TPT July 2013

Global Marketplace

its membership of the European Free Trade Association and the European Economic Area. › Currently there are two giant trade deals under discussion, both pivoting on the US: the Trans-Pacific Partnership being negotiated between Washington and a host of Asia-Pacific nations, and a comprehensive trade and investment agreement with the European Union. China is party to neither the Trans-Pacific Partnership nor the negotiations between Europe and the US. With the Doha Round of talks under the World Trade Organization largely moribund, Mr Jolly of the Herald Tribune pointed out that some nations have been seeking partnerships below the global level.

Economics A significant but mysterious phenomenon: 65 per cent of all US $100 bills circulate outside the country

Writing in the “Economix” blog of the New York Times , Bruce Bartlett recalled the theory that credit and debit cards and electronic bill-pay should make cash superfluous. Instead, as

a new report from the Federal Reserve Bank of San Francisco makes plain, cash has not only held its own but continues to grow in popularity. According to that report (“Cash Is Dead! Long Live Cash!”), as measured in dollar terms there is 42 per cent more US currency in the form of cash in circulation today than there was five years ago. To Mr Bartlett, an economics historian and conservative columnist, a key factor is the decline in interest rates, which has reduced the “opportunity cost” of holding cash relative to such interest-generating assets as bank deposits, money market funds, and Treasury bills. Mr Bartlett also takes note of some less wholesome promptings. Many economists, he wrote, believe that the rise in cash is strongly related to growth in the so-called underground economy: tax evasion by people working off the books, as well as criminal activity. Evidence for this proposition allegedly lies in the distribution of cash holdings by denomination. Some 84 per cent of the increase in cash since 1990 has been in the form of $100 bills, which in 2012 had risen to 77 per cent of the value of cash outstanding, from 52 per cent in 1990. The “Economix” blogger, who said his use of $100 bills is confined largely to Christmas gifts for nieces and nephews, places an ominous construction on these data. He wrote, “Studies and common sense suggest that those people most likely to use large bills are doing so for nefarious purposes, especially drug dealing. One can easily fit $1mn in $100 Mr Bartlett also called attention to a rise in the amount of US currency being exported. And, according to the San Francisco Fed, the great bulk of US currency held abroad is in $100 bills. Indeed, some 65 per cent of all ‘C-notes’ in existence circulate outside the US. (“America’s Most Profitable Export Is Cash,” 9 April) bills into a briefcase.” A profitable export

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July 2013