Larry Summers Launches The War On Paper Money: "It's Time To Kill The $100 Bill"

Tyler Durden's picture

Yesterday we reported that the ECB has begun contemplating the death of the €500 EURO note, a fate which is now virtually assured for the one banknote which not only makes up 30% of the total European paper currency in circulation by value, but provides the best, most cost-efficient alternative (in terms of sheer bulk and storage costs) to Europe's tax on money known as NIRP.

That also explains why Mario Draghi is so intent on eradicating it first, then the €200 bill, then the €100 bill, and so on.

We also noted that according to a Bank of America analysis, the scrapping of the largest denominated European note "would be negative for the currency", to which we said that BofA is right, unless of course, in this global race to the bottom, first the SNB "scraps" the CHF1000 bill, and then the Federal Reserve follows suit and listens to Harvard "scholar" and former Standard Chartered CEO Peter Sands who just last week said the US should ban the $100 note as it would "deter tax evasion, financial crime, terrorism and corruption."

Well, not even 24 hours later, and another Harvard "scholar" and Fed chairman wannabe, Larry Summers, has just released an oped in the left-leaning Amazon Washington Post, titled "It’s time to kill the $100 bill" in which he makes it clear that the pursuit of paper money is only just starting. Not surprisingly, just like in Europe, the argument is that killing the Benjamins would somehow eradicate crime, saying that "a moratorium on printing new high denomination notes would make the world a better place."

Yes, for central bankers, as all this modest proposal will do is make it that much easier to unleash NIRP, because recall that of the $1.4 trillion in total U.S. currency in circulation, $1.1 trillion is in the form of $100 bills. Eliminate those, and suddenly there is nowhere to hide from those trillions in negative interest rate "yielding" bank deposits.

Chart of value of currency in circulation, excluding denominations larger than the $100 note. Details are in the Data table above.

So with one regulation, the Fed - if it listens to this Harvard charlatan, and it surely will as more and more "academics" get on board with the idea to scrap paper money - could eliminate the value of 78% of all currency in circulation, which in effect would achieve practically the entire goal of destroying the one paper alternative to digital NIRP rates, in the form of paper currency.

That said, it would still leave gold as an alternative to collapsing monetary system, but by then there will surely be a redux of Executive Order 6102 banning the possession of physical gold and demanding its return to the US government.

Here is Summers' first shot across the bow in the upcoming war against U.S. paper currency, first posted in the WaPo:

It’s time to kill the $100 bill

Harvard's Mossavar Rahmani Center for Business and Government, which I am privileged to direct, has just issued an important paper by senior fellow Peter Sands and a group of student collaborators. The paper makes a compelling case for stopping the issuance of high denomination notes like the 500 euro note and $100 bill or even withdrawing them from circulation.

I remember that when the euro was being designed in the late 1990s, I argued with my European G7 colleagues that skirmishing over seigniorage by issuing a 500 euro note was highly irresponsible and mostly would be a boon to corruption and crime. Since the crime and corruption in significant part would happen outside European borders, I suggested that, to paraphrase John Connally, it was their currency, but would be everyone’s problem. And I made clear that in the context of an international agreement, the U.S. would consider policy regarding the $100 bill.  But because the Germans were committed to having a high denomination note, the issue was never seriously debated in international forums.

The fact that — as Sands points out — in certain circles the 500 euro note is known as the “Bin Laden” confirms the arguments against it. Sands’ extensive analysis is totally convincing on the linkage between high denomination notes and crime. He is surely right that illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500 euro note rather than more than 50 pounds as would be the case if the $20 bill was the high denomination note. And he is equally correct in arguing that technology is obviating whatever need there may ever have been for high denomination notes in legal commerce.

What should happen next?  I’d guess the idea of removing existing notes is a step too far. But a moratorium on printing new high denomination notes would make the world a better place.  In terms of unilateral steps, the most important actor by far is the European Union. The €500 is almost six times as valuable as the $100. Some actors in Europe, notably the European Commission, have shown sympathy for the idea and European Central Bank chief Mario Draghi has shown interest as well.  If Europe moved, pressure could likely be brought on others, notably Switzerland.

I confess to not being surprised that resistance within the ECB is coming out of Luxembourg, with its long and unsavory tradition of giving comfort to tax evaders, money launderers, and other proponents of bank secrecy and where 20 times as much cash is printed, relative to gross domestic, compared to other European countries.

