Is It True Only Criminals Use High-Denomination Notes?

The belief arose in the late twentieth century that only criminals use high-denomination banknotes. To a certain extent, I think this has spilled over into crypto. Maybe whenever someone is able to move a lot of value anonymously, the immediate assumption is that it must be resorted to by the criminal element.

The link between high-denomination notes and criminality was current in the Fed by the late 1960s and used as an argument against continuing denominations above $100. However, there was no evidence supporting this that I ever came across. And, in the 1930s, it appears to have been common knowledge that criminals and bootleggers largely used small denominations to avoid notice.

So, what happened between the 1930s and the 1960s? One factor was the rise of checking and then credit cards. These would tend to be used for high-value purchases, replacing cash, at least by middle class consumers (like the people working for the Fed and the banking industry). So, the perception arose that only the less savory parts of the populace would use high-denomination bills. Meanwhile, a great many people (according to circulation figures) stuck with high-denomination bills, using them routinely for major purchases or a store of value.

This bias, I believe, was combined with the experience of the World War II black market in the US. Given wartime rationing, the black market for everything from meat to gasoline took off. So, I think, the idea arose that there was a lot of money in the US that needed to be in cash to avoid detection. And, combined with the bias above, this meant for the Fed that high-denomination notes were used only by criminals.

Of course, this belief is still circulating. In Europe, high-denomination Euros have disappeared, while some call for the elimination of the $100 bill, all in the name of thwarting crime and without any solid evidence that such a move would be effective. And, we hear these types of arguments about Bitcoin all the time.