How the Fed Distributes Billions of Dollars in Cash

Summary

Odd Lots Podcast Summary
Episode Title: How a Fed Bank Distributes Its Billions of Dollars in Cash
Release Date: February 13, 2025
Host/Author: Bloomberg's Joe Weisenthal and Tracee Alloway

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Introduction: An Exclusive Tour of the Federal Reserve Bank of Chicago

In this special episode of Odd Lots, hosts Joe Weisenthal and Tracee Alloway venture into the rarely seen depths of the Federal Reserve Bank of Chicago to uncover the intricate processes behind the distribution of billions in U.S. currency. Joined by special guests, including Austan Goolsbee, President of the Chicago Fed, and Olympic skier Mikaela Shiffrin, the episode offers listeners an unprecedented look into the physical operations that sustain the nation's cash flow.

Entering the Vaults: Security and Transparency

[03:03]
Tracee Alloway sets the stage: “We're about to go to a place that not many people get to see. We're going deep into the vaults of the Federal Reserve Bank of Chicago to tour its cash operations and get an inside look at how money is actually distributed.”

Austan Goolsbee emphasizes the significance of the Chicago Fed within the Federal Reserve System:

“We set up a system in the United States with 12 reserve banks around the country because in 1913, as today, people were deeply uncomfortable with the financial system being run exclusively by New York City and Washington D.C. So they wanted input from all around the country.”
[05:24]

The hosts navigate through multiple security checkpoints, highlighting the stringent measures in place to protect the vast sums of money handled daily.

The Cash Processing Workflow

Receiving and Counting Cash
Upon entering the transfer area, Joe Weisenthal remarks on the sheer volume of cash:

“There is money everywhere.”
[12:49]

[13:00] Mikaela Shiffrin provides insight into the initial handling:

“We open the bags and make sure we have the correct amount of bundles in each bag. A bundle is 10 straps of 100 notes, or 1,000 notes per bundle.”
She explains the meticulous process of verifying and accounting for each bundle before it's stored or redistributed.

High-Speed Sorting Machines
In the high-speed processing room, the duo hears the rhythmic sound of machines sorting currency. Mikaela Shiffrin describes:

“The currency goes into the machine and it's singling those notes... pulling those notes at a rapid pace and sending them singly through the machine.”
[16:38]

These machines perform rapid assessments to determine the fitness and authenticity of each bill, ensuring only quality currency remains in circulation.

Maintaining Currency Integrity

Automated and Manual Checks
Mikaela Shiffrin details the dual-layered inspection system:

“The machine will cut the straps off and then take each individual note, run it through our sensors... Any items that are rejected on the machine will go to a secondary process where the operators handle notes by hand.”
[17:54]

This combination of automated technology and human expertise ensures that counterfeit or damaged bills are effectively identified and removed from the system.

Lifecycle of a Dollar Bill

[25:54] Austan Goolsbee outlines the journey of a dollar:

“The Bureau of Engraving and Printing prints the money, ships it to the reserve banks, it circulates through ATMs and banks, and then returns to the Fed for processing when needed.”
[26:11]

Lifespan Variations by Denomination
Mike Kepler shares fascinating statistics on bill longevity:

“A $1 bill lasts an average of 6.6 years in circulation, whereas a $100 bill can circulate for up to 22.9 years.”
[27:12]

Security Measures: Protecting the Vaults

The Chicago Fed's vaults are portrayed as imposing and secure:

“Each door weighs like 80,000 pounds and you have to drop the floor to actually be able to open and shut them.”
[21:18] Joe Weisenthal
Austan Goolsbee humorously likens the vault controls to the bridge of a ship: “It's got kind of a master and commander ship wheel feel to it.”
[21:52]

These measures ensure that only authorized personnel can access the vast stores of currency.

The Importance of Cash in a Digital Age

Resilience and Accessibility
Mike Kepler underscores the enduring necessity of cash:

“Think about things like hurricanes or weather-related events or power outages where electronic payments don't work... Cash is extremely important.”
[10:06]
Austan Goolsbee counters the notion of a cashless society by highlighting: “Currency in circulation as a share of GDP is over 10%, double what it was in 2008.”
[10:44]

The hosts discuss real-life scenarios where cash remains indispensable, reinforcing its continued relevance despite the rise of digital payment systems.

