October 12, 2010
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. 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 They were withdrawn as part of the so-called "war on drugs"; the theory was that if large bills were unavailable, it would be more difficult to move large amounts of cash.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
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