I was wondering why no “rogue states” (as we like to call “bad places” who like to bomb us) ever set up a massive counterfeiting operation of US currency, and then release that money into circulation to deflate our economy. Sure, our money is hard to copy (although I’ll bet that new dollar coin is easier than a dollar bill!), but it’s hard to make a huge bomb, too. Plus, if we can’t catch Osama we probably won’t catch his underground US Mint either.
If Saddam wanted to start printing fake US money, it would be quite hard to stop him. And instead of blowing up bombs, all he’d have to do is drop the money on times square on new year’s eve (or any other time for that matter). Drop millions of fake dollars off of a random building… or just gradually put it into circulation somehow. What could we do to stop them? We can’t send the cops in to raid their printing facilities… we can’t have INTERPOL do anything, so what would happen? Does anyone know if any anti-US countrires have ever tried this (or are currently doing it)? Financial terrorism.
Sure, a bomb is a quick way to “make a statement” but if one really wanted to harm a country (and of course the US could do the very same thing to any other country as well - why don’t we drop fake iraqi money on iraq?) causing massive inflation would seem to be a good idea.
Well, one thing we could do is redesign our currency to include new anti-counterfeiting features–like color-shifting watermarks, more microprinting, security threads, and so on. Reportedly, fears of foreign counterfeits (including a sophisticated counterfeit from the Middle East called the “superdollar”) was one of the things which drove the decision to introduce the new designs. See GAO/GGD-96-11: Counterfeit U.S. Currency Abroad: Issues and U.S. Deterrence Efforts, a U.S. General Accounting Office report reproduced on the Federation of American Scientists website.
Why do you think this isn’t being done? A substantial amount of American currency is held overseas (in nations where local currencies are unreliable) and estimates are that about a third of these overseas dollars are counterfeit. A lot of this counterfeiting is done for purely financial reasons but presumedly some is done as a political action as well. Germany counterfeited dollars during WWII. I’ve also read that the Iranian government counterfeited dollars during the seventies.
But realistically, it’s not that effective a tactic. Counterfeiting only hurts currency, and currency makes up only a small percentage of American money. Even massive counterfeiting doesn’t affect enough money to cause major inflation.
Actually, the Germans counterfeited British Pounds, in an effort to destabilize Britain. They printed tens, if not hundreds, of millions of pounds, in all denominations, and intended to flood them in through straw men and various industrial-level deals.
Fortunately, the plot failed for various reasons- the ships carrying the money were sunk, agents intercepted, etc.
As I recall, a sunken ship was discovered and explored years later, in which they found boxes upon boxes of waterlogged banknotes.
At the time, cash was far more prevalent than today- no one had a credit card, bank records were in paper ledgers, etc. And consider the already-strained nature of wartime money reserves… Such a huge (relative) volume of fake cash would have indeed destabilized the Pound and caused yet another serious problem for Britain to cope with.
On the OP topic- I don’t have a specific cite, but I did read that one of the reasons for the redo of the Dollar, involved the discovery of a large warehouse in Iraq which contained two printing presses, a vast quantity of almost-correct paper and inks, plates, and so on.
I believe there was a rough estimate that the factory- by comparing things like partial pallets of paper and empty ink barrels- had likely already produced between one and three hundred million in $100 bills.
The presses were, as I recall, surplus units from actual legit mints. As in they were the correct type of press for printing money, not a reworked lithographic unit or modified newsprint press.
[nitpick] Mints don’t use printing presses. They use blanking presses, and coining presses. But they make coins, not banknotes. Banknotes are usually made by private printers (the U.S. excepted). For instance, bank notes in Canada are made (on behalf of the Bank of Canada) by the Canadian Bank Note Company and the British American Bank Note Company.[/nitpick]
You’re right, of course. I had intended to state that the presses used engraved plates, not photolithographic sheets (as nearly all newspapers use today.)
However, as an anti-nit, the “United States Mint” produces both our bills and coinage.
They also were working on counterfeiting U.S. bills, but coule not come up with one that would pass as legitimate (the engraving on the U.S. bills made them extremely tough to counterfeit).
Britain also got wind of the plan and redesigned their currency, withdrawing the old notes from circulation.
The US economy is a HUGE thing. Sometimes when I hear about monetary policy trying to adjust our economy I think of it as being like a weatherman trying to adjust a hurricane with a blow-dryer or something (IIRC a University of Chicago economist won the Nobel prize in economics a few years ago suggesting that whatever the government does regarding economic policy really has little effect in the big picture [it might cause a temporary blip in financial markets]). The economy really is akin to a force of nature.
Anyway, dropping a few million on Times Square would do practically nothing to our economy (although it might start a riot).
Also, money is big and heavy. Sure, for most of us we never have enough money at once to notice this but think of the ream of paper you use to fill a printer. That’s 2 inches thick for 500 pages. If you printed small denomination bills that get into circulation easier (say $20’s) it’d take a stack over 16 feet tall to equal $1 million. Obviously you wouldn’t carry them stacked like that but it gives you an idea of how heavy such a thing would be (I don’t know how much that’d weigh but I bet it’d be very hard for one person to carry if it could be done at all). Now add in the multi-millions you want to flood the economy with and you’d need trucks and forklifts to move it around. Getting enough to the top of the World Trade Center (or whatever) to drop on New York and affect the economy as a whole would be a major undertaking that’d probably get noticed before it got very far.
