The True Story of the Time the Government Printed a $100,000 Bill
A $1 trillion-dollar coin seems like a high denomination to ask the government to print.
Some say its weight could sink the Titanic! (This is benightedly ludicrous).
But one time, the U.S. government actually got 1/10000000th of the way there — by printing a $100,000 bill. And it really helped the economy.
The year was 1933. We were in the midst of a worldwide depression characterized by massive deflation.
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| St. Louis Fed |
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Gold hoarding and bartering were also reducing the amount of funds flowing into the government.
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Americans agreed to surrender their gold, but it wasn't enough...
So Roosevelt proposed the Treasury take over the Federal Reserve's gold supplies.
The
pluses: Once the federal government controlled all the gold, it could
better enforce its plans to devalue the dollar (thus reflating the
economy).
The costs: end of Fed independence.
Congress
took up the measure in January 1933. The Democrat-controlled Senate — a
first since World War I — helped get the measure passed Jan. 31.
The Gold Reserve Act of 1934 set a new federal exchange rate for gold at $35, but only for the purposes of foreign exchange.
It also allowed the Treasury to print bills to pay for the Federal Reserve's gold.
And one of them was worth $100,000. (It had Woodrow Wilson on the face).
Spoiler alert: It worked.
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Fed Chairman Gene Black was sympathetic but wary. He advised the decision was best left up to Congress.
...Because Roosevelt also agreed to bail out the banks. That was good news for consumers but bad news for currency control. |
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The Gold Reserve Act of 1934 set a new federal exchange rate for gold at $35, but only for the purposes of foreign exchange.
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It also allowed the Treasury to print bills to pay for the Federal Reserve's gold.
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And one of them was worth $100,000. (It had Woodrow Wilson on the face).
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Spoiler alert: It worked.
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