See where ripped, damaged money goes to die — and what they do with it

The $5 bill in your wallet. The $20 bill in the cash register. The $100 bill at the bank. You may be using less cash day-to-day, but some $2 trillion of paper currency keeps the economy churning so that people can exchange, handle and spend money with ease.

But wait, does that $20 bill have a tear down the middle? Did someone take a Sharpie to that $100 bill?

If so, it is time for the Federal Reserve to step in. It is one of the central bank’s lesser-known, but hugely significant roles: inspecting millions of paper notes every year so you can actually use all the bills that wind up in your wallet.

On a July afternoon, we watched the process unfold at a Baltimore facility that is part of the Richmond Fed. The various steps link together armored carriers, experienced staffers, high-velocity machines and, for the bills that meet their end, a dumpster full of shredded, used-to-be-money confetti. (We’ve lined up some faulty bills so you can test your knowledge here, too.)

The journey takes place almost entirely behind the scenes, securely shielded from public view. When run smoothly, it makes it possible for us all to use cash without a second thought. It is a bedrock of the economy. And here’s how it works.

The trucks are like middlemen between banks ready to have their cash inspected and the Fed, which receives the bills through high-security doors and windows.

Inspection teams take the cash out of sealed plastic bags and manually count the number of “straps” and “bundles” — 100 notes per strap, 10 straps per bundle. From there, the money is packed into locked carts and wheeled down the hall. At the Baltimore facility, the bills are either headed for a seven-story vault (equipped with a crane system) for inspection later on, or straight for processing.

One denomination at a time, inspection teams load bills onto the belts of high-velocity machines.

Inside, sharp scanners search for anything amiss: tears, markings, stains, counterfeit labels. The bulk of the bills pass the test.

Sometimes, it is obvious when a bill has run its course. But with some bills, you have to look a little closer — or get a state-of-the-art scanner to take a second look.

See if you can spot the bills that are not fit for use.

You got it! The tears, doodles and discolorations on these bills mean they did not pass your test.

To fill currency orders from banks, staffers use a crane to pull bundles from the vault, much like an Ikea or Home Depot warehouse. Or they will draw from the cash that was just inspected and repackaged.

Then the bundles are packed into locked carts and wheeled back out to the armored carriers, where they head back out into the world.

The rejects stay behind.

Some immediately head to a shredder that blitzes them into pieces the size of a grain of rice.

A thick plastic tube then suctions up those tiny money bits and carries the remains out of the machine and through a winding series of pipes, which pump the shredded cash into a massive brown dumpster outside the building. (Others that look questionable and get a second look at a “reconciliation station” will also ultimately be destroyed.)

Various Federal Reserve banks recycle the shreds in different ways. Some use it for compost, building insulation or cement. Some use it to generate electricity. Others turn it into trinkets, like snow globes or piggy banks filled with shredded money — a second act for that blemished bill.

Editing by Jayne Orenstein, Haley Hamblin, Betty Chavaria, Karly Domb Sadof and Mike Madden. Copy editing by Dorine Bethea.