We Need McKinley

It seems the story that Gisele is demanding payment in euros rather than dollars is false rather than, say, revealing of trouble in international currency markets. On the other hand, Jay-Z is unquestionably rolling with a fat stack of 500 euro bills here:

Rather than an exchange rate hedge, I think the point here is simply that the euro is available in larger cash denominations, which arguably makes it the superior currency for large-scale criminal enterprises. Perhaps bringing back the $500 bill could help pull the dollar out of its doldrums. Meanwhile, it seems that back in the day there was even a $100,000 bill:

The old very large denomination bills, it seems, were used by banks and the government for large transactions before it was possible to do electronic transactions.

Comments

I once heard a very high-ranking U.S. government offical say, only half-joking, that drug dealers switching to euros would drive down the value of dollar.

Posted by Dave | November 6, 2007 8:49 AM

I would say that drugs being priced in dollars is as real a barometer of economic stability as oil being priced in dollars. And there, too, there's been talk of a switch to Euros.

Posted by Freddie | November 6, 2007 9:05 AM

Dave is on the right track, actually.

Jay-Z is posing with 500 Euro notes because that's the note of choice for drug dealers. Drug dealers don't like the US$100 note because it is simply too small.

It has actually been rumored that the Europeans introduced the 500 Euro note in part to appeal to drug dealers...

Posted by Al | November 6, 2007 9:06 AM

BTW, I love Matthew's eupheism for drug deals: "large scale criminal enterprises". Nice!

Posted by Al | November 6, 2007 9:07 AM

Chandler fans will recall the "portrait of Madison" in The Long Goodbye. $5000, IIRC.

Posted by Anderson | November 6, 2007 9:31 AM

"It has actually been rumored that the Europeans introduced the 500 Euro note in part to appeal to drug dealers..."

What utter nonsense. The Euro is modelled on the DM, and the DM always had 500's and 1000's. Part of the reason is that Europe used to be and still is more cash-based, customers being disclined to use credit cards.

Posted by gr | November 6, 2007 9:34 AM

I actually knew the answer to this trivia question even before Googling. Who is on the $10,000 bill and who the hell is he anyway? Google images: $10,000 bill Still seems like an odd choice.

Posted by Bruce Webb | November 6, 2007 9:40 AM

The Euro is modelled on the DM

The Dungeon Master? Cool, never knew that. Do they have platinum pieces (pp) over there?

Posted by Bill | November 6, 2007 9:42 AM

Who is on the $10,000 bill and who the hell is he anyway?

From the picture I'd say it was the young Peter Boyle.

Posted by Bill | November 6, 2007 9:45 AM

Hmmmm a lot of these sites are saying the $10,000 was the largest American bill ever. So is that $100,000 above real?

Posted by Freddie | November 6, 2007 9:46 AM

Freddie, the Wilson $100,000 note (don't know why MY references McKinley) was indeed the largest ever U.S. denomination.

Posted by Bill | November 6, 2007 9:49 AM

Excluding, of course, the trillion-dollar note that the FBI had Homer Simpson go after.

Posted by Bill | November 6, 2007 9:52 AM

It has actually been rumored

You really should stop reading the Daily Mail, Al. It's designed specifically for xenophobic post menopausal women living in the midlands. On second thoughts, maybe you are a xenophobic post menopausal woman living in the midlands.

Posted by novakant | November 6, 2007 10:06 AM

The Euro is modelled on the DM, and the DM always had 500's and 1000's.

So then the 1000 Euro note is... where?

Posted by Al | November 6, 2007 10:10 AM

I actually remember from childhood an issue of Richie Rich comics in which the Riches get a bill for the size of their estate as a space saving measure to clear out all of their vaults. Not surprisingly they then have trouble spending it.

Posted by Lon | November 6, 2007 10:12 AM

"Part of the reason is that Europe used to be and still is more cash-based, customers being disclined to use credit cards."

Not really. I for one (I'm German) have never had an actual 200 or 500 Euro bill (or a 1,000 DM bill, for that matter) in my hand (and I'n not on welfare or anything).

Many shops don't accept them anyway, due to a fear of counterfeits. And I've read that most 500 Euro bills are in fact not actually in daily circulation (in non-criminal circulation, that is).

