Currency and the Subterranean Economy

Currency holdings have always fascinated the public. The fascination is only heightened by the lack of hard data that confines investigators to conjecture in explaining currency holdings. Growth in the number of checking accounts and the expanding use of such currency-saving instruments as credit cards have often led to predictions of a "cashless society." Yet along with the growth in credit cards and checking accounts there has come a large increase in currency holdings. Currency in circulation has increased nearly 13 times in the past 40 years, boosting per capita holdings to $510. Even casual observation indicates that $2,000 in currency is more than a family of four needs for ordinary transactions.