$100 Bills See Mysterious Surge In Circulation

Monday, March 4, 2019
By Paul Martin

by Tyler Durden
ZeroHedge.com
Mon, 03/04/2019

It has been three years since the establishment launched its official ‘war on cash’ by eliminating Europe’s €500 bill, under the pretense that this effort would be fighting financial crime, terrorism, corruption and drug dealers.

Of course, as we wrote at the time, what Europe and the rest of the world’s elites would be truly doing is setting the scene for ever more aggressive NIRP, and by removing the highest denomination bank notes, it would make evading negative rates that much more difficult and costly (albeit would certainly favor gold).

How did the ‘war on cash’ workout? Not so well, as CNBC’s Kate Rooney points out, the amount of $100 bills in circulation is surging. And it’s leaving some economists scratching their heads.

The number of outstanding U.S. $100 bills has doubled since the financial crisis, with more than 12 billion of them across the world, according to the latest data from the Federal Reserve. C-notes have passed $1 bills in circulation, Deutsche Bank chief international economist Torsten Slok said in a note to clients this week.

Generally, economists believe the surge is related to people around the world wanting to hoard cash, a similar force that’s driven the interest in cryptocurrencies. High denomination, high value currency notes have historically been a preferred form of payment for criminals, given the anonymity, lack of transaction record and relative ease with which they can be brought across borders.

Nicholas Colas, co-founder of DataTrek Research, has been down the “rabbit hole of a topic” for more than a decade. He said the growth in $100 bills in circulation is a signal the world is relying on them as a store of value — and still using them for international crime.

“It has nothing to do with the U.S. economy and nothing to do with interest rates,” said Colas.

“There’s certainly enough evidence to say it is an enabler of corruption, but it is also a way for people to keep assets outside of the financial system albeit in a kind of bulky way.”

The number of hundred dollar bills abroad began surging after the Gulf War and U.S. invasion of Afghanistan, according to Colas. Part of stabilizing the region meant replacing local currencies with something, and “that something was the U.S. dollar.”

Those larger bills also have a longer shelf life than any other form of U.S. cash. Still, Deutsche Bank’s Slok said multiple factors could explain the increase in C-notes.

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