Conclusion: A Deeper Appreciation for Physical Currency

As the tour concludes, Tracee Alloway reflects on the experience:

“I will never look at cash the same way again. I will annoy everyone that I know by telling them which Fed bank their money came from.”
[28:17]

Joe Weisenthal adds a personal touch:

“How many people actually get to say they've seen billions of dollars in cash without doing something illegal?”
[29:22]

The episode wraps up with the hosts expressing gratitude to the Chicago Fed staff and acknowledging the intricate balance required to maintain the nation's cash supply.

Notable Quotes

• Austan Goolsbee on the Federal Reserve System's foundation:

  “We set up a system...because people were deeply uncomfortable with the financial system being run exclusively by New York City and Washington D.C.”
  [05:24]

• Mikaela Shiffrin on processing cash bundles:

  “A bundle is 10 straps of 100 notes, or 1,000 notes per bundle.”
  [13:00]

• Mike Kepler on the importance of cash:

  “Cash is extremely important... A third, very close third for payments.”
  [10:03]

• Austan Goolsbee on currency circulation:

  “Currency in circulation as a share of GDP is over 10%... four times higher as a percent than it was 40 years ago.”
  [10:44]

Final Thoughts

This Odd Lots episode demystifies the complex and secure processes behind the Federal Reserve's cash operations. By blending technical insights with engaging storytelling, Joe Weisenthal and Tracee Alloway provide listeners with a comprehensive understanding of how physical currency remains a cornerstone of the American economy.

---

For more insights into finance, markets, and economics, tune into Odd Lots every Monday and Thursday on Bloomberg.

Transcript

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[Tracee Alloway]

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[Tracee Alloway]

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[Joe Weisenthal]

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[Austan Goolsbee]

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[Tracee Alloway]

Award hey there Odd Lots listeners. It's Tracee Alloway and Joe Weisenthal. We are very excited to announce that Oddlauts is going to Washington.

[Joe Weisenthal]

That's right. For the first time we are going to do a live public Odd Lots recording in our nation's capital. That's going to be March 12th. It's in Washington D.C. at the Miracle Theater and guests will be announced in the coming days. But in the meantime you can find a ticket [e-mail] oddlots Bloomberg Audio Studios Podcasts Radio news.

[Austan Goolsbee]

Go forward until the other door shut.

[Mike Kepler]

And there's gonna be one more we gotta go through. So come on in.

[Tracee Alloway]

Oh, wow. You could definitely get trapped in here.

[Austan Goolsbee]

This is the trap. And everyone must come in and the door must shut.

[Tracee Alloway]

Very well.

[Austan Goolsbee]

Now we can go to the next door.

[Joe Weisenthal]

Deep underground. Coming through. Elevator. This sort of monochrome quietness, the uniforms, this kind of reminds me of Severance little bit. Has anyone made that observation before?

[Tracee Alloway]

Hello, and welcome to another episode of the Odd Thoughts podcast. I'm Tracy Alloway.

[Joe Weisenthal]

Is this the one where we get severed? Tracy, my name is Jill Wiesenthal and I freely consent to being severed.

[Tracee Alloway]

Joe. We are not getting the severance procedure, but we are about to go to a place that not many people get to see. We're going deep into the vaults of the Federal Reserve bank of Chicago to tour its cash operations and get an inside look at how money is actually distributed.

[Joe Weisenthal]

All right.

[Austan Goolsbee]

Yes.

[Joe Weisenthal]

Okay. Welcome to Cash. In this episode, we take a walk through the basement of the Chicago Fed and we learn all about how the central bank processes and delivers cash. Cash operations, while not, quote, highly classified, like in the inner workings of the office and the show Severance, they're well beyond the public eye for obvious reasons. So this is a rare look or a listen, I guess, at the inside.

[Tracee Alloway]

Yeah. And you're not actually allowed to take any pictures or videos inside the vaults, so an audio format actually does pretty well here. And this is all really interesting because we're used to thinking about the Fed in terms of monetary policy. Raising or cutting interest rates to try to keep inflation in check and unemployment low. And there's stuff like bank regulation. Of course, we talk a lot about that on the show. All of that can feel very theoretical, but there's this very physical side to the Fed as well.

