11.21.2012

When was the last time you had a C-Note?



Why the Share of $100 Bills in Circulation Has Been Going Up for Over 40 Years

Excerpt:


The short answer is that a lot of money is spending a lot of time outside the United States.

The cognoscenti look at the share of $100 bills as something of a proxy for foreign demand for US currency. An overwhelming majority of the $100 bills come from the Federal Reserve Cash Office in New York City, which handles the bulk of foreign shipments of US currency. A typical shipment is a pallet containing 640,000 such bills, or $64 million, according to a recent Fed paper.

... And while there are plenty of reasons folks outside the US might want to hold dollars, the thinking is that most people are not using these $100 bills to buy milk and bananas. No, most economists seem to believe $100 bills are most often used as stores of value—almost something like mini-Treasury bills that don’t pay any interest. This is especially so in developing countries, where problems with unstable currencies and inflation often mean the purchasing power of local currency gradually—or not so gradually—erodes over time.
Comment: See How 100-Dollar Bill Changed in 150 Years . I had a C-note a couple of years ago. I mow my neighbor's yard and plow her driveway and several years ago she gave me a C-note. My typical wallet is one or 2 Twenties or less.

2 comments:

  1. Where we lived for a few years in Asia the easiest, most reliable, and best value in changing money was to take new, crisp $100 bills with us. This method avoided fees for wire transfers, and if the bills were new we always got the best exchange rate. I never could figure out exactly why, but that's the way it worked.

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