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

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.