[Joe Weisenthal]

That's totally right. The cash in your wallet has got to come from somewhere. Right. And a lot of it comes from the Fed. Or at least it moves through one of the 12 Federal Reserve banks. The Bureau of Engraving and Printing actually makes the money, and then it gets delivered and processed through for the Fed banks.

[Tracee Alloway]

And the Chicago Fed building itself, I mean, it kind of looks exactly like how you might picture an old fashioned bank. It has these giant, beautiful neoclassical columns on the outside and inside. Inside is where the magic happens.

[Austan Goolsbee]

We set up a system in the United States with 12 reserve banks around the country because in 1913, as today, people were deeply uncomfortable with the financial system being run exclusively by New York city and Washington D.C. so they wanted Input from all around the country. And one component of the job is monetary policy like we talk about all the time.

[Joe Weisenthal]

That's Austan Goolsbee, president of the Chicago Federal Reserve bank. And you've probably heard him on the podcast a couple of times before. Very recognizable voice. And he's usually, you know, talking about the macro environment, monetary policy, things like that.

[Tracee Alloway]

But now you're going to hear him talk about something very different. Being the bank behind the banks, the one that actually provides them with cold hard cash.

[Austan Goolsbee]

We're also a real live, working bank and we got 171800 employees. We are a bank, two banks, and they have a master account. We pay interest on their deposits into that account, which are bank reserves. And we provide Fed wire. We do ach direct deposit. We do Fed now. And one of the things we do is cash. It's one of the Fed financial services. And so if one of our member banks wants cash for their ATMs, they'll send in and say just like you, in your account, you go down the atm, you take some cash out. They say we want cash to put in our atm, so take that out of our master account. They send a Brink struck over here and we can they. They place an order, we count it out, we give it to them. If they have too much currency, they send it to us in the same Brinks truck. We take it in, we run it through machines, we count it, we pull out anything that's been signed or somebody spit on it or you know it's dirty and shred it. We process it, put it in our vaults, send it out the next day and we get a bunch of shipments of brand new money from the Bureau of Engraving and Printing. So it's a very live operation and you're going to see it. There are a lot of people work there, there's a lot of machinery and it's pretty neat.

[Joe Weisenthal]

Pretty neat is putting it mildly because it turns out that Austin loves giving the tours of the cash shop. Something that was totally evident while we did it. I think most people in finance and economics love money, but Austin really loves money.

[Tracee Alloway]

Yeah. So join me and Joe and Austin on this special edition of Odd Lots as we follow how money actually moves through the Federal Reserve System. We are standing in the lobby of the Chicago Fed building. There's a beautiful staircase and a balcony that looks down on this gorgeous atrium. Apparently there used to be machine guns mounted up there and now there's security guards at the entrance, the Fed's own.

[Joe Weisenthal]

Police force, and as Austin mentioned earlier, the Chicago Fed was established in 1914, and back then investors didn't have much reassurance that their bank deposits were, you know, actually safe. And after months of back and forth, Congress passed the Federal Reserve act establishing the Federal Reserve System and the 12 Reserve Banks that cover the entire country.

[Tracee Alloway]

And the Chicago Fed covers parts of Illinois, Indiana, Wisconsin, Michigan and the state of Iowa. And, and as we've said before, we are used to talking about whether the Fed is doing a good job on things like inflation and unemployment, but we don't actually talk that much about its other big job, which is managing the money.

[Mike Kepler]

We know when we're doing a good job when you can go to an ATM and there's money in it. You can go to a grocery store and you can pay in cash and they have change to give you in currency.

[Joe Weisenthal]

Mike Kepler is an executive vice president of the District's cash operation and the Chicago Fed Central bank service area.

[Mike Kepler]

So essentially I oversee the full currency operation between our Chicago and Detroit offices. That includes everything from processing the currency on the high speed machines to paying out orders to financial institutions in our district and taking money in.

[Tracee Alloway]

Even though we live in a world that's full of digital payment systems, cash still plays a role in everyday transactions.

[Joe Weisenthal]

Cash is lindy.

[Tracee Alloway]

That's right, Joe.

