The Counterfeiter

April 7, 2010

The Counterfeiter

If technology is your thing, you like a challenge, and you enjoy taking chances, you might find counterfeiting a good way to earn a living. The technological challenge is fast moving; as fast as the Treasury Dept finds new ways to detect counterfeit money, you must find new ways to foil their detection. The risk, of course, is of getting caught and landing in prison.

Our government, which supposedly believes in the free market and competition, does not tolerate any competition with it’s monopoly on counterfeiting.

THE EFFECTS OF COUNTERFEITING

Printing $20 bills doesn’t quite give you something for nothing. You need to print a lot of twenties to get back what you invest in equipment and time and skill. But let’s suppose you print enough to recover your investment and a lot more. What are the consequences?

You can buy all sorts of goodies and live like the rich. The people you spend your money with will appreciate the new business you give them, because they’ll get a bit of extra income. They, too, will spend a bit more and live a bit better. The extra money ripples outward in ever-widening circles, so maybe everybody benefits from your counterfeiting, right?

Wrong. This would be something for nothing. The real world of production and consumption hasn’t changed; it hasn’t increased production. All you have done is shift the consumption of some of the goods to yourself and a few early receivers of your counterfeit money. Other people will have to do without the goods you bought.

There will now be a bit more (counterfeit) money circulating and chasing the remaining goods. The result is that prices will increase so that the later receivers of the counterfeit money will pay more money to buy fewer goods. These are the people you have robbed to provide your new affluence.

Of course, you are just a small time counterfeiter, so your new wealth has only cost a few pennies from each to the millions of people you have robbed. They won’t even notice!

It’s a different story with the real big-time counterfeiters, the banks and the government. This is legalized counterfeiting, on a grand scale and unending. Or have you noticed how prices have gone up in the last hundred years? It’s called price inflation.

Rising price level is really an abnormal situation in a healthy economy. With producers competing for our money, they forever innovate, finding newer and more efficient ways to produce better and cheaper goods.

The government can, of course, print any number of dollars at any time. It’s legal theft. Or the Federal Reserve can achieve the same result in a more roundabout and less obvious way. By such means, the government can finance a war, or a moon landing, or anything else that taxpayers would not willingly pay for.

Much of the counterfeiting by the banks consists of “credit”, loaned out to industry to finance expansion and new enterprise. This is the root cause of the business cycle, the never ending succession of boom, bust, and depression.

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