Currency: Searching for the Black Hole

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Many Americans wonder where their money goes. So, it turns out, does the Government. According to a study commissioned by the Federal Reserve Board and made public last week, about $154 billion in currency and coin had been put into circulation in the U.S. as of last spring. But about 60% of that cash supply, or at least $96 billion, seems to have mysteriously disappeared. Americans are probably carrying around no more than $36 billion in their pockets or purses to make day-to-day purchases. Companies, meanwhile, probably have no more than $22 billion stashed in drawers, safes and cash registers.

So what happened to the $96 billion? Federal Reserve officials speculate that some of the money may be salted away in mattresses and piggy banks. Much more has probably seeped into the underground economy, where drug dealers and organized crime bosses, as well as otherwise law-abiding citizens, make cash- only transactions that go unreported to the Internal Revenue Service. Finally, billions of dollars have undoubtedly journeyed overseas, because many foreigners like to hoard American money, especially in countries with unstable currencies.