[Mike Kepler]

It's extremely important. So, you know, think about things like hurricanes or weather related events or power outages where electronic payments don't work. In fact, I was in the store the other day and their credit card system was down. And fortunately I had cash in my pocket so I was able to jump the line and get my stuff and get out the door while others were kind of waiting for the credit card machine to pop back up. So it is very important. And not all consumers use just one payment type. So in fact, you can imagine in today's times, electronic payments, debit cards, credit cards are the primary two vehicles that folks use for transactions. But cash is a third, very close third for payments.

[Austan Goolsbee]

And look, the thing is, as the share of payments that are made electronically, mobile banking using cards rises, people have this tendency to say, oh well, there is no cash. I don't even see cash. If you go look and you can look on Fred, it's on there. Currency in circulation as a share of GDP is over 10%. And that's among the highest percent on record, or at least since the 1980s that you could find on Fred. That's double what it was in 2008. That's like four times higher as a percent than it was 40 years ago, and it's shockingly large per person. It's like $4,800 per person on average, in money.

[Tracee Alloway]

Joe, I don't know about you, but I always keep $4,800 in cash just in case I have to spontaneously buy, like, I don't know, a MacBook Pro or something.

[Joe Weisenthal]

Emergency lumber purchases. Maybe a thousand chickens for you.

[Tracee Alloway]

That's right.

[Mikaela Shiffrin]

Hi. Hi, Tracy. Hi, Tracy.

[Joe Weisenthal]

Amy.

[Mikaela Shiffrin]

Nice to meet you. Hi, Joe.

[Joe Weisenthal]

Great to meet you.

[Austan Goolsbee]

You can meet aaa. The amazing Amy Alvarado.

[Mikaela Shiffrin]

Welcome to Cash. We're glad you're here.

[Tracee Alloway]

Getting into the basement, where the Chicago Fed's cash ops actually are, is a process.

[Austan Goolsbee]

There's a lot of cameras, there's a lot of security, and there's a lot of rules. So don't go fishing in your pockets. Don't pull out your wallet while we're Right.

[Tracee Alloway]

So there's no putting your hands in your pockets, and you're not allowed to carry anything with you. After going down in the elevator, I'm not even sure what floor we're actually on. And we have to pass through multiple security doors before we get here.

[Joe Weisenthal]

But when we do get there, it's pretty cool. We're in the transfer area where money comes in and processing begins. And let me tell you, there is money everywhere.

[Tracee Alloway]

So we are standing next to a big box filled with cash. How much would be in something like that?

[Mikaela Shiffrin]

Full container of twenties is roughly eight and a half million.

[Tracee Alloway]

Wow, Joe, grab it quickly. No, don't.

[Mikaela Shiffrin]

You'll see a lot of money as we walk around today.

[Joe Weisenthal]

That's Amy Alvarado, the bank's vice president of District Cash operations. She oversees the entire process.

[Mikaela Shiffrin]

Our team will go in the room and check all of the bags as the armored carriers drop them off. We'll make sure all the bags are intact and sealed and everything. We'll count them. We're doing this bag count, and then we're signing off on it. That's when we would release the carriers, and that's the transfer process coming in.

[Tracee Alloway]

There's a long hallway stretching out in front of us. The walls are white, and there's rooms on either side that have large windows and glass doors. In fact, one of the most striking things about this place is just how much you can see.

[Joe Weisenthal]

Everything is see through, even the doors. Amy and Austin tell us that transparency is paramount to the security of the whole operation, given that they're dealing with, you know, cash.

[Mikaela Shiffrin]

A reason why these doors are clear is because we are never in the room with these carriers. At the same time, the carriers will come in onto the concourse. They will unload their currency bags onto rolling screens, as we call them. They will put them in the room, they will go back out the other side of the room. When our team comes in the room, they're supposed to watch us flip all those bags because it's still theirs at this point. And once we do that, we'll bring the work in. But when we transfer work back out to them, same process happens. We go in the room, we drop off the currency, we come out, they come in. So we all need to be able to see through the glass of the transfer process happening.

[Joe Weisenthal]

All of these security rules apply to employees, too.

[Austan Goolsbee]

People wear smocks. There are no pockets when they go in. The colors indicate who's doing what role. And we have very, very good hygiene in an accounting sense.

