Who has the need for the $100 bill?The answer is clear -- the underground economy and criminal economy thrive on paper cash, especially the $100 bill.Because paper-cash transactions are non-transparent, anonymous and untraceable; paper cash has allowed criminal activity and the underground economies to thrive. In fact, the payment of choice by drug cartels and terrorist organizations is the $100 bill because it is easy to store, launder and transport.
Is the war on drugs really the reason? Or is the goal to monitor all cash transactions, and use the war on drugs as an excuse? Naturally, the war on "money laundering" is a subset of the war on drugs, but that, too, begs the question of whether the war on drugs supplies a very convenient pretext, to be used by those whose real goal is controlling our money.

As M. Simon keeps saying,

DRUG WAR = BIG GOVERNMENT

I understand why he put it in large caps, so I left it that way. Big government deserves to be fought in big caps.

Big Government, give us back our big bills!

MORE: Many thanks to Glenn Reynolds for linking this post, and a warm welcome to all.

Comments invited, agree or disagree.

posted by Eric on 10.12.10 at 01:39 PM










Comments

Thanks!

I like what Wm. Colby said:

"The Latin American drug cartels have stretched their tentacles much deeper into our lives than most people believe. It's possible they are calling the shots at all levels of government."
- William Colby, former CIA Director, 1995

So why money laundering? If you know where the money goes you can attack your competition.

M. Simon   ·  October 12, 2010 5:05 PM

Oh, I don't know, but if you wanted a safe stash at home for emergencies why not hundreds. Take up less room, look nice.

LYNNDH   ·  October 12, 2010 5:59 PM

glenn beck's fav progg woody wilson is on $100,000 bill

newrouter   ·  October 12, 2010 6:20 PM

When was the last time that you had any need for a $100 bill or perhaps a $50 bill?

A paraphrase of the phrase most likely to make you tell you to go screw.
"Why do you need that?"

I'm an American, if I wanted only what I need I'd move to some craphole country.

Veeshir   ·  October 12, 2010 6:55 PM

Some years back, "The Washington Monthly" had a sidebar suggesting demonitizing everything above a fifty. This would make large drug deals physically very unwieldy.

Bleepless   ·  October 12, 2010 9:52 PM

I've expected a move to outlaw cash for some time now.

Americans used to understand that liberty was impossible unless everyone minded their own damned business. What happened to that understanding"

Brett   ·  October 13, 2010 12:10 AM

So.....our plan is to eliminate major drug trafficking rings by slightly inconveniencing and mildly annoying them? Drug kingpins are notorious for their lack of commitment. That's bound to work. People who consider beheading, kidnapping, murder, etc. all in a days work will undoubtedly be deterred by having to carry a heavier bundle of cash.

smeg   ·  October 13, 2010 2:46 AM

It doesn't matter what denomination the bills are in, the drug cartels will use whatever is available as long as U.S. currency is the dominate currency in the world.
Do any of you brilliant drug war strategists see our currency being replaced in the next ten to twenty years?

I didn't think so.

So, the only reason all the large denomination bills are being discontinued is the 'government' doesn't want U.S. citizens squirreling away large sums of cash in small, hard to find, packages....caches?

By the way.
Why is FOX two hours behind on coverage of the miners rescue?

Bill

BillV   ·  October 13, 2010 3:26 AM

I think there were a couple other factors at work:

*The gold standard ended in November 1968. I suspect that the majority of +$100 bills were used to transfer gold between governments -- instead of actually transferring gold.

*The U.S. started a war on high-income individuals who paid little or no taxes -- the Alternative Minimum Tax was launched in 1969. I presume that by removing larger bills from circulation, it made it harder to transfer money to foreign bank accounts.

Stan Olshefski   ·  October 13, 2010 3:42 AM

I love how when the government's initial efforts fail, they ALWAYS decide to redouble their efforts.

It's a major inconvenience to law abiding Americans, but let's stop printing $100 bills!!!

Now, what's to stop the bad guys from using Euros? Or $20s?

Maybe the government should ban really large bags, too. And paper!

Dustin   ·  October 13, 2010 3:53 AM

To elaborate on the comment by M. Simon:

Does anyone who stops to think about it believe the trafficking in drugs into this country could continue at the level we now see without the contrivance of local, state and federal authoritys?

Get real, people.

I lived on the border with Mexico for too many years.

You have no idea what comes across the border and no idea how our border defenses are compromised by local, state and federal authority.

Most of our Border Patrol is honest and they work hard to intercept the drugs and human trafficers.

The ones I worry about are the individuals giving the orders to those honest Border Patrolmen/women.

And then we have the enviroterrorists who will not allow federal agents access to 'protected areas' along the border. What is up with that? If they are concerned about specific plant life, then collect seeds or plants that can be replanted and open the gates. If it is specific animal populations, we have most of them in zoos or private preserves. They can be replaced.

