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Re: e$ Signorage
>I believe money which is never redeemed back at the bank is called
>signorage in the currency biz. Whatever signorage *actually* is, Kawika
>Daquio of the ABA (B for "Banking"), the Fed makes $20 billion a year on
>it. Not much against a trillion dollar federal budget, but, hey, every
>little bit helps...
Seigniorage is actually the Government's interest income on all the currency in circulation. It's not obvious, but it's true, that the Fed collects the "float" on dollar bills you carry in your pocket, exactly as American Express collects the float on traveler's checks.
And, I don't know, call me crazy, but $20 billion sounds like a lot of money to me.
--
James Gleick
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