Tuesday, March 01, 2016
Cash is the currency of freedom
Larry Summers wrote recently in The Washington Post
that the $100 bill needs to go. The reason, he says, is that it’s a
favorite of criminals, along with the 500 euro note, which is likely to be discontinued. The New York Times editorialized in agreement, writing: “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. ... There
is no need for large-denomination currency. Britain’s top bill is the
50-pound note ($72), which has been perfectly sufficient. The United
States stopped distributing $500, $1,000, $5,000 and $10,000 bills in
1969. There are now so many ways to pay for things, and eliminating big
bills should create few problems.”
Reading this got me to thinking: What is a $100 bill worth now, compared to 1969? According to the U.S. Inflation Calculator online,
a $100 bill today has the equivalent purchasing power of $15.49 in 1969
dollars. Likewise, in 1969, a $100 bill had the equivalent purchasing
power of $645.55 in today’s dollars.
So even if we brought back the discontinued $500 bill, it wouldn’t have the purchasing power today that a $100 bill had in 1969,
when larger denominations were discontinued. And carrying around a $100
bill today is basically like carrying around a $20 in 1969.
although inflation isn’t running very high at the moment, this trend
will only continue. If the next few decades are like the last few, paper
money in current denominations will become basically useless.
Glenn Reynolds: Cash is the currency of freedom