While it is true that Europeans (continental Europeans, at least) don't use credit cards that much is not so much because they are so keen to pay in cash but due to the wide-spread use of combined ATM-debit cards which are cheaper than credit cards.

Posted by Patrick | November 6, 2007 10:20 AM

The Euro is modelled on the DM, and the DM always had 500's and 1000's.

So then the 1000 Euro note is... where?

Since 500 Euros are roughly 1000 DM, the 500 Euro bill has replaced the 1000 DM bill.

Posted by Patrick | November 6, 2007 10:23 AM

The MetaFilter discussion about the Jay-Z video indicates that €200 and €500 bills are actually fairly rare, in order to combat counterfeiting and money laundering.

Posted by Aaron S. Veenstra | November 6, 2007 10:32 AM

"A trillion dollar bill? That's a spicy meatball!"

/Simpsons quoting

Posted by Delicious Pundit | November 6, 2007 10:35 AM

The main reason for having a huge stack of bill is to avoid the taxman.

I remember 40 years ago when I was a teenager I was in a coin store and a guy came in and asked how much something was worth and whether the guy had any cameras.

The coin dealer pulled out a stack of $100's at least 2 inches thick out of his pocket. I think he ended up paying $3,500 for the coin.

This was done in broad daylight in front of a 17 year old kid.

Now, tell me how much tax do you think was paid on that transaction? How do you think the seller "acquired" the coin?

If the stack of bills had to be $20's then it would have been a lot harder to conduct a cash business like that.

The crimes would have been harder to get away with.

I would like to ban $100's

Posted by neil wilson | November 6, 2007 10:44 AM

Who is on the $10,000 bill and who the hell is he anyway?

C'mon dudes - really? You don't know who Salmon P. Chase was? As in Chase Manhattan Bank? One of Lincoln's chief rivals for the 1860 Republican nomination, he became one of the great Treasury secretaries - almost single-handedly responsible for generating financing for the Union side in the Civil War - he is responsible for the National Banking system - and is also responsible for paper money, i.e., the dollar bill, i.e. the "greenback". He later on had the not insignificant job of succeeding Roger Taney as Chief Justice of the Supreme Court.

I guess like George Mason of the revolutionary generation, because he never became President he's stuck in obscurity. but very fitting for his face to be on paper currency.

Posted by Ethel-to-Tilly | November 6, 2007 10:49 AM

As to who is on the $10,000, I seem to remember that Salmon Chase was on one of the big bills. Although I don't remember who he is or why he should get his own bill. I think he was a cabinet secretary at some point. I suppose treasury would make most sense.

Posted by Lon | November 6, 2007 10:50 AM

"The MetaFilter discussion about the Jay-Z video indicates that €200 and €500 bills are actually fairly rare, in order to combat counterfeiting and money laundering."

That's correct, as I said, one hardly ever sees one. Nevertheless, expressed in nominal sums of Euros, the 500 note is the most important one (followed by the (ubiquious) 50 Euro note), representing a third of the value of all Euro notes in circulation:

http://www.ecb.int/bc/faqbc/figures/html/index.en.html

And it's indeed not hard to imagine a great chunk of 500 Euro notes is used for illegal purpuses (may that be tax fraud or drug trafficing)

Posted by Patrick | November 6, 2007 10:59 AM

In reality, even if issuing larger denominations did increase the global circulation of our paper currency, I don't think it would have a particularly significant impact on the value of the dollar.

The dollar's value is more closely tied to treasury yields (as compared to the yields available in other countries), and interest rates are going to have to keep going down until we sort out this housing crisis.

Posted by southpaw | November 6, 2007 11:09 AM

The dollar's woes go FAR beyond not having a large-denomination bill. Instead, it has a lot more to do with very busy printing presses in the Fed and Ben's helicopter dropping money from the sky. Thanks Ben!

They're doing everything they can to avoid the mistakes made by the Fed in the run-up to the Great Depression. The problem is that printing more money has it's own consequences. Just look at Germany circa 1924...

Posted by CKT | November 6, 2007 11:09 AM

"The problem is that printing more money has it's own consequences. Just look at Germany circa 1924..."

The German post-World War I-hyperinflation ended in November 1923 when a new currency was issued.

Posted by Patrick | November 6, 2007 11:16 AM

They ought to bring back the $100,000 bill, but with Donald Trump's picture on it.