These are difficult times in Europe with the refugee crisis, economic weakness, security issues and the rise of populist movements.  There are real limits on what it can do to address global problems. But here is a step that will represent a global contribution with only the tiniest impact on legitimate commerce or on government budgets. It may not be a free lunch, but it is a very cheap lunch.

Even better than unilateral measures in Europe would be a global agreement to stop issuing notes worth more than say $50 or $100.  Such an agreement would be as significant as anything else the G7 or G20 has done in years. China, which is hosting the next G-20 in September, has made attacking corruption a central part of its economic and political strategy. More generally, at a time when such a demonstration is very much needed, a global agreement to stop issuing high denomination notes would also show that the global financial groupings can stand up against “big money” and for the interests of ordinary citizens.

* * *

And then there was this from Bloomberg:

Lawrence Summers urged countries around the world to agree to stop issuing high-denomination banknotes, adding his voice to intensifying criticism of a practice alleged by police to abet crime and corruption.

“Even better than unilateral measures in Europe would be a global agreement to stop issuing notes worth more than say $50 or $100,” Summers said on his blog on Tuesday. “Such an agreement would be as significant as anything else the G-7 or G-20 has done in years.”

The 500-euro note has been in circulation since the paper currency went live in 2002. British banks and money-exchange services stopped distributing the bills in 2010 after a report showed that 90 percent of demand for them came from criminals. ECB Executive Board member Yves Mersch said earlier this month that his institution still wanted to see “substantiated evidence” that the notes facilitate illegal activity.

For now, “I’d guess the idea of removing existing notes is a step too far,” Summers wrote. “But a moratorium on printing new high-denomination notes would make the world a better place.”

* * *

First they came for the $100 bill and nobody said anything...

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ParkAveFlasher's picture


Nutsack's picture
Nutsack (not verified) remain calm Feb 16, 2016 8:49 AM

Time to kill? Start with Larry

NoDebt's picture

I predict the demand for $100 bills is about to skyrocket.

knukles's picture

Dontcha just love the price of gold reporting on some sites.  Like uh, maybe manipulated.  Some this morning when gold's up about $5 over Monday's close, are still showing it down $26 or whatever from prior sessions.  Trying to make appearances reality?  Perceptions Management?  "They" used to do this all the time about 7 years ago.  The Truth May Not Be Told, Evidently.

Bokkenrijder's picture

Abolish the $100 bill? How will the CIA then finance revolutions? How will drug dealers and addicts pay for drugs?

Oh wait...perhaps in gold? ;-)

__Usury__'s picture
__Usury__ (not verified) Bokkenrijder Feb 16, 2016 9:01 AM



ISIS accepts visa/mastercard...........dont they bank with Goldman saks?

MillionDollarBonus_'s picture

This is an important first step towards a cashless society, which will enable a far more efficient and fraud-proof economy. Here is a small sample of the many benefits of a cashless society:

1. Easier to crack down on tax evasion

2. Easier to prevent money-laundering

3. Enables complete Federal oversight of suspicious transactions

4. Simplifies payments

5. Encourages the development of smart-payment technologies


It's time for us to abandon the prehistoric relic of cash, and bring payments into the 21st century. Larry Summers understands this very well, which I believe is the motivation behind his wise proposal. We need to slowly outlaw the practise of secretive cash transactions, and bring these transactions into the open, where they can be monitored, tracked and taxed in accordance with the law.

Croesus's picture

Glad to see you're still with us, MDB! 

Government needs you to pay taxes's picture

Hang Larry Summers from a tall oak tree.

Whoa Dammit's picture

Dear Larry,

Please report to your nearest hood or barrio and announce that $100 bills need to be killed. 

Best Wishes,


pemdas's picture

Hmm... I was hoping they would bring back the $1,000 Grover.

CrimsonAvenger's picture

They should totally bring that back. He was my favorite muppet.

hedgeless_horseman's picture



“How did you go bankrupt?” Bill asked.


“Two ways,” Mike said. “Gradually and then suddenly.”

Ernest Hemingway’s 1926 novel, The Sun Also Rises.

It looks to me like Europe, the Americas, and Japan are all moving on to the suddenly part.

Father Thyme's picture
Father Thyme (not verified) hedgeless_horseman Feb 16, 2016 9:32 AM

Kick that can. Right over the cliff.

