CLOSE
Original image
iStock

The Mystery of the Missing Money

Original image
iStock

The Federal Reserve tells us that more than $1.4 trillion worth of U.S. currency is in circulation. But we only know where roughly 15 percent of that money is—in banks or in regular, everyday circulation in the United States. The other 85 percent of the United States currency supply is simply missing. No one knows for sure where it is or what it's doing. "We call this the currency enigma," said Edgar Feige, an economics professor emeritus, in an interview with American Public Media’s Marketplace. "It’s hard to figure out where this currency is and why so much of it is out there."

There are some good guesses, but no certainties. And those possibilities tell us something about how our economy—and the world's—really works.

The shadow economy

A chunk of the money is probably used in illegal transactions. This shadow economy is enabled by cash, which is generally the most anonymous method of payment. Economists like Feige put the size of the shadow economy—which includes drugs, prostitution and various other misdeeds—at hundreds of billions of dollars. At certain points, that has accounted for more than 20 percent of the country’s adjusted gross income.

But this doesn’t mean that all of the missing money goes into the shadow economy—after all, currency can be used again and again as it passes from person to person. That leads some economists to theorize that a relatively small percentage of the missing currency (less than 10 percent) is part of the black market.

The overseas equation

So where’s the rest of it? Much—if not most—of the money is probably overseas. U.S. bills are still seen around the world as some of the most stable and reliable currency available. So vast quantities of cash are hidden away for a rainy day (some $80 billion in Russia alone).

That’s not necessarily a bad thing. Think of it this way: If someone holds onto U.S. currency, they’re essentially giving the Federal Reserve free money. This concept is called seigniorage, and it’s a bit complicated to explain. Here’s the basic idea: The Fed creates money by buying government bonds from banks. As people demand more dollars—and hold onto them—the Fed buys more bonds to increase the supply. But those bonds earn interest, which means our central bank pockets billions of dollars in pure profit each year.

The Fed scrambles

All of this means that the Federal Reserve has a balancing act on its hands. It has to bring new money into circulation (since that earns it sweet, sweet moolah), but the bank also wants to to keep U.S. currency from being mainly used by gamblers and drug smugglers. In the 1960s, we stopped printing $500 and $1000 bills, as they were almost exclusively used illegally. These days, there's been criticism of the $100 bill for just the same reason. Believe it or not, there are more $100 bills in circulation than $20 bills!

The Fed also wants to make sure that the bills are as secure as possible—the demand makes the $100 an attractive target for counterfeiters. That’s why the $100 was redesigned in 2013.

Original image
iStock
How Can I Save Money During Wedding Season?
Original image
iStock

According to one survey, the average American spends more than $600 on wedding-related costs—and that’s just to attend as a guest. If you have two or more events coming up this year, that adds up quickly! But with careful planning and some inside tricks, you can make it through wedding season without breaking the bank. Here are some tips so that you can focus on the stuff that matters.

1. PUT YOUR REWARDS POINTS AND MILES TO GOOD USE.

You’ve been racking up airline miles for months (maybe even years), and now is the time to use them. Leverage those air miles you’ve earned, rent a car or book a hotel room with that cash back, or see if your credit card offers discounts to certain retailers where you can shop with reward points rather than cash. Some credit cards let you redeem your cashback rewards for boosted value gift cards, which means you could redeem for even more value.

2. MAKE A VACATION OUT OF IT.

If you’re already traveling a long distance, consider flying out a few days early. Since weddings usually require guests to travel at peak weekend times, you can save by flying on a Tuesday or Wednesday. You will be spending more on lodging each night you are there, so factor that in as you plan your budget.

Even if you don’t add any extra days, book your transportation as soon as you finalize your travel dates. Once upon a time you could save money waiting for last-minute flights, but with so many budget airline options, you won’t be doing yourself any favors waiting until the last minute.

3. RESEARCH HOTEL RATES.

The bride and groom will likely negotiate block room rates for their guests, but don’t assume that is the best price you can find. Before booking, check around the web to see if you can secure a room at the same hotel for a lower price. You also might find cheaper options farther away from the venue. A short drive can be worth it to save $30 each night, but be prepared to take cabs or skip the open bar so you can drive yourself back at night.

4. RENT A HOUSE WITH FRIENDS.

Rather than booking a bunch of hotel rooms, find a great group house online. Depending on the location, you can find some incredible homes for less than $100 per night. Even better, you can save money by cooking and socializing at home rather than out on the town. You will need to account for transportation from the rental property to the wedding, but a cab will likely be cheaper than opting for the hotel where the couple has arranged transportation. If you don’t know many people at the wedding, ask the couple if they have other friends looking to share accommodations. Not only will you save, you might make new friends!

5. DON’T WAIT TO BUY YOUR GIFT.

Find out where the couple has registered as soon as possible. The earlier you scope out the registry, the more options you will have to find a gift that fits your budget. Guests attending bridal showers and engagement parties tend to snap up the less expensive items ahead of the wedding, so try to purchase your gift at least four or five months out. Not only will you look totally on top of things, but shopping early will give you time to get on the mailing lists for the stores where the bride and groom are registered and keep an eye on sales.

6. POOL RESOURCES FOR A GROUP GIFT.

Get a bunch of friends together and go in on a big-ticket item that no one person can afford. Not only will you each likely spend less than you would alone, you will be able to get the couple an expensive item that they might not otherwise receive. (Added bonus: You’ll be first on the invite list when they christen their new grill.)