[Tracee Alloway]

And it's a tough job. Cash, as it turns out, is pretty heavy when you're piling up millions of bills, millions of physical bills, millions. The Chicago Fed processes something like 5.5 million pieces a day. And the actual currency value of that can be higher, depending on the denomination of the notes.

[Joe Weisenthal]

Once the money comes into the Fed, the cash is brought into a receiving room, which is down another floor of the basement. This room looks very similar to the transfer room.

[Tracee Alloway]

And getting cash into the Fed is just the first part of this process.

[Mikaela Shiffrin]

We would now open the bags and make sure we have the correct amount of bundles in each bag. And a bundle, as I'll point out, is what you see in these containers. They look like little bricks.

[Joe Weisenthal]

It's like a brick of cash.

[Mikaela Shiffrin]

Like a brick of cash. And it is 10 straps of 100 notes. So 1000 notes per bundle, or brick, as it looks like. And so we open those deposits up, we make sure we have the correct number of bundles. And this is where we're entering in the deposit ticket. And we're making sure that all of the accounting is correct at the bundle level. And then all of the work out of these rooms gets stored by denomination into containers where they will be stored in vaults until it's time for their piece count verification.

[Joe Weisenthal]

We make our way through more long stretching hallways until we get to a room where there are a couple of workers sorting through a bunch of cash. And most strikingly, a big machine that takes up most of the room with a computer on the left side and stacks of money neatly sitting on top of the tables. They call this a high speed room. That's the sound of cash bing. Pounded and measured very fine.

[Mikaela Shiffrin]

That is the sound of the currency going into the machine and it's singling those notes. So there's stacks of hundreds. Right. They're going into that machine and they're kind of getting stacked on a rake and it is really pulling those notes at rapid pace and then sending them singly one by one through the machine.

[Tracee Alloway]

So it's not quite fed money printer go burr but it is a high speed money processor gober.

[Joe Weisenthal]

Some people are going to be disappointed that the Fed is not literally printing the cash.

[Mikaela Shiffrin]

Certainly we're imaging every strap that comes in here on the currency so that information relates back to the banks that sent it in. So we have that information. If there's any disputes, we send certainly send that out to our financial institutions. The machine will cut the straps off and then take each individual note, run it through our sensors and it will make rapid decisions on whether it is fit for circulation or it would be shred or if it needs to have another look.

[Tracee Alloway]

So the sensors would be looking for things like if there's a mark on it or a tear or that sort of thing.

[Mikaela Shiffrin]

Correct. It's checking the fitness level level. So is it clean, is it soiled? It's checking the authenticity of it. It is checking that it's the correct denomination. So it's looking at all of those things very rapidly.

[Joe Weisenthal]

Does human judgment ever come into this or can it just be 100% machine determined?

[Mikaela Shiffrin]

So any items that are rejected on the machine will go to a secondary process where the operators will handle notes by hand. They will feed them again through another set of sensors and it'll take that read. But the end determination on things like counterfeits are our staff are trained on counterfeits. They're tested on counterfeits and they do make those decisions as they're looking at those notes. So as you can see, the large machine we talked about here at the end of the machine and this tube that's going up into the ceiling, you can see the fluttering in that clear window. Looks like a bank, a drive up tube or a pharmacy tube. That's where the shreds are exiting our floor to go to our briquetter. That's what it sounds like when they don't roll straight.

[Austan Goolsbee]

Notice the wall guards.

[Mikaela Shiffrin]

Yes. We have our bumpers for a reason.

[Tracee Alloway]

What happens to all the shredded money? I know you sell some in like the gift shop.

[Austan Goolsbee]

So we give it away.

[Tracee Alloway]

Oh, you give it away. Oh well we definitely want some. But like what happens to the majority of it here?

[Mikaela Shiffrin]

It's sent out for recycling Most Fed offices send it out to be recycled.

[Joe Weisenthal]

Recycled back into future bills.

[Mikaela Shiffrin]

No. Here it's turned into some sort of fuel. We send it out. And at other Feds, it's different. One of the Feds composts.

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[Joe Weisenthal]

Visit jdpower.com awards once the cash is all processed and sorted, it gets stored in the bank's vaults.

[Tracee Alloway]

And these vaults are huge. They look straight out of a movie. Think Ocean's eleven, but bigger.

[Mike Kepler]

So as we lock that in, you.

