WHEN WAS the last time that you had any need for a $100 bill or perhaps a $50 bill? Indeed, most purchases that Americans conduct over $20 are in the form of a check, wire transfer, credit or debit card. This begs the question, who has the need for the $100 bill?

The answer is clear — the underground economy and criminal economy thrive on paper cash, especially the $100 bill. Drug dealers, criminals, terrorists, illegal immigrants, smugglers, human traffickers, tax evaders and corrupt government employees all rely on paper cash, especially the $100 bill.

Because paper-cash transactions are non-transparent, anonymous and untraceable; paper cash has allowed criminal activity and the underground economies to thrive. In fact, the payment of choice by drug cartels and terrorist organizations is the $100 bill because it is easy to store, launder and transport. Most of the $530 billion (U.S. dollars) in $100 notes is held overseas, and much of this paper cash is held by criminal and terrorist enterprises, as the $100 note has become the international criminals’ medium of exchange.

Additionally, adversary countries, drug dealers, organized-crime syndicates and terrorist groups are actively counterfeiting and passing fake $100 bills worldwide. North Korea and Iran have created near-perfect $100 replicas (the “supernote”), making the need to retire the $100 note imminent.

Because 100s are difficult to change, and it is risky and unnecessary for the law abiding American to carry or store; the functional use for the $100 bill has been declining in the lawful economy while its demand in the underground economies is booming.

Therefore, the time is ripe to demonetize the $50 and $100 bill. Whether it is a congressman caught with $90,000 in $100 bills inside his freezer, a CIA employee exchanging classified secrets for bags of $100 bills, a Mexican drug kingpin with his stash of C-notes totaling $205 million, armed robbers searching for $200,000 in a pro-football player’s Miami home, a serial bank robber demanding $50s and $100s, a Defense Department official receiving $100 bills from the Chinese in exchange for military secrets, or a terrorist exchanging a suitcase of $100s in exchange for a vital ingredient for a nuclear weapon; paper cash, especially the $100 bill, is the conduit that conceals, subsidizes and fuels rampant criminal and immoral activity.

By simply demonetizing the $100 bill, we can do more to undermine terrorist and other criminal activity without any expense to the taxpayer and no harm or loss of life to law enforcement and our troops. In fact, it would be a peaceful and nonviolent method for preventing crime, drugs and terrorism and will assist law enforcement in their crime-solving efforts.

Additionally, it could create a windfall for the U.S. If the U.S. retired the $100 and $50 bill; drug, terrorist and other criminal organizations would be left holding worthless paper or be smoked out of hiding if they attempted to redeem the billions of dollars in cash. In doing so, much of their ill-gotten wealth could literally be transferred to the U.S. Treasury overnight and perhaps redirected to spur the lawful economy (tax rebates, infrastructure, health insurance, etc.).

Maybe we can let the terrorists, criminals and drug dealers help pay for the “stimulus package.” This potential windfall does not include the hundreds of billions in tax dollars evaded annually by the criminal and underground economies. The $100 bill (along with paper cash) has allowed crime and drugs to become tax-free businesses, and this tax burden must be borne by the lawful economy.

In any scenario, their illegal operations would be disrupted, if not crippled if we demonetized the $100 and $50 notes. Without launching one missile or discharging one firearm, the United States could deliver a peaceful “knock-out punch” to crime, drugs and terrorism.

Compare this to the tremendous damage, the loss of life, and the hundreds of billions of tax dollars currently being spent combating terrorism, crime and drugs. The 9/11 commission indicated that we should not allow sanctuaries for terrorists. Paper cash and the $100 bill has created a money sanctuary for terrorists, drug dealers, and criminals. Stopping the cash flow amongst these groups is essential to winning the war on crime, drugs, human trafficking, and terror. President Bush has said that he is open to new ideas in the war on terror. The proposal to phase out the $100 bill not only appears to be a logical step, but a necessary one to help win the war on crime, drugs and terror.

In our efforts to find answers to our nation’s problems and recreate a safe, secure and more prosperous economy, demonetizing the $100 note can be a start and provide empirical results to study as our lawful economy continues to migrate from paper money toward electronic money.

David Gorman is the author of Cashless Money.