Where’d All the Cash Go? U.S. Treasury’s Printing Press Slows

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Andrew Harrer / Bloomberg via Getty Images

Stacks of $100 bills at the Bureau of Engraving and Printing.

Many economists and investors complain that the federal government has effectively been “printing money” through its loose monetary and fiscal policies. But in a strictly literal sense, the very opposite turns out to be true: In 2010 the U.S. Treasury printed the fewest $1 and $5 bills in decades; and the Treasury Department, for the first time in its history, didn’t print a single $10 note.

Plastic is to blame, says this article in The New York Times, pointing to the ubiquitous use of credit and debit cards at gas stations, in taxis, on airplanes and in restaurants — including one in Manhattan that only takes credit cards, no cash.

(MORE: Inside the Fed’s Vault: $1 Billion of Unused Coins)

It’s a long ways away from the 1970s, when plastic as payment was first introduced. Then, the value of hard currency equaled 5 percent of U.S. economic activity, according to the Times. But as credit and debit cards have flourished, the value of currency in circulation is now roughly 2.5 percent of economic activity.

So is this the beginning of the end for cash? Probably not. Cold hard cash will likely hold value over plastic in the minds of consumers for years. For one, money under the mattress still holds sway for some of us who feel more financially secure holding on to tangible currency rather than dealing with an account filled with numbers. And things like throwing a cash tip someone’s way can still feel more generous.

(MORE: Digital Deflation: How an Online Currency Stacks Up to the Dollar)

Much like the way people continue to enjoy holding a book when they could use an e-reader, cash will be around for a while – especially the $100 bill. While low-denomination bills were printed in fewer numbers last year, the $100 is wildly popular. Over the last several years, the number of printed $100 bills has spiked, from about half a billion printed in 2004 to almost 2 billion last year, primarily because it’s so popular for investors to hold overseas.

But Benjamins aside, as plastic begins to feel more and more like the norm, it’s likely that the Treasury’s downward trend in printing its smallest bills will continue. Alexander Hamilton, the first Treasury secretary and the man who adorns the less-than-popular $10 bill, would’ve never seen it coming.

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