$340 you’re sitting on without realising
AUSTRALIA has billions of dollars worth of buried treasure. It would be really helpful if we could find it.
The Reserve Bank of Australia has printed $76 billions in banknotes and, in a report this week, it announced 5 to 10 per cent of them were lost.
The report found between $4 billion and $8 billion - or about 5 to 10 per cent of all banknotes - had been "lost, destroyed, forgotten about" or were sitting in money collections.
"To put this in perspective, this corresponds to around $170 to $340 per person," the RBA stated.
The money can't all have been destroyed. Some of it must literally be forgotten about. If you bought an old house with a shed out the back, there could be millions in it. A second-hand car? It might have a few thousand stuffed in the spare-wheel well. There must be thousands of locations in Australia where life-changing fortunes are sitting, undisturbed and unnoticed.
MONEY MAKES THE WORLD GO ROUND
The mystery of the missing banknotes has been going on for some time now. The RBA prints them and then - whoosh - they are never seen again.
Many banknotes are in circulation. They get spent and handed out in change. They go through many people's pockets. Those are mostly $5, $10 and $20 notes. Cash use is declining but those notes are still being used.
This next chart shows what proportion of payments are cash payments for different types of people. If you live in the country, are female, have lower income and are over 65, you still probably use cash a fair bit. The rest of us use it much less.
The RBA is pretty confident where those banknotes are because the fives, tens and twenties get worn out within a few years and the RBA has to replace them. (Banks send torn or damaged notes in and get fresh ones after shops deposit their takings.)
But $50 and $100 notes are different. Very few of them ever show up with signs of wear and tear. Where do they all go?
HOARDING AND THE BLACK ECONOMY
Many banknotes are saved up by people who don't trust banks, or who like to keep cash for other reasons. This cash isn't lost (yet) but it doesn't get spent or deposited in banks either. About 30 per cent of our banknotes are in these hoards of cash, both here and overseas.
A lot of cash is also tied up in the black market.
The RBA staff may be a bunch of nerds but they are not unaware of the existence of a vibrant drug economy. The weight of drugs taken by Australians each year is hundreds of tonnes, as this next graph - provided by the RBA boffins - shows.
To avoid leaving a trail for the police to follow, most drug dealers don't offer bank transfers. So drug transactions happen in cash and billions of cash go around in the drug economy.
Anyone who has ever had a cash-in-hand job (which the RBA calls "underground production") knows that is also a major use of cash.
"Our estimates suggest that between roughly $3.5 and $6 billion worth of Australian banknotes are used in the shadow economy, split between underground production ($2.5-4 billion), purchases of illegal drugs (around $1 billion) and storing the profits of criminal activity (up to $1 billion)," the RBA stated.
So a lot of the "missing" banknotes are explained. They get used, just not in ways the authorities get to see. But billions of dollars in banknotes have been missing so long they must be still utterly, genuinely lost. Some of the cash will have been lost offshore, some will have been destroyed. But billions of dollars worth must still be here.
The economic effect of turning up this money would be positive. The government printed that money for a reason and if someone earned it but never spent it that's not how the economy is meant to work. Aussies getting rich and spending more money is exactly what we want. It would be a (small) boost to inflation and our national wellbeing.
WHERE TO LOOK?
I'm not saying you should go down to the tip and start cutting open every mattress you see. Hiding cash in a mattress is too obvious.
Old freezers could be lined with fat stacks of cash. And old bookshelves. And old sock drawers. Don't chuck that old furniture on the bonfire yet, especially if it belonged to a cranky old relative who distrusted banks.
Some of the missing cash is probably the old paper money. The RBA knows it printed $810 million in old $50 and $100 notes that have not come back yet. Paper money is still legal tender in Australia, although if it is nice and crisp it might have more value as a collector's item.
Now, please don't use this article as an excuse to go round to your grandma's house and rifle through her things. It's not polite. I'm just saying that if your great-uncle was a drug dealer, and he sadly passes away, my advice would be not to simply give away all his possessions to the Salvation Army.
Check the backs of cupboards. Look in the attic. Have a squiz in the backyard for places where the grass is a different colour and it looks like somebody may have been digging.
Because all that money is out there. Somewhere.