Announcement

Collapse
No announcement yet.

US to Zimbabwe: Help us print money!

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • US to Zimbabwe: Help us print money!

    http://finance.yahoo.com/news/The-Fe...&asset=&ccode=

    Every cloud has a silver lining: Zimbabwe can send consultants to help fix this problem...

    A significant production problem with new high-tech $100 bills has caused government printers to shut down production of the new notes and to quarantine more than one billion of the bills in huge vaults in Fort Worth, Texas and Washington, DC, CNBC has learned.

    Initially scheduled for release in February of 2011, the new bills were announced with great fanfare by officials at the Treasury Department and the Federal Reserve in April.

    At the time, officials announced the new bills would incorporate sophisticated high-tech security features, including a 3-D security strip and a color-shifting image of a bell designed to foil counterfeiters.

    But the production process is so complex, it has instead foiled the government printers tasked with producing billions of the new notes.

    An official familiar with the situation told CNBC that 1.1 billion of the new bills have been printed, but they are unusable because of a creasing problem in which paper folds over during production, revealing a blank unlinked portion of the bill face.

    A second person familiar with the situation said that at the height of the problem, as many as 30 percent of the bills rolling off the printing press included the flaw, leading to the production shut down.

    The total face value of the unusable bills, $110 billion, represents more than ten percent of the entire supply of US currency on the planet, which a government source said is $930 billion in banknotes. For now, the unusable bills are stored in the vaults in "cash packs" of four bundles of 4,000 each, with each pack containing 16,000 bills.

    Officials don't know exactly what caused the problem. "There is something drastically wrong here," a person familiar with the situation said. "The frustration level is off the charts."

    Because officials don't know how many of the 1.1 billion bills include the flaw, they have to hold them in the massive vaults until they are able to develop a mechanized system that can sort out the usable bills from the defects.

    Sorting such a huge quantity of bills by hand, the officials estimate, could take between 20 and 30 years. Using a mechanized system, they think they could sort the massive pile of bills, each of which features the familiar image of Benjamin Franklin on the face, in about one year.

    The defective bills - which could number into the tens of millions, potentially representing billions of dollars in face value - will have to be burned, they say. American taxpayers have already spent an enormous amount of money to print the bills.

    According to a person familiar with the matter, the bills are the most costly ever produced, with a per-note cost of about 12 cents - twice the cost of a conventional bill. That means the government spent about $120 million to produce bills it can't use. On top of that, it is not yet clear how much more it will cost to sort the existing horde of hundred dollar bills.

    First Bills Signed by Geithner

    Officials say they remain optimistic that the majority of the 1.1 billion bills will eventually be cleared for circulation.

    The problem with the new hundred-dollar bills has remained largely hidden from public view, despite a press release issued by the Federal Reserve on Oct. 1 that announced "a delay in the issue date" of the new bills and cited "a problem with sporadic creasing of the paper."

    The redesigned bills are the first $100 bills to feature Treasury Secretary Tim Geithner's signature. But to stave off a cash crunch as existing $100 bills deteriorate and can't be replaced, the Federal Reserve has ordered renewed production of the current-design $100 bills, which feature Bush Treasury Secretary Hank Paulson's signature and do not have the new security features.

    Officials say that is an important step, because there are 6.6 billion $100 notes in circulation at any given time, and they wear out quickly.

    Reprinting the current design bills will prevent any disruption in the global circulation of US currency.

    The production of American banknotes is a convoluted process. The paper is manufactured by Crane & Company, which has continually supplied the government since 1879. Design and production of the bills is handled by the Department of Treasury and its Bureau of Engraving and Printing. But the currency is actually issued by the Federal Reserve, which is why the bills are emblazoned with the phrase "Federal Reserve Note."

    The new $100 note is the latest denomination of U.S. currency to be redesigned with special anti-counterfeiting features. Treasury first introduced the redesigned $20 note in 2003 and has also redesigned the $50, $10 and $5 notes.

    The government says that more than a decade of research and development went into the new security features on the redesigned $100.

    The bill features a blue, three dimensional security strip that pictures bells that change to 100s as the strip is tilted. The ribbon is woven into the paper, not printed on it, which is why it is the focus of speculation as a potential cause of the paper creasing problem on the printing presses. The note also features another color-shifting image, of a bell inside an inkwell. The bell shifts color from copper to green as the bill is tilted.

    As part of the rollout effort for the new $100 bills, the government set up a website explaining the changes, which can be seen at this website.

    After they were printed, officials discovered that some of the new bills have a vertical crease that, when the sides of the bill are pulled, unfolds and reveals a blank space on the face of the bill. At first glance, the bills appear completely printed, but they are not.

    Officials have mixed views on what caused the problem, and who is responsible for it. "This is not about assigning blame," said one. But another person familiar with the matter said finger-pointing has already begun. "The Fed's very unhappy, and the Bureau of Engraving and Printing is taking a beating unnecessarily," the person said. "Somebody has to pay for this."

  • #2
    Re: US to Zimbabwe: Help us print money!

    Originally posted by c1ue View Post
    The total face value of the unusable bills, $110 billion, represents more than ten percent of the entire supply of US currency on the planet, which a government source said is $930 billion in banknotes. For now, the unusable bills are stored in the vaults in "cash packs" of four bundles of 4,000 each, with each pack containing 16,000 bills.