7. GO BEYOND THE REGISTRY.

Consider giving your time and/or your talents in lieu of a physical or monetary gift. Maybe you are a skilled photographer, makeup stylist, or hand letterer. There are lots of ways to contribute to your friends’ weddings that will save both of you money. Even offering to help run errands the weekend of the wedding will be greatly appreciated, and it will ultimately be a more meaningful gift than a $50 salad bowl.

8. BUY IN BULK.

It may not sound romantic, but when you see items like picture frames and champagne on sale – stock up! Then all you have to do is slip in a beautiful photo of the couple, get some nice wrapping paper, and you’re good to go!

9. INVEST IN A GREAT WEDDING OUTFIT...OR RENT ONE.

Unless you are part of the wedding party, you should not focus too much of your budget on your own attire. Women can invest in a classic black, navy, or gem-toned dress and mix it up with accessories. (Stay away from patterns; they are memorable.) It’s also a good idea to get a good, comfortable pair of neutral shoes that you can wear to every wedding. If you’re hesitant to wear the same dress in front of your friends, swap dresses with a friend or rent a designer dress.

Men will find it easy to change outfits just by mixing shirts and ties with one great suit. If you are attending a black-tie wedding, a black suit and black tie will fit the bill, or you can rent a tuxedo from a local shop or online.

10. IT IS OKAY TO RESPECTFULLY DECLINE AN INVITATION.

As much as you would love to attend every wedding, shower, or bachelor(ette) party, it isn’t always practical. You might have already taken a big vacation this year, so you cannot afford to attend a destination wedding in the Bahamas. Or maybe your friend’s fiancée invited you to her shower just to be polite. It is acceptable to say no. True friends will understand.

11. REMEMBER WHY YOU ARE THERE.

Don’t forget that you are there to celebrate your loved ones and the fact that they have found their partner in life. It’s not worth overspending and risking feeling resentful over what should be a happy occasion. Remember, your friends do not expect (nor want) you to go into debt so that you can be a part of their big day. They would much rather have the pleasure of your company than an expensive gift. Stick to what works for your personal budget and have a great time honoring your friends.

It’s that time of year: Wedding bells are ringing. And ringing. And ringing some more. Feeling overwhelmed by all the events on your calendar? The Discover it Miles Card will automatically match all the miles you earn at the end of your first year, which means 20,000 miles can turn into 40,000. The best part: There’s no limit to how much they’ll match. Terms apply. Visit Discover to learn more.

Original image
Darren McCollester/Getty Images
arrow
Live Smarter
5 Ways to Avoid Extra Rental Car Fees
Original image
Darren McCollester/Getty Images

Walking into a rental car dealer should be a simple task. Walk in with a reservation, your ID, and your credit card, and walk out with a set of keys. But more often than not, picking up and returning a rental car is a dizzying array of add-on offers and potential fees. How do you make the most of your vacation without getting tripped up by unnecessary costs? Condé Nast Traveler has some smart tips for keeping it under budget, and we’ve added a few tips of our own as well. Because you can never save too much money.

1. DON'T BUY EXTRA INSURANCE.

Are you paying for your rental with a credit card? Your credit card company likely provides its own rental car insurance. Your own car insurance, too, will often cover rental car trips. Check with both to determine whether you really want to spend extra on the rental company’s collision damage package. No, you don’t want to be fully liable if you total your shiny rental car. But that doesn’t mean you need to shell out a pricey daily fee for peace of mind. In fact, some credit cards don’t offer rental car insurance if you’re also covered under the rental agency’s collision damage waiver, so you may be shooting yourself in the foot if you get it. Make sure to check whether your credit card coverage is primary or secondary insurance, though.

2. DON'T BUY THEIR GAS.

At some rental car agencies, you can prepay to have them fill your tank after you drop the car off. That means you’ll save time on the way back, and generally, the price-per-gallon seems relatively cheap. The problem? You’re probably not going to run your rental car down to empty right as you pull into the return lot, and then you’ve just given the agency free gas. It’s never a good idea to leave filling up to the agency. Unfortunately, that’s doubly true on the return end if you've opted for the prepay—you’ll get hit with a huge premium if you forget to fill the tank and have to buy gas from the company when you’re handing over the keys. You don’t want to get stuck paying $15 per gallon.

3. AVOID THE AIRPORT.

It’s super convenient to hop off the plane and go right to the rental car agency, but that convenience comes at a price. Airports charge rental agencies concession fees to operate on their property, and those costs get passed along to you. If you can take a quick (and cheap) train or cab ride to a nearby agency a few miles away from the airport, you’ll probably pay lower rates.

4. FIND A DISCOUNT.

If you’ve got a travel credit card, you might get a discount at some rental car partners. Citi cardholders, for instance, get up to 20 percent off Hertz rentals, while Visa cardholders can get up to 25 percent off National car rentals. Chase’s Sapphire Reserve credit card gives discounts at Avis, National, and Silvercar.

Your employer may also provide rental car discounts, as do some airline and hotel rewards programs. You can even find a discount on Groupon. So don’t reserve blindly. A little research into coupons could save you significant money.

5. DON'T BOTHER TO RETURN EARLY.

In most cases, it’s better to show up early than late. But with rental cars, you can be penalized for returning your car too early. Depending on when you return it, you could be charged a different rate than what you originally planned. If you return a car on Saturday morning instead of Sunday morning, you might end up with a weekday rate charge instead of a weekend rate. If you have a weekly rental, you’ll be paying for a full week whether you return it after five days or the full week. If you return a weekly rental after four days, you might end up paying the day rate, which could be more expensive. In short: You want to stick to your original plans as much as possible, and if you do need to return your car early, call the agency first to check how it will affect your bill.

[h/t Condé Nast Traveler]

SECTIONS

More from mental floss studios