What would happen if someone secretly burnt & destroyed 500 million u.s. dollars?

It's the secret part that is important.

In "secret" millions on people take their pocket change and put it in a jar. This effectively takes it out of circulation, although, admittadly, only temporarily.

Does this have an effect?

Absolutely nothing.

For that little of an amount, it would have to be widely publicized for it to have any effect whatsoever. And even then the effects would be of a perceived nature rather than a concrete nature. Meaning; the Public's perception of the value of that money would far outweigh the actual value of one half a trillion dollars and the US dollar would be affected much more than it should have been.

Hope this helps.

The micro effect? Someone would be really pissed off.

The macro effect? It would have a minuscule effect on the U.S. money supply (only a small fraction of which is held in cash anyway), which maybe means a minuscule effect on demand for dollars - if anything would be noticed at all.

But it could cost the U.S. economy a lot more than $500M. If the money were to be deposited in a bank, the bank could loan it out. When you make a deposit, a bank only needs to keep a small fraction of your deposit. It can loan out the rest. So if the required reserve ratio for the bank is 25%, it could loan out $375M of $500M. And whoever it loaned the money to could put it in the bank, and that bank could loan out $281.25M. And so on.

In the end, it potentially costs the economy $2B ($500M/.25).

That is a good question. If we knew it was destroyed the value of the currency would increase very slightly. Being done secretly I would assume would take longer to reflect the change in value to the remainder of currency. If we could convince all the rich people in the world to destroy their money this $50 in my pocket would go a lot farther.

not much, it wouldn't effect the power of the dollar since it is practically worth less today, with the dieing economy, now if someone burned ten billion that may have a little effect. 500 million is easily hordes by change jars that may never return into circulation

Almost nothing.

About $9 BILLION in cash just went missing in Iraq, and few people even paid attention.

http://www.vanityfair.com/politics/features/2007/10/iraq_billions200710

It would make me angry! (along with many other people) ++