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It's Time To Kill the $100 Bill, Says Larry Summers
HughPickens.com writes: The NYT has an interesting editorial on why getting rid of big bills will make it harder for criminals to do business and make it easier for law enforcement to detect illicit activity. That's why officials in Europe and elsewhere are proposing to end the printing of high-denomination bills. According to a recent paper from Harvard's John F. Kennedy School of Government, a stack of 500-euro notes worth $1 million weighs just five pounds and can be carried in a small bag, whereas a pile of $20 bills worth $1 million would weigh 110 pounds and would be much more difficult to move around. Lawrence Summers, the former Treasury secretary and former adviser to President Obama, has argued that the United States should get rid of the $100 bill. "The fact that in certain circles the 500 euro note is known as the "Bin Laden" confirms the arguments against it," says Sanders. "Technology is obviating whatever need there may ever have been for high denomination notes in legal commerce."
Critics who oppose such changes say the big bills make it easier for people to keep their savings in cash, especially in countries with negative interest rates. Some people also prefer not to conduct transactions electronically because they fear security breaches. According to Sanders the idea of removing existing notes is a step too far but a moratorium on printing new high denomination notes would make the world a better place. "The United States stopped distributing $500, $1,000, $5,000 and $10,000 bills in 1969," concludes the NYT editorial. "There are now so many ways to pay for things, and eliminating big bills should create few problems."
Critics who oppose such changes say the big bills make it easier for people to keep their savings in cash, especially in countries with negative interest rates. Some people also prefer not to conduct transactions electronically because they fear security breaches. According to Sanders the idea of removing existing notes is a step too far but a moratorium on printing new high denomination notes would make the world a better place. "The United States stopped distributing $500, $1,000, $5,000 and $10,000 bills in 1969," concludes the NYT editorial. "There are now so many ways to pay for things, and eliminating big bills should create few problems."
This cynical yet short response is sadly very correct and should be moderated up.
If I had $100,000 AUD in a bank here 10 years ago and I collected the interest on it, compounded and never touched the money, the remaining figure of money (I dunno, $120k? shrug) would have _LESS_ buying power than it initially did, 10 years ago.
We ARE being screwed by inflation, (money printing) and general price rises in things. The financial system is messy and few people can see this.
NOTE: we had / have fairly high interest rates here in Australia, in the US, Japan, my understanding is the interest rates are significantly lower, $100,000 US 10 years ago would have increased less than my Aussie $100k and it too would have less buying power than it did 10 years ago.
You either buy into / speculate on the latest bubble / fad which is returning silly profits or you're boned.
The gold and silver hoarders are starting to not sound so crazy.