
$100 Bill: The Fed Has a $110 Billion Problem with New Benjamins - julian37
http://www.cnbc.com/id/40521684/The_Fed_Has_a_110_Billion_Problem_with_New_Benjamins
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brown9-2
Talk about your disingenuous headlines - it's not like this printing problem
has cost the government $110 billion, it just represents $110 billion in
printed currency that is not yet in circulation.

 _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._

In other words the true cost (so far) is one one-thousandth of the
sensationalist headline.

And then there's this:

 _"A very high proportion of the notes will be fit for circulation," said
Darlene Anderson of the Treasury Department. "We are working really hard to
try to get a solution to the problem."_

So basically, if estimates are correct, most of the costs will be re-couped
and a minority will be true losses.

~~~
hartror
Yeah was listening to NPR talk about it and the two problems they're trying to
deal with is fixing the problem that causes the faulty notes and sorting the
faulty notes for the good ones so the good ones can be used.

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zach
I have a three step solution.

1\. Create an amazing dream programmer job opening.

2\. Use this as the interview problem.

3\. Hire the one with the best solution and put it into practice.

I bet it turns out you only need two weighings.

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ck2
Why would someone bother to counterfeit the new bills when the old bills will
be around in circulation for over 100 years?

Wouldn't they just counterfeit the old bills?

~~~
cperciva
Paper doesn't last very long. Five year from now, the old bills will still be
in circulation, but they'll be uncommon. Ten years from now, any time you try
to use one of the old bills, the merchant will look at it very carefully
before accepting it.

The trick is to keep security measures a decade ahead of counterfitters, so
that the only counterfit bills are the ones which are antique enough to
attract extra attention.

~~~
d2viant
Dollar bills are actually made from more than just wood pulp, they also
include cotton, silk and linen -- along with red/blue fibers inserted to
create texture.

According to the federal reserve, bills have the following lifespan before
they wear out:

$ 1.....22 months

$ 5.....16 months

$ 10.....18 months

$ 20.....24 months

$ 50.....55 months

$ 100.....89 months

<http://www.federalreserve.gov/generalinfo/faq/faqcur.htm#13>

~~~
ck2
89 months is over 7 years.

And those numbers assume they are in circulation.

So it's perfectly plausible to have the old $100s in circulation for the next
decade, assuming some are kept in security boxes, etc.

But I guess they are planning for after 2025 to have some kind of lock against
fakes finally.

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krevis
How on earth did they have a 30% failure rate, but not notice until after they
had printed 1.1 billion notes? I thought the mint was extremely stringent
about their QA!

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stretchwithme
A broken bill for a broken currency.

Who makes 1,000,000,000 of something before verifying quality?

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siculars
The Feds need to hire this guy to build an automated sorting machine for them:

<http://gamesbyemail.com/News/DiceOMatic>

If he can build a machine "Capable of generating 1.3 million rolls per day" on
a shoestring budget, I'm sure a sorting a billion notes with a bit larger
budget shouldn't be a problem.

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tlb
It seems surprising that a stack of bills could have a lot (30%) of folds in
them without making it obviously bulge in the middle.

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danielsoneg
Golly, wherever will they find the money to pay for this error?

Surprisingly, the CNBC headline is editorialized and overly-sensational, as is
the rest of the article. At worst, they have a $120M problem, and that's if
they just burn everything and reprint all the bills. Otherwise, "up to 30% of
the bills" will have to be reprinted, for a cost of $36M plus the cost of
identifying the broken bills.

Otherwise it's an interesting article - I wasn't aware they were redesigning
the bill.

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erikpukinskis
They're going to destroy most of these, and someone is going to smuggle out a
few, and they'll be worth a lot more than $100 a hundred years from now.

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daimyoyo
Why wasn't this caught during printing? I worked for a company that printed
newspaper circulars and we had to check the prints every 10 minutes for
quality. So the department of engraving and printing can't do the same? My
theory is that they discovered someone(North Korea?) printing counterfeits of
the new bill and are modifying them again.

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kylec
Perhaps the anti-counterfeiting measures are too effective if the _U.S.
Government_ is having trouble printing them.

~~~
smallblacksun
The mint produces coins. The bureau of printing and engraving produces bills.

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webXL
I'm amazed at some of these comments. People seem to be more upset at the
article's headline than a government which _routinely_ wastes money and
creates problems. After all, the government can't exactly chalk up its (our)
$12 trillion debt to tax cheats! Boondoggles like this must be happening on a
daily basis.

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rdj
Are these pieces of paper really worth $100 a piece or only the cost of the
paper and ink? Since the notes never shipped, and likely won't, thus won't
backed by the government I have a hard time thinking this is a $110 billion
problem.

~~~
stratomorph
Depends on how you look at it. Yeah, they're "worth" $100 apiece because they
can be exchanged for goods and services "worth" $100. (Let the chicken and egg
lie.) So it's $110 billion worth of cash that can't circulate. Good or bad
thing? That's over my head.

On the other hand, they don't cost that much to print, only 12 cents. But
there's 1.1 billion of them. So that's $132 million of work that's not doing
any good right now. Still a good-sized problem, without considering the time
and expense of sorting and replacing bad notes.

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siculars
I can see collectors scouring new bills for this flaw and hoarding them. If
they ever make it into production you can be sure they will instantly become
collectors items.

*edit s/production/circulation

~~~
stretchwithme
They made it into production. They printed 1,000,000,000 of them before
verifying their kwalitee.

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tdoggette
$100 bills with a blank stripe down the middle are going to be valuable in the
future.

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sliverstorm
Is there a non-cosmetic reason the defective bills are unservicable? I say
just circulate 'em, unless the blank spot is very large.

~~~
drusenko
I would imagine that since paper money gets its value entirely from the trust
the public places in its authenticity and value, any printing defect will
cause chaos when the not-completely-uniform bills go into circulation.

This will waste the time of those that need to check for authenticity (imagine
the image scanners that need to be adjusted for this), deflate trust in what
constitutes an authentic bill, and devalue the "defect" currency as it may not
be accepted in all scenarios.

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lhnn
If ten percent of the bills are bad, the actual cost of those bills is roughly
$14,000,000. That's about 1/9000 the cost listed by the article.

(1.1 gigabills * .1 [faulty bills] * 0.12 [cost per bill])

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jeffreymcmanus
Remember how the U.S. was going to print money to get itself out of debt? So
much for that idea.

~~~
kjhughjkjh
I think they just got a bit confused. You print notes - employing printers,
then recycle them, then pay to print more - eventually you have full
employment in the printing industry

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sausman
So when the government prints money it "stimulates the economy" but when
anyone else prints money they do jail time?

If printing money is so good for the economy why don't they give us all
printing presses?

~~~
kevin_morrill
Clearly you haven't been brainwashed with enough Keynes It's not as though
creativity and execution really had anything to do with the economy.