Get off the stick.

It is time we, as a people told our 'government' that we are fed up with all the excuses for why we can't do this and demand the 'government' do what is needed to solve this problem.

The best lessons I ever learned was from one of my first bosses on the job.
After listening to all the engineers and technicians tell him how a problem couldn't be solved, he said,
"I am tired of hearing how we can't. I want to hear how we can. And I want to hear it now or you are all fired."

Problem solved.

Bill

BillV   ·  October 13, 2010 4:00 AM

If anyone has noticed my usage of the term 'government' I want you to think about this:

You are the government. If you are not happy with how our 'government' is performing, you have the option to make changes. It is called the voting.

SO GET OFF YOUR DEAD ASSES AND LET'S VOTE ALL THE PARTICIPANTS IN THIS FRAUD ON THE CITIZENS OF AMERICA, OUT.

Bill

BillV   ·  October 13, 2010 4:11 AM
M. Simon   ·  October 13, 2010 4:48 AM

"I am tired of hearing how we can't. I want to hear how we can. And I want to hear it now or you are all fired."

LEGALIZE

M. Simon   ·  October 13, 2010 4:54 AM

Fear not, I expect to see $500s & $1000s resulting from their war on money. Either that or government issued wheelbarrows.

egoistd   ·  October 13, 2010 6:16 AM

Yes...the wiley gov't will also soon make pieces of gold that weigh more than 1/10th of and ounce and diamonds over 0.001 carot illegal, to prevent ultra-bad-evil-doers from doing "bad stuff" that has been outlawed but the Wise-Persons [PBOT!] of DC. I am guessing that high value monoloply money is next, as it trains children to use money in ways not controlled by the Great Leaders[PBOT!]. I refuse to ...akkk! awwk ! zfffff! oooohhhhh....got me!

Bozo   ·  October 13, 2010 6:17 AM

M. Simon, egoistd

At least you guys have caught on.

HooRah!

Bil

BillV   ·  October 13, 2010 6:52 AM

Counterfeiting is also a major consideration. Countries with a major counterfeiting problem (such as South Korea facing North Korean fake bills intended to destabilize its economy) have an incentive not to issue very large bills. The drug war isn't the sole villain here, though it is a factor.

The Eidolon   ·  October 13, 2010 7:29 AM

Large denominations stop you, me, and every other Joe from moving large sums of money undetected out of the country. Try walking through TSA with a bankroll of greater than 8 or 10K and they'll confiscate it. Under the pretext of suspected drug money, they'll take it and you have to go through administrative and legal purgatory to get it back. Who needs a big wad when what you pack in your wallet is a couple of bills that take no more space than simple dollar bills.
Try bank or other transfers and its all monitored. So squirreling away something in a 'safe haven' is effectively prohibited. Of course those with lawyers and serious money can do it. Just not you or me.

Why do you need to move large sums? Because the world still recognizes its value. Here from HGTV is an example where property purchases are done in American dollars and not bank instruments.

http://www.hulu.com/watch/175933/house-hunters-international-apartments-in-buenos-aires

Don51   ·  October 13, 2010 7:33 AM

We've sacrificed a lot of liberty in the name of "only drug dealers need to do that".

The world is full of countries where the dollar circulates because the people find it preferable to the local currency. Is it that much of a stretch to imagine a US where people eschew the dollar for the euro? Or the yen, or even the RMB?

Eric   ·  October 13, 2010 7:35 AM

An even more effective way to stop the flow of drugs would be to secure the f---ing border. Strange that the government hasn't done that.

Strange, but not surprising. Eliminating large denomination bills mostly inconveniences the little people. Ending illegal immigration, however, would inconvenience the people that matter.

WJ   ·  October 13, 2010 8:37 AM

There was an article a couple of years ago saying that the drug dealers prefer the Euro because it comes in a 500 Euro bill.

A $75 or $150 or $250 bill would be fun.

Sandy P   ·  October 13, 2010 8:38 AM

Try buying a used car with a debit card, then tell the fed to F off and let go my cash. $100 bills are still too small and unwieldy for a $3500 purchase, $20 bills make the transaction a real horrendous mess. And what about taking vacations? $100 per person per day is about the minimum basic spending money needed, if I can't use $50 and $100 bills I'll never be able to close my wallet. This 50-year war on drugs has never made an advance but has sustained way to many civilian casualties. By any measure it needs to be stopped.

ILTim   ·  October 13, 2010 10:16 AM

The main reason to get rid of large bills is to make tax evasion more difficult. As the government ratchets up tax rates and regulations, many people, from plumbers to lawyers, move into the cash economy.

