Posts Tagged ‘currency’
“It’s All About The Benjamins”*…
A funny thing happened on the way to a world of cryptocurrencies and mobile payments. Cash became more popular than ever. The main reason? The one hundred dollar bill.
In 2017, for the first time ever, the one hundred dollar bill became the most popular US bill in circulation, beating out the one dollar bill. It is quite the turn of events for Benjamin Franklin-faced banknote. Just 10 years ago, it was less common than both the $20 and the $1.
The share of US dollars in circulation as a share of GDP rose from about 6% in 2010 to 9% in 2018, according to the Federal Reserve. Increased use of $100 bills has been the primary driver…
Why cash is king: “There are now more $100 bills than $1 bills in the world.”
* Puff Daddy
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As we contemplate currency, we might spare a thought for Franco Modigliani; he died on this date in 2003. An economist, he originated the life-cycle hypothesis, which attempts to explain the level of saving in the economy, suggesting that consumers aim for a stable level of consumption throughout their lifetime (for example by saving during their working years and then spending during their retirement)– for which he was awarded the Nobel Prize in Economics in 1985.
Among his other accomplishments, he initiated the Monetary/Fiscal Debate when he (and co-author Albert Ando) wrote a scathing critique of an early 1960s paper by Milton Friedman and David Meiselman. Freidman and Meiselman had argued (in effect) that monetary policy was the only effective tool in managing an economy; Modigliani and Ando pointed out flaws in their analysis and made the case for fiscal measures (effectively, government spending) as equally-effective tools. The debate– known by the antagonists’ initials as the AM/FM Debate– rages to this day.
“Many people take no care of their money till they come nearly to the end of it”*…
(Roughly) Daily has taken a look at the obscure corner of the U.S. Treasury once devoted (literally) to laundering money (“Cleanliness is Next to Godliness“); today we visit that operation’s forensic cousin…
The colorfully named Mutilated Currency Division at the Bureau of Engraving and Printing is a small office of crack forensics that spend their days poring over all manner of defaced dollars. Provided for free as a public service, the Mutilated Currency employees labor to identify bits and fragments of identifiable denominations that can be redeemed at face value.
Established by Congress in 1866—less than five years after the government started issuing paper money—the Mutilated Currency Division handles about 30,000 cases a year, returning currency valued at over $30 million. As long as more than half of the note remains, or the Treasury can be satisfied that the missing portions have been destroyed, the Mutilated Currency Division will redeem the amount of money that has been damaged by fire, water, chemicals, and acts of god…
Cash in your burnt, moldy, or soiled greenbacks at “The Mutilated Currency Division.”
* Johann Wolfgang von Goethe
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As we take it to the bank, we might recall that it was on this date in 1928, after more than 130 years of trading, that the New York Stock Exchange finally had its first day on which more than 5 million shares trade hands, as total daily volume hit 5,252,425 shares. Just over a year later, on Black Tuesday, volume spiked to over 16 million shares… as traders dumped their holdings and the Wall Street Crash of 1929 began (presaging the Great Depression).
Average daily volume (over the last three months) on the NYSE today is 880,564,865 shares.
Trading floor of the New York Stock Exchange, 1929
“Cleanliness is next to godliness”*…
One woman feeds bills into the washing machine as another collects the clean bills
Long before the term “money laundering” entered the popular lexicon, the U.S. Treasury Department had an actual laundry shop for grimy greenbacks. The mostly female “redemptive division” worked out of the basement and cleaned up to 80,000 soiled bills a day using mechanical scrubbers…
Come clean at: “Treasury Department Laundry.”
And for an insightful look at the dirty business that money laundering has become, see “The Russian Laundromat Exposed.”
* A colloquial expression (used by Francis Bacon, e.g., but popularized by John Wesley), rooted in an interpretation of Acts 9:32-10:23
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As we love the lave, we might recall that it was on this date in 1939 that The Viking Press published John Steinbeck’s The Grapes of Wrath. The story of the Joads, a poor family of tenant farmers driven from their Oklahoma home by economic hardship– drought, agricultural industry changes, and bank foreclosures forcing tenant farmers out of work– it won the National Book Award and Pulitzer Prize for fiction, and was cited prominently when Steinbeck was awarded the Nobel Prize for Literature in 1962.
“The best way to destroy the capitalist system is to debauch the currency”*…
In a world full of smartphone payments and cryptocurrency, 85% of all transactions are still done in cash. Australia actually sees cash demand rising at a steady 6% to 7% per year with no decline on the horizon.
As printers and scanners become more sophisticated, the government has moved to ensure that its currency is safe. “What we noticed in recent years, with the availability of technology—particularly around reproduction technology like scanners and printers—counterfeiting in Australia had started to increase. We’re in the fortunate position where it’s still pretty low but it is rising,” says James Holloway, deputy head of note issue at Reserve Bank of Australia. “We thought we just don’t want it to keep rising in a sustained fashion, so the time had come around upgrading security”…
How Australia means to frustrate counterfeiters: “The Painstaking, Secretive Process Of Designing New Money.”
* Vladimir Lenin
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As we bite our coins, we might recall that it was on this date in 1789 that President George Washington named Alexander Hamilton as the first U.S. Secretary of the Treasury. A founding Father, Hamilton created the Federalist Party, the world’s first voter-based political party, the the United States Coast Guard, and the The New York Post newspaper. As Treasury Secretary Hamilton stabilized the nation’s economy and paid back the mountainous debt resulting from the Revolutionary War. He established the first national bank and created the U.S. Mint in (the precursor of) the form in which we know it today.
“Money doesn’t talk, it swears”*…
In 1858, the United States was an industrializing nation with a banking system stuck in frontier times… Heated battles over ‘the money question’ came to dominate the country’s politics, but no matter how unsatisfied the people, any solution that tended toward centralization was, due to the prevailing prejudice, off the table.
America was a monetary Babel with thousands of currencies; each state regulated its own banks and they collectively provided the country’s money. Officially, America was on a hard-money basis, but the amount of gold in circulation was insignificant…
And therein hangs a terrific tale, “Printing Money,” an excerpt from America’s Bank: The Epic Struggle to Create the Federal Reserve in the always worthy Delancey Street; read it here.
* Bob Dylan
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As we bite our coins, we might recall that it was on this date in 1982 that money market deposit accounts were first offered by banks and S&Ls across the U.S. Pioneered in the early 70s by brokerage houses, the accounts were a way around the Regulation Q prohibition on interest payments n demand accounts.
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