[Austan Goolsbee]

Got to lower the floor or the door cannot shut.

[Joe Weisenthal]

Each door weighs like 80,000 pounds and you have to drop the floor to actually be able to open and shut them. So you just sort of have to envision that if they tell you to.

[Austan Goolsbee]

Keep your hands and arms inside the car at all times, you do it in this one.

[Tracee Alloway]

The vaults are over 100 years old now, and it took over 220 trips to transfer the Chicago Fed's entire cash holdings from their previous location to this new site.

[Joe Weisenthal]

Wheel gets turned and locks it in place.

[Austan Goolsbee]

Yeah, it's got Kind of a master and commander ship wheel feel to it.

[Joe Weisenthal]

What's the combination to a market?

[Austan Goolsbee]

There's multiple. Now we turn the dials on the.

[Joe Weisenthal]

Combination so that way it sets it back for the next business day so no one can just come in and open it. As we walk around these halls down deep in the basement, there are screens showing live streams of outside of the Fed building. You can see the streets and sidewalks outside the bank.

[Tracee Alloway]

Why is that showing a video of the outside.

[Mikaela Shiffrin]

So that is what we call the windows to the world. Because as Austin mentioned, we are in the basement and we want to know if it's raining. And instead of calling Austin to ask him if it's raining, we have our own windows.

[Austan Goolsbee]

We don't have windows. We got a second basement, a third basement, and you want to know is it sunny or.

[Mikaela Shiffrin]

Okay, so we're going to come around the corner here, and then we're going to step inside. This is considered a working vault, so you can follow me in into the polls.

[Tracee Alloway]

Oh, my gosh.

[Mikaela Shiffrin]

And so what we have in here are two more paying rooms, just like we talked about outside. And then this vault, it has these working rooms. And then we have inventory. Storage. You can see some of our leadership is in here doing some work right now. But this is where we have the new inventory stored, as well as some fit inventory. Inventory and some of the orders that will go out tomorrow is where the.

[Tastytrade]

Smell is the strongest, right?

[Austan Goolsbee]

Yeah. You just smell that smell.

[Joe Weisenthal]

This is fresh money.

[Austan Goolsbee]

That's fresh money.

[Tracee Alloway]

Smell of fresh money in the morning.

[Joe Weisenthal]

This is probably what I remember most about the experience. The smell of new money. This is where the Fed keeps bills ready for distribution to banks.

[Tracee Alloway]

Yeah. In a room with millions of dollars in it, that smell is strong. This is the room where you really get to appreciate the physical aspects of money. Because as it turns out, dollars aren't just green. When they're all stacked up, you start to see there's a whole range of colors in there. And of course, there's that smell.

[Austan Goolsbee]

That's a good smell.

[Mikaela Shiffrin]

And it's funny for the longer you work here. There is a thing really about nose blind because.

[Joe Weisenthal]

Oh, I've heard you don't.

[Mikaela Shiffrin]

You don't really pick it up as much anymore as our visitors are always like, what is that smell?

[Austan Goolsbee]

Yeah, I went to the bureau engraving and printed. One of my quests was, where does the smell come in? Is it the paper? Is it the what? And there are big buckets of the green ink. And I took it. I was like, that's it. That's the smell.

[Tracee Alloway]

And this room is where the fit money, all the stuff that's been processed by the high speed machine gets paid out.

[Mikaela Shiffrin]

That machine creates fit inventory. And that's on the right side of the room. Here. On the left side of the room are there orders that they're going to be paying out tomorrow. So our allocator will pull the orders like a grocery list. Those orders get downloaded. We have a list of how many bundles they want of each denomination. We'll fill it like a grocery list. They'll put the inventory on the table and then the verifier will confirm blindly that count. We'll enter that work in. Once that count is balanced, they will bag it and tag it, put into their containers by armored carrier. And then that work will get stored in the vaults overnight. And tomorrow we'll be taking it up to where we do our transfer process.

[Austan Goolsbee]

Mike will have the exact numbers, but we pay out probably 140 million a day, 135 million a day, 135 million a Day. And we take in 100 million a day, 119 million a day. And then you say wait a minute, how can you pay out more than they get? It's because we get new money shipped in from the, from Bureau Engraving and Printing.

