Why Money Launderers Love $100 Bills

Joe Weisenthal (0:03)

Hello, Odd Lots listeners, I'm Joe Weisenthal.

Tracy Alloway (0:06)

And I'm Tracy Alloway.

Joe Weisenthal (0:07)

We're the hosts of the Odd Lots podcast, and we've got something exciting for you.

Tracy Alloway (0:11)

That's right. So one of the best parts of hosting our podcast is we get to actually meet and interact with our listeners, and we know we have some listeners over in Los Angeles.

Joe Weisenthal (0:21)

That's right. So if you're in LA, we're going to be recording a live show, some live recordings at the Vermont Theater in Hollywood on September 17th.

Tracy Alloway (0:30)

We have some really exciting guests lined up, have some really great conversations planned. So go ahead and get your tickets. You can find those over at bloomberg.com/oddlots, or click the link below in the show notes and come and say hi when you're there.

Oliver Bullough (0:49)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (1:04)

Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (1:08)

And I'm Joe Weisenthal.

Tracy Alloway (1:10)

Joe, everything I know about cash came from that tour we took of the Chicago Fed's cash facilities with its president, Austin Gillespie.

Joe Weisenthal (1:20)

That was really fun. I'm trying to think, what do you remember? I remember just seeing lots and lots of cash, ink.

Tracy Alloway (1:26)

I remember appreciating the smell of the cash. It has a very idiosyncratic smell. I remember the color of the cash, which you don't really notice all the different shades of dollar bills until you see them stacked up.

Joe Weisenthal (1:41)

Right. We just think of them as green. Yeah. There's like pinks in there and oranges. Yeah, absolutely.

Tracy Alloway (1:45)

Fifty shades of green. And then one thing that I remember is Austin actually telling us that 85% of the $2.4 trillion in circulation happens to be $100 bills. Do you remember that?

Joe Weisenthal (2:00)

Yeah. And this is one of those sort of like facts about the world that people seem to know, but don't really think through it. It just sort of comes up every once in a while. This phenomenon that, by and large, like two things I think people may know about the cash economy, which is by and large people use less and less cash in their daily lives.

That fact seems to have actually had no effect on the amount of cash in circulation. Right.

Tracy Alloway (2:26)

It keeps growing.

Joe Weisenthal (2:27)

And then quite a bit of that cash in circulation is in relatively high denomination bills that are even used less than say the fives of the twenties.

Tracy Alloway (2:36)

I don't know about you, but I do not walk around with a lot of hundred dollar bills in my pocket.

Joe Weisenthal (2:41)

No, me neither.

Tracy Alloway (2:42)

On the rare occasions when I do go to a cash machine, I always choose twenties or even fives and tens, right? So the question is, what are people doing with all these hundred dollar bills, right? And when we talked about it with Austin, he described it as a disconnect between the stats and the daily use of cash of most Americans. But I think there's kind of an obvious answer here, right? What are people doing with hundred dollar bills?

Joe Weisenthal (3:07)

I have an answer, because I can tell you the last time I walked around with a significant stack of hundred dollar bills. Okay.

I was playing in a poker game in New York City, and it was not a regulated poker game, and I didn't lose all my money that night. And so I walked home with a lot of hundred dollar bills. So maybe that is a sort of-

Tracy Alloway (3:25)

That's some good humble bragging, Joe, about winning at poker.

Joe Weisenthal (3:28)

I didn't win. I said I didn't lose all my money. But maybe that's sort of a clue about the types of activities that might lend themselves to high denomination individual bills.

Tracy Alloway (3:39)

Yes. So this episode is perhaps poker adjacent. We're going to be talking about money laundering, which we've never done an episode specifically devoted to money laundering. And it is, in fact, like a huge business.

Joe Weisenthal (3:50)

Some of the numbers you read about them and they're like staggering. And I almost like don't believe some of the numbers. But when you figure out it's like, okay, drugs are probably a big deal, fraud is probably a big deal, crime is a big deal. People are trying to get their money out of countries that have various sort of rigid capital controls, China being an obvious example. You can see how it adds up.