The Authority of Money

by admin July 22, 2020
USA Federal Reserve Visit


During my recent trip to the U.S., I decided to play tourist and visit a few places that I had never been. One of the more interesting destinations was the Money Museum at the Federal Reserve Bank in Chicago, Illinois.

 
 

No matter how much it’s talked about in the news and politics, I really had no idea exactly what the Federal Reserve Bank does. I know its name is printed at the top of all of my Benjamin, but that was about the extent of my knowledge. With the help of a friend I’ve had for 40 years, I signed up to take the tour and get a glimpse behind the scenes of the place that money calls home. Knowing the amount of money that passes through the place and seeing the turn of the century style conjured up images of caper stories the whole time I was there. I couldn’t help but think  

“okay, if I was going to rob this place, how would I do it?”

 

The Guided Tour

While it was interesting to learn what the Federal Reserve Bank does, the real beauty of the visit was a special tour through some of the innards with a guide who knows trivia that spans centuries and literally trillions of dollars. Jerry, our tour guide, was a fascinating man who returned from the boredom of retirement to be a tour guide, talking guests through the museum.

 
USA Federal Reserve Visit
 

He wore a light green and white suit, looking like he too had been minted by the U.S. government decades ago. Over the course of the next hour or so, he shared background on the Fed, stories and more numbers than anyone should be able to recall.

In the main museum, we got to see a number of displays about the history of currency in the United States, including a couple of displays of One Million Dollars:

We also got to learn a bit about what the Federal Reserve Bank does in a video that was put together in-house – nice, but a bit dry. I’m sharing what I took away from it, which may be entirely inaccurate, due to my failing memory.

The Fed’s charter is to “oversee how monetary policy is implemented.” It comes down to three primary functions:

  • they oversee how payment systems work, so the way checks are cashed, the way credit card and online transactions take place;
  •  they are the regulators of banks in the U.S., so they’re the ones who go in and audit banks to make sure they’re not breaking any laws and
  • The most visible function is that they’re responsible for moving cash around.
 
 

For most of us, that’s the fascinating part of what they do. Every day of the week, shipments of currency come from the United States mints to the Federal Reserve Bank. The Fed then ships that currency out to the banks that need it. While the larger bills are transported by armored car every day, the $1 bills are packed into unmarked semi-trailers and driven to the building to prepare them for distribution.

I guess it’s not much different from shipping a truckload of iPhones to a warehouse, but somehow it SEEMS riskier that they do that.

On the flip side of things, the Fed gets deliveries of cash from the banks, which is counted and bundled for re-distribution. This is also the step that includes pulling old and worn bills out of circulation. One of the most surprising things I saw was how little wear a bill needs for it to be taken out of circulation. Most of the bills in your wallet are probably not going to pass.

About $17 Million in currency is destroyed every day at the Chicago Fed, which is one of 12 Federal Reserve Banks. The Money Museum even gives you a small bag of shredded money as a souvenir, which contains the remnants of currency equal to about $370. One of the more interesting facts about this shredded currency is that until the mid 20th century, the shredded bills were burned, but because of the toxic chemicals used in the ink, they had to stop doing that.

 It’s now shipped off to special landfills for toxic materials. Kind of makes you worry about handling it every day, doesn’t it?

A Personal Tour

I had the pleasure of getting a more personal tour, including a trip to see the money sorting and counting machines (through a thick glass window, of course), but sadly the machines weren’t operating that day.

 
USA Federal Reserve
 

Those functions are visible from an additional section of the Museum that was closed off in 2001, so not many people get to visit it.

 
 

My other favorite part was looking at the high denomination currency that’s no longer in circulation. One display has a $10,000 bill in it, along with several other bills from the 200-ish years of American money printing. The 10k bills were printed until the 1940s and discontinued when it became apparent that virtually all bills above $1000 in denomination were being used for criminal purposes.

 Just over 300 of the bills survive, most of which are in the hands of collectors. About 9 years ago, one of them actually arrived at the Fed through normal banking channels! Someone had gotten hold of it (perhaps stored in a box in an attic somewhere), taken it to their local bank and deposited it. With a quick bit of research, they’d have discovered it was worth close to 10 times that to a collector.

 

 

I’d love to make a few suggestions to the guys at the Money Museum as improvements, but since this is solely for PR (admission is free), I’m sure they are limited in how much they invest in the tour. Although considering the constant saber-rattling in Congress about the Fed, maybe they could use a bit stronger PR push.

One of my biggest pet peeves with 90% of museums is that no one really thinks about photos. Placement of light fixtures to minimize glare, setting up obstruction free angles and allowing guests the chance to pose without impeding traffic are critical factors for any museum and most of them don’t think that through.

Re-open the closed section of the tour. Money counting and shredding is one of the more fascinating things that happens at the Fed and no one gets to see it. I get it. 9/11 happened. But the security checks and procedures keep out bank robbers, so I’m sure they can be effective for other people, too.

Tell some stories. Interactive displays are all well and good, but you’ve got an asset like Jerry who has hundreds of stories in his arsenal. I’m the only one who heard any of them. Everyone else just heard him introduce the video and rattle off a lot of facts and figures.

 
 USA Federal Reserve VisitUSA Federal Reserve Visit
 

Stories = excitement. Spend a little money and create a new video to share some of these stories in the context of explaining what the Fed does.

All unsolicited advice, of course, but I found the place fascinating and woefully under-utilized. As an average tourist, there just wouldn’t be a lot to hold my interest without some upgrades.

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