Paying $50,000.00 to a plumbing contractor is a pain for everyone involved when one need get, carry around and deliver 500 $100 bills. Then, getting past the 'large cash transaction' rules is also a pain, but one that bigger bills won't cure.

Fred Z   ·  October 13, 2010 10:39 AM

I paid for a vehicle with $100 bills. It was a van old enough to vote, and I bought it directly from its previous owner. Everyone knows you don't use a check in situations like that, because the seller has no way to know if the check will bounce. And I couldn't get a cashier's check or money order for it, because (a) I didn't know in advance who I'd be buying it from, (b) the seller and I negotiated the price on the spot so I didn't know in advance how much I'd be paying, and (c) it was a weekend and the banks and post offices were all closed.

Wacky Hermit   ·  October 13, 2010 11:14 AM

This is America damnitt! I want bills denominated in increments of 9.99, 19.99, 29.99 etc. It will make paying all those 10 easy installments for things I buy on TV much easier.

Stan   ·  October 13, 2010 11:31 AM

The idea that druggies get support by using high dollar bills is kinda crazy. Where they going to get them? A bank? Well a $10k note triggers certain levels of paperwork before the bank will issue the note. Druggie won't go there.

Not only that but if druggies can afford to build submarines to transport drugs, they can use those same vessels to transport pallet loads of $50's or $100's. But the reality is the druggies will find some other vehicle. Like say gold. All they need is some front with say a Cash4Gold site to launder it. With gold approach $2k and ounce it is the perfect tender for them.

Sheesh.

JohnMc   ·  October 13, 2010 12:16 PM

Most third world countries control the population by limiting the issue of any bills larger than about $5. In Burma, the ONLY bill in circulation is equivalent to about $1. You either buy enough of whatever you're buying to get to that $1 level or you take your change in candy or whatever is at hand.

If the government won't issue larger bills, the marketplace will come up with a solution and right now it's looking like gold.

Sure it's heavy compared to paper, but there isn't any counterparty risk. A one ounce coin will soon be worth $2000 at the rate things are going.

Concerned Citizen   ·  October 13, 2010 2:38 PM

When reading old fiction (especially mysteries) one encounters references to big bills. It's sometimes sobering to recall just how much those big bills represented at the time.

For instance, in Damon Runyon's short story "Blood Pressure", the narrator goes to Nathan Detroit's crap game, where the "high shots... all have these big coarse G notes in their hands which they are tossing around... [like] pieces of waste paper." A gambling session where $1,000 bets are routine would be way too exciting for most people today - imagine what it would be like in 1930.

Or the scene at the end of The Maltese Falcon where Gutman forces Spade to return the $15,000 paid for the black bird, and Spade holds back one $1,000 bill "for my expenses". He later hands the bill over to the police, saying it was meant to bribe him. $1,000 doesn't seem like much now, but in 1940 it was about the price of a good new car (an upscale LaSalle was about $1,250).

If we scaled up our currency today in proportion, we would have coins up to $10, and bills up to $2,000 or $5,000 in circulation.

Richard Rostrom   ·  October 13, 2010 3:02 PM

Who wants to make change for a $500 or a $1000? That would impose a cost on cashiers everywhere. No, I think the $100 is fine as the largest bill.

John Lynch   ·  October 13, 2010 3:52 PM

I'd like to see a coin of face value of a round $1000, made of 5K gold.

Pouncer   ·  October 13, 2010 9:23 PM

Why notes of $100 or more?

Well, since I live in CA, I often drive over to NV to gamble. It's a fun pastime that I enjoy in moderation. Besides, it keeps NV state-income-tax free, which I hope to make use of in a few years by moving me and my business there. Call it an investment in my future. :-)

Anywho, it's more of a pain to walk up to the craps table and toss down 25 $20 bills than 10 $100 bills, that's why. It would be even more convenient to toss down a single grand note. The less counting time the dealers need to change me to chips, the faster I get into the game.

OK, a trivial reason. How about this one - alluded to by other commenters here: "None of your damn business". Because I want it, that's why - and since the government is MY EMPLOYEE, they should willingly and happily cater to my wants (within those empowered to it by the Constitution, that is - which leaves out about 90% of the current Federal government apparatus, but certainly INCLUDES the printing of money, Art 1 Section 8).

Honestly, I need no other reason... but I've provided a concrete example as well.

So, where's my $1000 bill, eh?

-MrJest

Jester   ·  October 13, 2010 11:55 PM

Post a comment


April 2011
Sun Mon Tue Wed Thu Fri Sat
          1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30

ANCIENT (AND MODERN)
WORLD-WIDE CALENDAR


Search the Site


E-mail



Classics To Go

Classical Values PDA Link



Archives



Recent Entries



Links



Site Credits