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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

Back in April of this year, the Federal Reserve and the Treasury Dept. issued an excited press release announcing the new design of the $100 bill.

"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.
<snip>

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

Originally posted to Siriously on Tue Dec 07, 2010 at 10:46 AM PST.

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Comment Preferences

  •  Tip Jar (4+ / 0-)
    Recommended by:
    MKinTN, JeffW, Greasy Grant, science nerd

    Tips for peek behind the scenes of our national money machine.

    "Compassion is the radicalism of our time." -- Tenzin Gyatso, 14th Dalai Lama

    by Siri on Tue Dec 07, 2010 at 10:41:59 AM PST

  •  And how many times may this have happened? (3+ / 0-)
    Recommended by:
    wader, Greasy Grant, Siri

    Paper currency has that propensity for printing flaws. That's why they were trying to push dollar coins.

    To err is human...human...human...hu[THUNK!]...thanks, Calamity Jean!

    Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

    by JeffW on Tue Dec 07, 2010 at 10:53:03 AM PST

    •  I'm certain printing errors (1+ / 0-)
      Recommended by:
      JeffW

      occur on a fairly regular basis as they do with any large scale printing operation. The scope and the cost of this particular problem is what makes it newsworthy IMHO.

      Just an interesting look I thought some people might be interested in. Not implying calamity or conspiracy :)

      "Compassion is the radicalism of our time." -- Tenzin Gyatso, 14th Dalai Lama

      by Siri on Tue Dec 07, 2010 at 10:57:35 AM PST

      [ Parent ]

  •  This is entertaining on several levels. (2+ / 0-)
    Recommended by:
    MKinTN, Siri

    First, the mere fact that the Fed can't even get inflation right.

    Secondly, this must be horrible news for our friends in Iraq and Afghanistan.  "Cash crisis" my ass -- this is the kind of money we send to those countries on pallets.  

    Thirdly this:

    "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.

    All that R&D into something that most first-world currencies have been doing for . . . how many decades now?

  •  What I'd like to see is... (2+ / 0-)
    Recommended by:
    MKinTN, Siri

    Geithner issuing a press release explaining the situation, with the headline: "It's All About the Benjamins."

    Barack Obama in the Oval Office: There's a black man who knows his place.

    by Greasy Grant on Tue Dec 07, 2010 at 11:02:55 AM PST

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