by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Former U.S. Treasury Secretary Lawrence Summers and international banker Peter Sands of the Kennedy School of Government at Harvard University agree. They said $100 bills play little role in the functioning of the legitimate part of the American economy, yet the government prints billions of them each year, seemingly as a public service to criminals.
Experts guess that two-thirds of the bills with Benjamin Franklin’s portrait circulate overseas, out of sight and out of mind for most Americans. The €500 note is said to be so popular among illicit weapons dealers and other black-market operators that its slang term is the “Bin Laden.”
Large sums converted to large bills are eminently transportable and therefore easily hidden from border guards and tax authorities. They are easy to count and easy to convert, but it’s hard to account for them and hard to keep track of them as they cross borders and change hands.
Unfortunately for law enforcement, big bills facilitate illegal transactions; they don’t cause them. Crime is profitable in any currency. Criminals can afford other means of exchange and other ways to store value. Diamonds are old-fashioned, but they can be a mobster’s best friend. Bitcoin is widely misunderstood, but such computerized valuta is widely recognized as untraceable. And so on. A simple IOU can be as solid as any money, if the issuer knows his life is on the line for payment. But we can try to make life difficult for criminals.
Cash is in high demand among those who find financial transparency and record-keeping to be obstacles to their businesses. Where would bribery, extortion, ransoming, drug dealing, tax evasion, and gun-running be without big bills that fit in small suitcases?
However, we should put in a word of sympathy for the people who like to keep their secret savings at home, in a sock or a mattress. They have more reason than ever to do so, as governments define more activities as tax evasion, even while they drift toward confiscatory negative interest rates.