    ...

    Officials say that is an important step, because there are 6.6 billion $100 notes in circulation at any given time, and they wear out quickly.
    So, 70% of FRNs are denominated in hundreds?

    Comment


    • #3
      Re: US to Zimbabwe: Help us print money!

      Is there a double-message in this, a kind of Fed-speak? Might it be that the Fed is not printing money?

      De-flation?

      I just don't know what to believe, and I don't believe anything Bernanke says. There are possible double-meanings.



      Also, currency that is all but impossible to counterfeit is in itself de-flationary. That is the good part. But the bad part is that old U.S. $100 bills become suspect, and increasingly suspect with time: Might the old notes be counterfeits? Or might the old notes be drug money (swartz gelt) ?

      Yes, old U.S. currency is always good, but counterfeit money is never good. And drug money is never good. So, old money should be switched to new money, and then the government takes an interest in the exchange, as it should: a.) Who is exchanging the notes? b.) How much is being exchanged? c.) Where did the old notes come from? d.) Why do you, the bearer of the old notes, not have a bank account, and why do you have so much cash? e.) Have you filled-out papers on these notes? f.) What business are you in? g.) Do you pay bribes with this money so that the San Francisco County field-mouse's habitat might be preserved? h.) Why did you collect these old notes, and aren't these old notes now "a collectors' item"? Hence, why would you exchange these old banknotes? Where are your old $50 bills? $20 bills? Do you collect old postage stamps, too? Coins? Gold? Silver? Guns? Rocks? Gems? Wedgewood pottery? Antiques?
      License plates? Old lingerie? Old cars? Silverware? Sports-cards? Comic-books? Tokens? Wives? X's? Whores? Stray-cats?
      Last edited by Starving Steve; December 06, 2010, 05:28 PM.

      Comment


      • #4
        Re: US to Zimbabwe: Help us print money!

        Originally posted by bpr View Post
        So, 70% of FRNs are denominated in hundreds?
        Yeah pretty much. Here's a graphic from 2008.

        http://www.visualeconomics.com/the-v...n-circulation/

        Comment


        • #5
          Re: US to Zimbabwe: Help us print money!

          Originally posted by zoog View Post
          Yeah pretty much. Here's a graphic from 2008.

          http://www.visualeconomics.com/the-v...n-circulation/

          Of course, 70% of the face value of FRNs is in $100 bills, but from that graphic it's clear that $1 bills are by far the most common.

          Comment


          • #6
            Re: US to Zimbabwe: Help us print money!

            Originally posted by zoog View Post
            Yeah pretty much. Here's a graphic from 2008.

            http://www.visualeconomics.com/the-v...n-circulation/
            Interesting, thanks. Still, there's some fuzzy math here:

            2009 Circulating Coin Production
            The number of coins that are dated 2009 is made up of 1.65 trillion pennies, 86.64 million nickels, 146 million dimes, 379.12 million quarters, 3.4 million 50-cent coins and 322.98 million $1 coins. Of the $1 coins, 271.88 million are presidential coins and 51.1 million are Native American coins. The total number of all of the coins was 2.585 trillion.
            They should all probably be in billions, not millions.

            Comment


            • #7
              Re: US to Zimbabwe: Help us print money!

              How can US ask such questions to a Foreign saver who has saved in US dollars to avoid the inflation in local currency. If the old dollar is not taken at face value, there will be a huge flight from old dollar and new dollar will never be trusted again and then dollar can lose it's reserve status to these small savers/drug cartels.....

              Comment


              • #8
                Re: US to Zimbabwe: Help us print money!

                Originally posted by sishya View Post
                How can US ask such questions to a Foreign saver who has saved in US dollars to avoid the inflation in local currency. If the old dollar is not taken at face value, there will be a huge flight from old dollar and new dollar will never be trusted again and then dollar can lose it's reserve status to these small savers/drug cartels.....
                The U.S. will always take its old money at 100cents on the dollar, unless it de-values the dollar officially to a new currency. But the U.S. has NEVER done this. Nothing has ever been de-valued nor de-monetized, except against gold. And the same thing in Canada: NOTHING in circulation has ever been de-valued nor de-monetized..... Those stunts are for banana republics or maybe for the Bank of England, but not here in North America. Everything is good and supposedly, as the adage goes, "as good as gold".

                But maybe with Bernanke now running the Fed and his pick at the Bank of Canada, Marc Carney, "all bets are off". Who knows?

                But the U.S. and Canada are quite serious about watching for "swartz-gelt", and they will confiscate any dirty money, especially any drug money. This is a well-known fact. Also, deals in precious metals over $600US have to be reported on a currency reporting form in the U.S. My advice would be to comply with the law and to fill-out the reporting form. If you report honestly, the law is on your side.

                I think you can still trust the governments in Canada and the US because there is a democratic tradition here, especially if you comply with the law. In Canada, the reporting begins at $10,000 Cdn, but check with your local bank or coin shop. DO NOT BREAK THE LAW. <------period. Cash transactions are being watched, closely.

                Comment

                Working...
                X