To seriously flood the US economy with paper currency would take literal boat loads of cash. Sooner or later something like that would get spotted. The real Holy Grail of counterfeiting isn’t printing…it’s getting access to international bank record systems. Tell a computer somewhere you have $100 million instead of printing it. I’m sure it’s a bit harder than that but you get the gist.
Frankly, a bomb probably would be easier.
(As an aside…why would counterfeiters care about having to counterfeit the new, tough to counterfeit, US bills? The old bills are still good and to my knowledge they always will be. If counterfeiters simply continue to print old style bills what good are the new anti-counterfeiting bills?)
Just as an FYI, US currency is printed on special paper made from 100% cotton. Production and distribution of this paper is strictly regulated and controlled to deter domestic counterfeiting. If a printer is doing a job which requires this paper he must be able to account for the majority of the paper stock he purchased.
Iran and Syria have been counterfeiting U.S. (old style) $100 bills for a long time. It would appear as if Iran started the operation shortly after the fall of the Shah, when Iran quickly realized that they had no acceptable hard currency. Here is one blurb about it.
And here’s another soggy article that purports to detail how Iran did it. Whether it’s crap or not, it does echo the claims of a 20/20 expose I once saw that claimed that Iran purchased from Switzerland a printing press identical to that used by the United States (“Made in America,” my ass! Our money isn’t even made with American machinery.). The second article above claims that actual U.S. engravings were stolen; I think that’s probably bullshit. They can be spotted by U.S. banks, but other countries never got up to speed.
Supposedly, the counterfeit bills were used to pay off terrorists. As long as the bills stayed outside of the U.S., as they are likely to do overseas, they were usually considered legal tender.
I’ve seen movies… Lethal Weapon 4, for example, where they put the freshly counterfeited bills in tumblers with rocks to “wrinkle them up” to make them look old. So, as long as Old style bills are still legal tender, the new protections on the newer style bills will not really be the ultimate solution.
When i said “drop it from a building” i meant that in a sort of hypothetical, whimsical way. More realistically, i meant that if they printed a million $100 bills a day, and somehow injected them into our economy, that much fake money would eventually ruin our economy, after a while… especially if that money got into the hands of poorer people. They could have contests where everyone wins. E-mail SPAM that actually sends you the $10,000 for replying… stuff like that. Eventually it would ruin our economy.
Never having been to the US, the only time I ever need US currency is when I travel in South East Asia. I’ve been told not to accept US $100 notes which were printed in 1990 because there are so many counterfeits around of that year that many places won’t take them.
Australian banknotes, on the other hand, are now polymer, not paper. They have very advanced security devices embedded in them. They also take a lot longer to wear out. Good idea, but they remain unpopular here for some reason.
I once read that the only demonimation of U. S. Currency the Germans didn’t counterfeit during World War II was the $2 bill. (Interestingly enough, sailors used to be paid in $2 bills aboard ship.)
While you are correct that the production and distribution of the stock used in US currency is controlled, the composition is actually a composite of linen and cotton (25% linen, 75% cotton).
Counterfeiting money sounds profitable for the counterfeiter. Let’s see how effective it could be as a terrorist act.
Using 1995 data, there is about $373 billion of currency in circulation. Add currency to checking accounts and you get “M1”, which totaled to $1.125 trillion. If our evil scientist wanted to double that, he would need to print about 11 billion $100 bills. Say a wad of 100 bills is 1 centimeter thick. The total $1100 billion stack would be 1100 kilometers thick, if I’ve done my math right. That’s a lot of cotton and linen.
Also, remember that moves by counterfeiters to increase the money supply can be offset by the Federal Reserve, which could merely sell a few more of its bonds.
Still, any large counterfeiting maneuver would certainly reshuffle the citizenry’s wealth by some amount.
counterfeit money doesn’t have to be perfect, only passable. Sure, it should be better than a color copy made on a copy machine… but it can be 80% cotton and 20% linen and it won’t give it away.
To be most effective, the terrorists would have to distribute their billions of fake dollars to the poorest americans. That would cause the largest rise in inflation the fastest.
Even if the fake $ was used by americans to pay off debt, invest in the market, used for food/necessities… or even illegal drugs for that matter, there would still inflation. New money into the system = inflation. Yes the federal reserve could raise interest rates to cut back inflation, but that would hurt our economy just as well.
I’m curious what would happen to the level of price inflation in the US if tons of fake US currency was made but never injected into the US itself - rather, used outside of the country. I’m trying to think it through, but i’m tired and kinda have a headache… i dunno. Would that cause inflation even without any of that fake money coming in here? Maybe they wouldn’t have to “inject” it into the US at all. My gut feeling is that it would still devalue the dollar, which, i assume, would lead to inflation of prices in the US.