[Tracee Alloway]

And it all comes full circle. The Bureau of Engraving and Printing, which has facilities in Washington D.C. and Fort Worth, prints the money. They ship it to the reserve banks where this whole process takes place. And then those bills go out to banks, ATMs or wherever you're getting your cash money.

[Joe Weisenthal]

The life cycle of a bill is pretty interesting.

[Austan Goolsbee]

That's where the money is printed. They put it on pallets, they ship it to the reserve banks and we receive it. And you'll see it, it'll circulate for a few times. It will come back to the Fed for processing. As it gets spent, it goes to a bank, the bank puts it in deposit, they'll send it to us and say we got too much currency. Credit our deposit account. We'll count it, run it through the high speed machine. If it's too dirty, we'll shred it. If it's fine, we'll bundle it up, put it in a package and send it out to the next bank that needs more, more cash for their atm. And that's kind of the cycle. The money comes in, gets stuck in the vault, goes out the next day or whenever people want it. And it's supplemented by, by the new money that comes from Bureau Engraving and Printing.

[Mike Kepler]

In terms of a lifespan of a dollar bill or currency, it ranges somewhere from the $1 bill, I think lasts an average of 6.6 years out in circulation versus, as you can imagine, the hundred dollar bill less used, probably more of those people that keep it in their homes under mattresses or whatever that circulates every 22.9 years. So quite a bit of difference. But it varies based on the denomination.

[Austan Goolsbee]

There's supposed to be a strip. Yeah. You can see it's. It's green. If you put the UV light right up against it, it gets brighter, but there's a green strip. I don't know.

[Tracee Alloway]

I hope we end our tour at the Chicago Feds Money Museum, which is both fun and even though it's about money, it's about actually free to enter. And you can learn even more about cash.

[Joe Weisenthal]

Yeah. So if you're ever wondering which of the 12 Fed banks your money comes from, if you look at the bill, you see a big letter printed on each note on a $1 bill. It's just to the left of George Washington.

[Austan Goolsbee]

F. Who's F? That's Atlanta. This is Atlanta money. No wonder it's not. No wonder it's not there. So you can see the letter in the corner. Corner. That's the equivalent of the G. So B would be the second district. That'd be New York. C would be third district. So is that Philadelphia? I think it might be Philadelphia.

[Joe Weisenthal]

Each letter corresponds to the regional Fed that it passed through. So if you're wondering what the Chicago Fed is, that's G. That's Chicago money. So the Chicago Fed will put in an order with the Bureau of Engraving and Printing for new cash, and that money will be made and sent to the Chicago Fed.

[Tracee Alloway]

And let me tell you, Joe, I will never look at cash the same way again. I will annoy everyone that I know by telling them which Fed bank their money came from.

[Joe Weisenthal]

And with that, our tour comes to an end and we're thrown back out into the real cashless world. And we are blinded by the sun.

[Tracee Alloway]

Yeah, but we learned a lot. And how many people actually get to say they've seen billions of dollars in cash without doing something illegal?

[Joe Weisenthal]

All right, Tracy, I am ready for my waffles and dance party now.

[Tracee Alloway]

Let's go. Special thanks to Austan Goolsbee, Mike Kepler, Amy Alvarado, Mark Peters, and the staff at the cash operations department of the Chicago Fed.

[Joe Weisenthal]

This special look inside how the Fed stashes Cash was written by Tracy Alloway and Carmen Rodriguez. I'm Jill Wiesenthal, and together with Tracy, we co host the Odd Lots podcast. Carmen produced this episode with the help of Dashiell Bennett and Cale Brooks. Blake Maples is our sound engineer. Brendan Newnham is our Executive producer. Sage Bauman is the head of Bloomberg Podcasts.

[Tracee Alloway]

If you enjoyed this special Odd Lots episode, then please leave us a positive review on your favorite podcast platform. Thanks for listening. Don't miss the 5th Qatar Economic Forum powered by Bloomberg this May 20 to 22 live in Doha. With the 2030 end date of national visions in Qatar, Saudi Arabia, Abu Dhabi and Bahrain on the horizon, this year's forum will spotlight how choices made by Gulf heads of state and sovereign wealth funds could shift the global economy further. Join us in Doha this May request an invitation today@qatar economicforum.com.