Dr. Spin's picture

Dear Larry, (Yes that's right Lord Summers, we're on a first name basis around here.)

When you take away cash, I will stop working and sign up for every .gov bennie I can qualify for and sit back and watch you fuckers squirm on the end of the hook. 

You're a worm Larry,,,

Spoctor Din

SoilMyselfRotten's picture

Hang Larry Summers from a tall oak tree


Noo, never let it be said that Larry Summers is hung

Manthong's picture

If you think ahead just a bit, the junk quarter will be the new $20 bill and the common Morgan the new Benjamin.


nope-1004's picture

If .gov were smart, they'd ban all money.  Then, life is much easier.  We report to our superiors in the morning, take instruction for the day, hand over all that we produce, and go back to our .gov provided shelter in the communal building every evening.

I totally see where Larry is coming from.  He's a banker and uselss so this is their solution.  The bankers can't manage things in a free society because they produce NOTHING.  Therefore, they need to control production, and when productivity starts to fall as represented by the currency, the only thing left is to try to control the unit of exchange.

Poor Larry.  Hope this works out for him.  Hope someone doesn't get too angry and attempt to take him out.  The world would be lost without his divine input.


Baby Bladeface's picture
Baby Bladeface (not verified) nope-1004 Feb 16, 2016 10:37 AM

Larry Summers new nickname and now called "hundred dollar bill y'all".

Pinto Currency's picture


The banks hold 1% of deposits in cash.

The rest is in bonds and loans earning interest.

When the debt bubble that Larry helped create explodes, very few are going to get their money back.

glenlloyd's picture

Hmmm...I was almost sure Leia killed Jabba the Hutt.

Bokkenrijder's picture

But thinking ahead (of my previous post), it will also be perfect to demonize gold once more!

Instead of "honest money," gold will me portrayed by the media and the politicians as something only shady people and criminals posses and pay with.

Save_America1st's picture



Durrmockracy's picture
Durrmockracy (not verified) Save_America1st Feb 16, 2016 12:01 PM

Okay, but could someone ~PLEASE FINALLY~ help me out here and tell me who on ZH gives a fuck what happens to their Joo confetti?

A cash ban is the greatest gift ever to people holding gold!

Socratic Dog's picture

Yep.  Unintended consequence will be that EVERYONE in the US will want gold/silver, rather than just a few looney-tune stackers.

These cunts are dumb.

johngaltfla's picture

When I guest hosted on the old Steve Quayle shortwave radio show back in 2008, I remember warning that when this moment happened, when paper currency was banned or the $100 bill first then the $50 were to be removed from circulation, hyperDEFLATION was around the corner.

Welcome to the corner.

We're fucked.

Four chan's picture

abolishing money is the jew's final solution...for us.

DownWithYogaPants's picture

This started me wondering if they are preparing for China to have a mega-crisis that gets out of control and due to the USA's huge debts to the Chinese said mega-crisis being transmited to the USA.

Additionally if I was a Chinese leader and things got so out of control perhaps I would see breaking the USA economy might be an alternative method to keep afloat bring USA down to my level as opposed to fixing Chinese system to rise to USA level.

Beam Me Up Scotty's picture

So lets also ban cell phones, and cars, and trucks, and hoodies, and hats, and wigs, and fake mustaches, and colored contacts, and razors, and scissors so you can't cut your hair, and on and fucking ON!!!  How about you just put everyone in a jail cell and let them out to till the field every day.  Will that be TOO FUCKING OBVIOUS THAT WE ARE ALL SLAVES THEN???

The9thDoctor's picture

Summers is in an ivory tower.

Millions of Americans still cash their paychecks. It's a way of life for the working low-income citizen. Go to Walmart in the ghetto on a Friday and see the long line wrapped around the store for the Walmart Money center.

With all of the BS banking rules, millions of working poor are unable to open a traditional bank account.

A $100 bill is nothing. The average worker makes $10 an hour and works 28 hours a week due to Obamacare. They most likely have 2 of those Mcjobs so they can afford their outlandishly overpriced apartment rent. That's about $800 netted every 2 weeks. What are they going to do, get a thick stack of $20s? It doesn't make any sense.

The way things are going, we should have to reintroduce the $500 bill and $1,000 bill.

