Making money

The new $100 bill, with its additional anti-counterfeiting features

The $100 bill is an especially hot item on the global stage: The Federal Reserve estimates that one-half to two-thirds of $100 notes in circulation are abroad at any given time, making them one of the nation’s largest exports.

Remember how, before internationally usable credit cards, when you were about to travel abroad you first bought a bundle of American Express travelers checks? You told yourself that when you returned, you would take your unused travelers checks to the Amex office to get (most) of your money back. But, it turned out, you were tired from your trip so you just stuck them in a drawer, rationalizing that you were sure to travel internationally real soon now again so you'd just use them then. But, it turned out, you actually didn't get out of the country for several years, and by the time you did, you'd forgotten you had travelers checks sitting around, and even if you did remember, they were probably in one of those 8 still unpacked moving boxes of old vacation souvenirs and eight track tapes, so you just bought some more travelers checks from American Express. Meanwhile, interest rates were running 10% annually.

What a great business Amex had! Just sell people fancy pieces of paper for money. 

This is totally different from what the U.S. government does, of course. I think. But I have to say that I've never understood money at all. Trading salt for bullets in the Sahara is about as far as my powers of abstraction go when it comes to money. By the way, if you someday take the tour of the U.S. Bureau of Engraving and Printing in Washington, don't ask any of the employees if they ever have so much work to do that they have to take some of it home with them. They've heard it before.

I'm reminded of the scene in the 1984 movie The Killing Fields when Dr. Haing S. Ngor is making his escape from the Khmer Rouge. There's a close up shot of a roll of American $100 bills that will be essential in getting out of Cambodia. This was one of 1984's U-S-A! U-S-A! moments. It's hard to recall just how battered American economic self-esteem was after the late 1970s, but I spoke to several viewers at the time who felt like Sally Field accepting an Oscar: "You like it! You really like our paper money!"

Of course, most money doesn't exist in paper form, just in electronic notation. So, how much does it benefit America that the digital dollar is the reserve currency for, say, the oil trade? Former French president Valery Giscard d'Estaing argued that the U.S. enjoyed a sizable "exorbitant privilege." This Wikipedia article sums up various studies attempting to quantify this concept, but they make my head hurt.

But, the vague sense that a few insiders' heads must not hurt so that we'd all better do what they say, has vague but broad political effects. Because I, like most people, don't comprehend anything about reserve currencies, I find myself a sucker for those who intimate that they know just how uncountable are the benefits America gets from dollars being the reserve currency and that they know how to keep the dollar the reserve currency.

So, they imply, if the government were to prosecute Wall Street muckety-mucks, or tax billionaires more, or not build the F-35 flying money pit, or not bomb Syria, or not invite the world, or whatever violates this moment's DC-NY Economist-reading consensus ... well that would have catastrophic consequences that little me can't begin to understand. They obviously must understand things I don't, so who am I to question their plans to, say, build 10 new aircraft carriers?