It’s Official – fake money is as good as the real thing (if not better)

Posted by Guest Blogger on Sunday, 14 March 2010 06:18.

by Alexander Baron

Although he is unquestionably one of the most irksome presenters on British television, Dominic Littlewood has one major saving grace; here and there he presents a programme which has real educational value. On March 9, 2010, he presented the second of five episodes of Fake Britain, which among other things showed a police raid on an illegal factory where bank cards were being cloned, literally by the hundred.

Littlewood also visited the Yorkshire town of Ilkley where shopkeepers and publicans had been on the receiving end of a blitz of forged £20 notes, which had left many of them out of pocket, but the most interesting cameo was where he brought in a counterfeit coin specialist – a former employee of the Royal Mint – who in a near two hour shopping session in the capital managed to find seven fake one pound coins. There was probably nothing too surprising about that, nor with the claim that the police would not be the slightest bit interested if you, dear reader, were to take a fake pound coin to your local cop shop. Such a course of action may leave you out of pocket, but a dud coin passed here and there will not prompt any sort of investigation while the police have terrorists to chase and motorists to harass.

But the really surprising revelation was the reaction, or rather the non-reaction, of the Royal Mint to fake coins. Though it is estimated that some two and a half percent of one pound coins in circulation have been produced illegally, the Mint does not bother to take them out of circulation. While a forged twenty pound note will most definitely leave you out of pocket and may see you questioned by the police if not actually arrested, it is quite likely that you will continue to spend your quota of fake pound coins in your local shops, and as long as neither the shopkeeper nor the bank notices (or cares) your fake money will be every bit as good as the real thing.

This is because the value of money – the only value of money – is psychological. While gold, silver and other metals used for coin do have real value in themselves, currency – including notes and credit – function only if and as long as people, or the majority of the people who matter, continue to believe in them. If this is a difficult concept to grasp, imagine two men jumping out of a plane at gunpoint. One of them is told he is wearing a real parachute, while the other is told that his is purely for show. Only it is actually the other way around. Will the man with the fake ’chute glide to Earth in spite of his belief? Clearly not! And provided he pulls the ripcord, the other man will, regardless of what he believes.

On February 21 this year, in a groundbreaking article, the Sunday Telegraph gave space to convicted fraudster Darius Guppy to vent his spleen against the corrupt debt-based money system. Herein he related how during his sojourn at Her Majesty’s Pleasure, the man in the next cell had been serving hard time for doing what the banks do legally.

As was customary among prisoners who became friends, Tommy allowed me to read his legal papers and I quickly became fascinated by the Judge’s sentencing speech, the gist of which was that Tommy’s activities had been parasitical. By creating money out of little more than thin air he had reduced the purchasing power of more deserving members of society. What would happen if everyone behaved like him?

Hopefully we can expect to see more articles of this sort in the near future, and maybe something of substance to follow, but one point that appears to have been missed by all and sundry is that undetected fake money is not just as good as the real thing, in times of austerity it is actually better!

Consider this, a businessman who borrows money from a bank – money which is created out of nothing – has to repay it with real money at interest. This leaves a continual shortage of purchasing power. But money that is created out of nothing and spent into circulation debt-free does not create such a shortage. One must add a big caveat to what the trial judge told Darius Guppy’s forger friend that he was reducing society’s purchasing power.

Obviously if a forger were to print a million pounds for every person in the country and either spend it into circulation or give it away, it would have a devastating effect on the economy, because there would then be so much money in circulation that no one would use it, prices would go through the roof, and many people would resort to barter. But that is clearly not the case now. There is a dearth of purchasing power, what little money is out there is in the possession of the banks, so these anonymous men in lock up garages minting illegal coins up and down the country are actually stimulating, and benefitting the economy rather than debasing the currency. The cost of minting these coins is not insubstantial – especially if they are caught doing it! – but this cost is a fraction of what it would cost if money were spent into circulation by irredeemable loans at interest from the banks.



Comments:


1

Posted by Søren Renner on Sun, 14 Mar 2010 11:23 | #

I had a little fishy
I loved it tenderly
But not in an erotic way—-
For it was a guppy.


2

Posted by john rackell on Sun, 14 Mar 2010 20:38 | #

interesting article on an interesting topic.

I’d beg to differ that the only value of money is psychological.  Obviously at one level that is a truism, but the reality is it ain’t called ‘fiat’ for nothing and we are commanded under penalty to pay our tithe to the state in the form of taxes.  The state has got us by the short hairs, which creates a psychological force all its own. 

And quoting Wikipedia, “Legal tender or forced tender is an offered payment that, by law, cannot be refused in settlement of a debt, and have the debt remain in force.[1] Currency is the most common form of legal tender.” 

The point being that it is not some psychological and arbitrary choice whereby we assent to the use of this money.  There’s a lot of compulsion behind it.

It is remarkable that the Royal Mint is showing such little interest in the counterfeiting.  Are they involved in it somehow?  Surely the right to print money and having the sole discretion of use of lethal force are the main pillars of any state.  I wonder why the state ceding its interest, except perhaps it is benefitting from it by creating inflation in the economy.  Either they are involved or working in collusion—which is what turning a blind eye is.

I would say that there is a broken window fallacy aspect to it when you say sort of no harm, no foul.  Yes, we can see the benefits, but the real value of the money is being destroyed.  And on this scale, as you say, nobody is really getting hurt by much.  But it reeks of corruption and any sane society wouldn’t resort to it (assuming it is a deliberate policy, which I wouldn’t put it pass them that this is officially sanctioned.)


On the other hand, these coins are not as fake as all that.  Presumably there is real metal in them that might conceivably be worth more than the nominal value of the coin very soon.


3

Posted by martin_uk on Sun, 14 Mar 2010 21:47 | #

Some ten years ago I took a pound coin to the Royal Mint offices in Westminster as the “heads” and “tails” did not match for the year. I expected to be told that it was an extremely rare mistrike worth £500.00.
Instead they told me it was a cheap fake and that I should spend it as if it was genuine.
I believe at one time you could get £1.50 for fake pound coins on ebay.


4

Posted by Englander on Sun, 14 Mar 2010 22:11 | #

I’ve had numerous fake pound coins over the years. They usually have a high amount of lead content and are quite obvious.  I’ve had one rejected by a shopkeeper once.



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