On one hand, we have bullshit laws like the PATRIOT act which make it hard to get a bank account up and running for low-income people. Then on the other hand, they tighten the noose and make hard to use cash to get around the out-of-touch banking system. Those Bible-thumping kooks are on to something that without the Mark of the Beast one cannot buy or sell.

We have a low-income populace with ZERO understanding of how finance even works so as The Economist puts in an article last year "It's Expensive to be Poor". They fall for every fee, trick, and trap, just to make it to the next paycheck to repeat the awful process.

This is why I agree with Robert Kiyosaki that we need financial education in the schools.

Tired old socialist Sanders isn't going to fix this. What is going to fix this is teaching people how finance works.

Durrmockracy's picture
Durrmockracy (not verified) The9thDoctor Feb 16, 2016 12:30 PM


Just imagine when those Ghetto Walmartians are trying to squeeze their high-fructose butts into a coin store to turn their digi-bux into gold & silver.  ;-)

Fourmyle's picture

I can see the logic to this. Any large crime syndicate has to stomp out the small independents to protect their action. Monopoly positions are the logical outcome for any mob. Larry ( The aspiring Don ) Summers is just trying to catch the attention of his betters to get a chance at promotion above soldier. The marks don't enter into this.

TahoeBilly2012's picture

By Order of Decree from the House of Rothchild...We Hereby...

aVileRat's picture

The problem is the entire system of consumer led economics (demand side) relies on a marginal understanding on time value of money and maximizing consumer purchasing in the present with the assumption inflation will kill frontloaded household debt over a lifespan.

Once you start telling people inflation and asset monetization is no longer a certainty then as we are witnessing in Japan the whole system implodes. Rational allocation is done on risk vs. utility and unless its a giffen good (like gold or oil) the whole network starts to implode at the same exponential rate of depreciation to which it was originally loaned against.

That one single reason, keeping consumers spending is why 80% of the accomodative policy exists. Without that infinite treadmill no fiscal stimulus is fed into the services sector and the capex recession becomes not just a liquidity trap but a default trap.

(edit: I miss when Dr. Paul Krugman used to troll ZH, he was way more fun to work into a nerdrage. Larry's column is offering decent insights but his calibration and this comment for liquidity draining "plan Z" flies in the face of his main call for accomodative policy. This is likely a mistake on his part, having never run a bond desk before and seen liquidity shortages/bid covers realtime).


oracle_man's picture

That is hilarious.  Thanks.  I needed to see this.

Overfed's picture

A hundred bucks ain't shit these days.

bonderøven-farm ass's picture

"Eradicating" crime my fucking ass....

It's more like monopolizing crime....

Fuck you, Larry....somewhere there's a lamp-post with your name on it. 

Supernova Born's picture

When a $100 became the largest denomination in 1969 it was worth $645 in today's dollars

$15.50 in 1969 could buy what a $100 buys today.

All per the Fed's inflation calculator.


zeronetwork's picture

Elements drugs deals, my foot. Some drug dealer are already using Tide washing liquid as payment.

daveO's picture

CIA ain't gonna haul pallets full of Tide around the world. 

DownWithYogaPants's picture

But some of those rag heads could really use a strong bath using tide as surfactant. 

xavi1951's picture

MDB- You forgot a few other benefits,

No bank runs, you cannot get your money without bank permission

More Gov. monitoring of EVERY transaction and EVERYTHING you buy is a transaction

Bail-ins so the middle class can be eliminated by depleating their savings

Automatic Gov. debt buy down, the Gov. controls the banks and the banks control the digital money, so the Gov. can use yours to pay for theirs.

A cashless society is a slave society.  The whole idea is bad!

Tall Tom's picture

We are enslaved already.


There is no pronounced difference.


More people will wake up to that fact.

undertow1141's picture

The day they outlaw cash is the day I go from bank to bank killing everyone.

DosZap's picture

The day they outlaw cash is the day I go from bank to bank killing everyone.


This has always baffled me, WHY would you do something so idiotic?,if you're going to do it, go after the ones resoponsible for it. 

You kill snakes by chopping off heads,not tails.

Tall Tom's picture

It depends on his choice of banks.


The Fed Bank in San Francisco and Denver are in my neck of the woods.


But maybe I ought to move to rent and close to Wall St. and close enough to the Hamptons.

Master Toms Dog's picture

Human sacrifice, dogs and cats living together, mass hysteria!!