Posted by live | November 6, 2007 12:42 PM

I remember that large-denomination bills were a big plot point in East of Eden. I think they were $1,000-dollar bills though, not $500.

Posted by Persia | November 6, 2007 1:19 PM

Everybody seen that million dollars in ten thousand dollar bills hanging in the Horseshoe Club in Vegas?

Meanwhile, I just found this:

"...on October 2, 2007, Mohammad-Ali Khatibi, deputy head of the National Iranian Oil Company (NIOC), in charge of the marketing announced that Iran has drastically lowered the use of the U.S. dollar in payment for its oil export by 15%. Khatibi was reported as saying that "Iran is selling about 85% of its oil in the non-dollar currencies," nearly 65% in euro and soon 20% in yen. In July, the NIOC requested from its customers in Japan who import over 300,000 barrels per day (bpd) of Iranian oil, to pay in yen. A switch in currency by Nippon Oil and other Japanese oil refiners to yen has helped Iran to achieve its goal of reducing its exposure to the dollar and as a result, in the period over the last two years it has avoided the loss emanating from the constant depreciation of the dollar."

Which is one reason Bush and Cheney are pushing for war with Iran.

Posted by Richard Steven Hack | November 6, 2007 9:47 PM

"...ATM-debit cards which are cheaper than credit cards."

Cheaper in what sense? It costs me nothing to use my credit card for all kinds of purchases so long as I remember to pay my balance every month. Meanwhile, I have to actually balance my check book and keep track of my day-to-day balance in order to avoid the "overdraft protection" fees imposed by my bank. Even if I do that perfectly, it's still a larger cost in terms of time and effort.

Posted by Greg | November 7, 2007 2:48 AM

Why are debit cards cheaper than credit cards? Well, I can't speak for America, but here in Germany they are. Debit-Cards are issued by your bank, and all it costs you is paying a (relatively low) fee to keep your bank account (if the bank bills you at all). Banks earn next to nothing with debit cards and bank accounts, as they are primarily a marketing tool to attract cutomers for other services. Fees imposed on shops for accepting debit card payments are also significantly lower than those for credit cards payments.

As for time and effort, here in Germany you do not have to balance your check book. For one, checks have been more or less completely replaced by account-to-account transactions. I'm 32 and I've never written a check in my life. To avoid overdraft protection fees you just have to look at the display at the ATM (if you use one operated by your bank), check online or go to a printer at your bank, insert your ATM-card and get a bank statement.

Posted by Patrick | November 7, 2007 3:42 AM

Indeed, so you have to do the same constant checking and transferring of funds to avoid outrageous fees. That's the cost I was talking about, and it does require balancing your checkbook if you write checks for any purpose (I still pay my rent by check, although that's about it). Do you not have credit cards in Germany with no annual fee? My credit card costs me nothing to use beyond a couple of minutes once a month for an online payment from my checking account.

Debit cards are not just a marketing tool. Banks make a ton of profit from overdraft fees. Here is the first article I found on the subject from a simple two-second google search. Note the part where it says, "Making an in-store debit card purchase is by far the most expensive way to overdraft, costing $2.17 for every dollar borrowed." That's one heck of an interest rate!

Posted by Greg | November 7, 2007 3:55 AM

I think we are talking past each other. Of course I have to pay overdraft fees. But when that is caused by a debit-card payment, the fee is not higher than in any other case (using the ATM, for instance). So that's the cost of overdrafting, period. Maybe it's different in the U.S., but not here. Here, regular accounts with debit cards are a marketing tool.

And note: I do not have a seperate account for my debit-card, as nobody else has in Germany. It's my regular account to which my salary is transfered and from which I transfer my rent, for instance, and I have no other. So to avoid overdrafting fees, I do not have to transfer funds all the time. Either I have the money I need, or I have to overdraw.

So for me, the problems you cite have nothing to do with my deibt card as such, but with the question if I spend more than I have or not (and with controlling my spending, irrespective the way I pay.

Posted by Patrick | November 7, 2007 6:50 AM

In the "Films Sadly, but Understandably Ignored by Oscar" category, we mustn't forget that in Pluto Nash, the $10000 bill has Hillary's face on it.

Posted by Idaho Matt | November 7, 2007 4:43 PM