In news of the facepalm variety, it has come to light that a printing error on new $100 bills has resulted in the quarantine of 1.1 Billion bills – that’s right over a billion individual notes. Now you may ask yourself, how is it that the Fed can print over 1 billion bills without doing some kind of quality control and checking the print run after a few thousand of these rolled out? Apparently no one is answering that question.
Follow me over the fold for the details
"As with previous U.S. currency redesigns, this note incorporates the best technology available to ensure we're staying ahead of counterfeiters," said Secretary of the Treasury Tim Geithner.
The blue 3-D Security Ribbon on the front of the new $100 note contains images of bells and 100s that move and change from one to the other as you tilt the note. The Bell in the Inkwell on the front of the note is another new security feature. The bell changes color from copper to green when the note is tilted, an effect that makes it seem to appear and disappear within the copper inkwell.
"The new security features announced today come after more than a decade of research and development to protect our currency from counterfeiting. To ensure a seamless introduction of the new $100 note into the financial system, we will conduct a global public education program to ensure that users of U.S. currency are aware of the new security features," said Treasurer of the United States Rosie Rios.
A decade of research, plans for a global public education program and no quality control at the printer. Too bad they didn’t check to see if their printing technology was up for the job.
The Fed issued a press release on October 1st citing "a problem with sporadic creasing of the paper." that would cause a "delay in the issue date" . However, the scope of the problem remained largely unknown until CNBC broke the details yesterday.
An official familiar with the situation told CNBC that 1.1 billion of the new bills have been printed, but they are unusable because of a creasing problem in which paper folds over during production, revealing a blank unlinked portion of the bill face.
A second person familiar with the situation said that at the height of the problem, as many as 30 percent of the bills rolling off the printing press included the flaw, leading to the production shut down.
The total face value of the unusable bills, $110 billion, represents more than ten percent of the entire supply of US currency on the planet, which a government source said is $930 billion in banknotes. For now, the unusable bills are stored in the vaults in "cash packs" of four bundles of 4,000 each, with each pack containing 16,000 bills.
These bills were scheduled for release in February 2011. They were to be the first with Timothy Geithner’s signature as Treasury Secretary. Since a delay in getting bills into circulation could result in a cash crisis in the global money supply, the Fed has decided to print the old billdesign, with Hank Paulsen’s signature as Treasury Secretary, till they sort out their printing problem.
It seems this is going to be both a costly and a time consuming mess.
Per Mail Online
The sheer numbers are staggering. Authorities estimated that sorting through the enormous pile of bills by hand could take 20 to 30 years.
Instead they are developing a mechanised way of sorting the usable notes from the flawed ones - a process that they hope will only take a year. There was no estimate on how much the sorting process will cost.
The defective bills - which are the most costly ever produced - will simply have to be burned. The American taxpayer paid 12 cents to produce each note, roughly twice the cost of previous bills, meaning roughly $120million is about to go up in flames.
What a mess, all for the lack of a little quality control at the printer. I knew the Fed was good at burning through cash but this really takes the cake. For an interesting look at the 2010 costs to print currency see here