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Hundred Dollar Bills: A Boon to Bad Behavior?

Posted By Prucia Buscell, Thursday, September 04, 2014

Richard Stratton, executive, author and former drug smuggler, enjoyed counting piles of hundred dollar bills. He says it was a "pleasant, relaxing experience." Harvard Economist Kenneth Rogoff thinks hundred dollar bills are nothing but trouble.


Both expressed their individual expertise in an NPR interview with Melissa Block and Chris Arnold. Stratton, a novelist, friend of the writer Normal Mailer, and later TV executive and magazine editor, once served eight years in prison for drug smuggling. He told NPR the drug business involved generating and smuggling huge sums of money as well as narcotics. Rogoff thinks $100 bills are all too often used to finance illegal activities, and that's a good reason to get rid of them. Rogoff notes these big bills allow a person to carry $1 million in a briefcase. And why would anyone not engaged in nefarious enterprises want to do that?

Rogoff goes even further. Writing in the Financial Times, he proposes getting rid of paper money entirely and replacing it with electronic money. Among other things, he argues, as electronic payments, even for small amounts, become increasingly prevalent, the need for paper currency declines. There would be complications, of course, and international cooperation among governments would be needed. But Rogoff suggests getting rid of large denomination bills would be a good start.

Rogoff and others have said 75 percent to 80 percent of all U.S. currency world-wide is in $100 bills. And many experts think easy flow of huge amounts of anonymous cash facilitates tax evasion as well as illegal trafficking in drugs, weapons and human beings.

The Financial Times notes that when someone with Rogoff's heavyweight credentials questions the future of physical money in a conservative, influential publication like the Financial Times, "The world should sit up and listen."

The change from physical to virtual money would be momentous. Would underground and unofficial currencies flourish? Would crooks find ways to exploit the transition? Stratton, who no longer holds $100 bills, told NPR he thinks criminals would adapt.

Ruth Judson, an economist at the Fed, told NPR she's not convinced there's a need to get rid of the Benjamin Franklin bill because there's really no way to know how much cash in circulation is being used for good or evil. Some historically huge $100 bill transactions have been conducted by government. After the invasion of Iraq in 2003, the U.S. government sent $12 billion in shrink wrapped hundred dollar bills to Iraq to pay Iraqi ministries and U.S. contractors. Planes delivered literally tons of cash from New York to Bagdad for disbursement by the U.S. led Coalition Provisional Authority. Congressional investigators later found control of the cash was lacking, and accounts vary on how much remains unaccounted for.

Tags:  buscell  complexity matters  culture 

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