Here is a question for all those with a good grasp of economics.
Say you were able to produce counterfeit money so real that it couldn’t be identified by any means less than analysis in a lab. And it is so realistic that it would never raise suspicion causing it to be tested.
Now that we’ve set up the fantasic hypothetical, here is the question. How much of this counterfeit cash would you have to produce before there was a detrimental effect on the economy?
From that link I particularly liked this part, “German spy Elyesa Bazna (codename “Cicero”) was paid with counterfeit Pounds and unsuccessfully sued the German government after the war for outstanding pay.”
As to destabilising an economy like the US with counterfeit currency I’d think it’d take a helluva a lot. I forget the actual numbers but something like only 15% of the money in the US is in the form of currency. The rest is all just on the record books at banks and such. So, even if you doubled all the currency out there I am not sure you would get more than a moderate spike in inflation (or would it be deflation…prices rise because of lots of money but each dollar is worth less?).
Anyway, it would be a huge task of literal boatloads of money to undo the economy of the US.
It would depend too on where the money goes. If you are going to put it in a checking account, then it would quickly multiply as banks lend 85% of it out, someone buys something else and puts it in the bank, who lends 85% of it out, you get the jist…
If you are going to stuff it in a matress, it wouldn’t have much on an effect.
It’s all a matter of degree. Technically a single counterfeit dollar bill would be detrimental to the economy by creating a minute amount of inflation. Realistically, there’s over $650,000,000,000 in currency circulating; any amount one individual could fake would be negligible.
There is about $730 billion in currency in circulation, with about 2/3 of that held outside the US. Depending on what you count, the total money supply is $1.3-9.2 trillion, and fluctuates $10-20 billion per month on its own. (source: Federal Reserve Bank of NY.) So, unless you get up into the billions of dollars, you’re not going to make an appreciable difference on the U.S. economy as a whole - and people are going to wonder why you have a tractor trailer filled with $100 bills parked in front of your house.
On the other hand, you’ll probably be spending much of this money in a fairly small geographic area, probably smaller than a city. So then we have to ask how much currency there is in a typical city, to see how much would be needed to have a detrimental effect locally.
From the above link: … which caused the Bank of England to withdraw all notes larger then £5 from circulation, and not reintroduce the denominations until the early 1960s (£10), 1970 (£20), or 1980 (£50).
So what did they use instead? Plastic money was not so common these days, I think.
Five quid was a lot of money back in those days, not that much different from USD 100 these days. Back around 1950, my parent bought a house in England for 1,700 pounds – that would be 340 five quid notes. What kind of house can you buy for USD 34,000?
IIRC, one of the Fletch books (movie version starred Chevy Chase, for you youngsters) had a guy placing bags with $100,000 of top quality counterfeit cash on the doorsteps of entire small towns, trying to destroy the us economy.
He’s eventually thwarted by the US responding by releasing an emergency stash of new currency – I think it was blue instead of green – and requiring all outstanding green cash be converted to the new blue stuff.
Ooh, just remembered… wasn’t counterfeit cash. A guy figured out a way to catch the money that was going to be incinerated at the mint, replaced it with blank paper that burned the same, and hoarded all the “destroyed” cash for years til he had enough to release and cause massive inflation.
Different approach, same end goal. Sorry if the details are wrong, I read this ages ago.
Yep. Between what are known as Currencty Transaction Reports, where banks are required to submit reports to the government on single-day cash transactions in excess of $10,000.00 and Suspicious Activity Reports, where the banks tell the Feds that “this customer might be up to something - they deposited
$9,000 cash yesterday and $5,000 cash today” how would you get a lot of dough out into the world other than trying to pass your phony baloney at every grocery store, dry cleaners, gas station, etc. you go past in an overwhelming multitude of relatively tiny transactions?
I think the real damage you could cause by a LOT of counterfeit cash is not so much to the actual economy but rather to people’s faith in money.
If you think about it money is a funny thing. It has no intrinsic value. It is only “worth” something because everyone agrees it is worth something (which is encouraged and supported by the government which stand behind it). In a smashed economy such as Germany post WWI the German mark was trading at an absurd amount of 4.2 trillion marks to the dollar…effectively worthless (cite).
If enough counterfeit money appears to make people think twice about accepting it you could cause damage to the economy even if the actual amount floating around was not near enough to do any actual damage to the overall economy.
Exactly my quandry. If the counterfeit was so real that it didn’t get caught, and you didn’t get nabbed on the 10K a day rule at the bank…thus your fraud never being exposed, there wouldn’t be any detrimental effect on people’s faith in the economy.
It seems like you could get away with this for years. And when it finially was discovered, it seems it would almost be more harmful to people’s confidence to make it public instead of just waiting for the fake bills to die a natural death through wear and tear…provided of course you weren’t still making the fakes.
If it is to make really good counterfeits and never get caught so you essentially make yourself rich than I doubt the economy as a whole would even notice. That of course does not mean the Secret Service would lay off.
If your goal is to destabilize a currency then I suspect you’d want it to be good enough to get a bunch in for awhile and then have it found out that it existed so people scrambled around wondering if they were now stuck with funny money and by that fashion causing a currency crisis. However, since most people keep the vast majority of there money as an entry on account ledgers in banks and such even then I am not sure much damage could be done. Just saying if any damage were to be done I think it’d take the route of undermining people’s faith in the money in their pocket being any good rather than actually causing hyperinflation in the economy as a whole cuz of loads of the stuff floating about.