US troops in Iraq have apparently found as much as $656 million in US 100-dollar bills, hidden on a palace grounds in Baghdad. The cash was apparently transferred to the Bank of Iraq from the Bank of Jordan, and is said to appear genuine.

I'm not so sure. The Middle East is positively rife with extremely high-quality counterfeit US currency, believed to have been printed primarily by the governments of Iran and possibly its allies in Syria and Lebanon. (Some joke that, in yet another instance of the waning of America's industrial dominance, the US has dropped to number 2 or 3 in the world in the manufacture of US $100 bills.) Even if the alleged transfers from the Bank of Jordan were "legitimate"--in the sense of being properly accounted for at least that far--it would hardly be surprising if these bills' origins were of considerably more dubious origin. And the Iraqi government, with no doubt many thousands of trusting cash recipients, would be an excellent laundering route for illicit currency. (Then again, if this stash was intended for emergencies, rather than for general slush-fund use by the Iraqi ruling family, then clean, authentic currency might have been requested specifically as an extra bit of insurance.)

Of course, the US government is highly unlikely to say anything, one way or another; the Treasury folks hate to talk about just how much counterfeit American currency is out there, for fear of eroding worldwide confidence in the greenback. It's a huge problem, though, and the increasing speed with which the US Mint cycles its currency designs is only a stopgap measure.

Fortunately, cash is only a tiny fraction of the total value of US-dollar-denominated financial instruments. The main problem is abroad, where banks are less trusted, a greater fraction of economic activity is "underground", and (American) cash is thus correspondingly more popular as a safe store of value. Hopefully the spread in the reach of the Internet will eventually make it easier for people around the world to avail themselves of trustworthy non-cash financial instruments, wherever they are, and cash can then become a sufficiently small fraction of overseas US-dollar transactions that even a rogue government with the right kind of printing equipment would have little impact on foreign dollar holdings.