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So, you know that thing in the US nowadays where every few months interest rates go like
this then the stock market goes like this, mass panic ensues, but it’s actually a good
thing because it signals the economy is strong and it gives a way to fight economic slowdowns
in the future but interest rates haven’t been raised enough and there are no mechanisms
to fight an upcoming recession and we’re all going to die and panic should start now
and you should stock up on gold bars and bullets and all the money is going bye bye?
Yeah, well setting that interest rate is the responsibility of the US Federal Reserve.
The Fed is important not only because it manages interest rates but also because it manages
this—the US dollar.
The US dollar is important not only because it’s whats used in the world’s largest
America, but also because a number of other countries use it with varying levels of officiality.
Some countries like Ecuador and El Salvador and East Timor use it as their actual, official
currency while others like Barbados, the Bahamas, and Belize have currencies tied in value to
the US dollar and accept both currencies widely while almost the whole world uses the dollar
for business purposes thanks to its stability.
So don’t worry the other 95.7% of the world—you’re getting mentioned this episode… exactly
that one time.
As a country that has existed for a medium amount of time, there have been many iterations
of US banknotes and you’ll notice that even the old ones say something along the lines
of, “this note is a legal tender at its face value for all debts public or private.”
There’s no expiration date on this note which means that, despite it being printed
in 1880, it is still a fully legal $5 bill that you could use anywhere you wanted.
Of course its collector value is much greater than its face value but still, you could rock
up to 7/11 and buy some mountain dew with it.
Now, this occasionally leads to issues because your average 7/11 clerk probably doesn’t
know what all the hundreds of different iterations of US banknotes look like.
This is all unlike countries like the UK—oh wait, yeah I’m sorry I’m going to have
to mention the rest of the world again.
This is unlike in the UK where this paper ten pound banknote, printed as recently as
2016, is no longer accepted in stores.
You can go to the Bank of England, Scotland, Ireland, or another of the banks that issue
notes to exchange your paper ten pounds for the new polymer ten pounds but unfortunately
you can’t pay for your cheeky nandos with the lads using them.
So that brings us to the big boys of American banknotes.
As any street-based “entrepreneur” knows, the only banknotes currently being printed
in the US are the $1, $2, $5, $10, $20, $50, and $100 bills.
If you get a $100 trillion note you might have performed a little too much product testing,
walked too far, and ended up in Zimbabwe.
Of course, in the days before Venmo, PayPal, and credit cards banknotes were more important
as they were the primary means of paying for things.
Even when buying something pricy like real estate banknotes were often still used and
the US didn’t want every large transaction playing out like a Mr Beast video with people
rocking up with wheelbarrows of $100 bills.
Therefore, the US issued, at different times, $500, $1,000, $5,000, and $10,000 banknotes.
Those were and still are fully legal and real banknotes with which you could pay for anything
you wanted… except for happiness.
It’s worth noting that, due to inflation, the earliest $10,000 note, issued in 1863,
was at the time worth the equivalent of $200,000 today.
In your pocket you could carry enough value to buy a house, a few cars, or a few dozen
textbooks.
The other major purpose for these large denomination banknotes was for transfers between banks.
Wire transfers have existed since the 1870’s over telegraph but they weren’t yet secure
and reliable.
Therefore, banks still often settled up debts between each other by sending over cash and
these large bills made it quite a bit easier.
Of course, there are twelve huge banks across the US which essentially act as the government’s
bank—the Federal Reserve Banks.
These biggest of the big boys needed some big boy bills to transfer money between them
and so they printed this—the $100,000 bill.
These bills were officially gold certificates—they represented $100,000 in gold that the fed
banks held—and when these were printed in 1934, they had the equivalent value to $1.9
million today.
About 42,000 $100,000 notes were printed and they were used for their money-transfer purpose
up until 60’s when they were withdrawn.
Unlike normal notes, where the withdrawal process works by destroying any notes received
by banks and therefore notes can stay in circulation for decades or centuries, these $100,000 notes
were able to be repossessed by the government rather easily since they were exclusively
in the possession of the government.
While most were destroyed, a few specimens remain in museums and at fed banks and, since
the government has all the surviving notes, it’s illegal for a person to possess this
note since the only way to get it would be through theft.
Of course, we at Half as Interesting are 99.9% anti-illegalness so if you have a fully-legal
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