All of the worry about inflation and the Fed’s ability to control it has put this organization under the microscope. Markets react to their every move, and investors take cues from Bernanke for how they should position themselves. The Fed recently released its printing plans for 2013 to the effect of how much physical currency they will be printing and in what denominations. NPR has a great infographic for anyone interested in a visual representation [for more economic news and analysis subscribe to our free newsletter].
Now it should be noted that this printing is not tied to QE or any other policy, but rather just replacing old bills that are taken out of circulation. There has also been a trend to print a large amount $100 dollar bills given a jump in overseas demand. The Fed’s fiscal year runs from this month to September of 2013, and in that time nearly $473 billion will be printed in the following breakdown:
- $1′s - 1,792,000
- $5′s - 480,000
- $10′s - 313,600
- $20′s - 518,400
- $50′s - 246,400
- $100′s - 4,428,800
That totals out to about 7.8 billion bills being printed. To give you a better context, if you were able to stack all of 2013′s new currency (assuming a thickness of .0043 inches), you would have a pile nearing 530 miles; that’s the distance between Chicago and Memphis. And just for fun, if you were to line those 7.8 billion notes end to end (assuming an average length of 6.14 inches), you would have a line stretching for more than 750,000 miles; that’s enough to run 30 laps around the earth with some change on the end [see also Jim Rogers, Peter Schiff Rip Bernanke and The Fed].
When it comes to QE3, the numbers are a different story. Bernanke’s plan will call for $480 billion in printing to inject into the economy for the entirety of 2013, assuming it continues for the whole year. That’s a few billion more than they are printing to put into circulation, displaying just how significant open-ended easing can be. Commodity investors have been foaming at the mouth as the prospects of a debased dollar make a number of hard assets enticing buys. Some have been pointing to gold as the go-to asset, while others have boasted the benefits of agricultural commodities. Either way, investors will want to keep an eye on the printing habits of our Fed in the coming years.
Disclosure: No positions at time of writing.