Guest Post: The Counterfeit Economy

Tyler Durden's picture

By Charles Hugh Smith from Of Two Minds

The Counterfeit Economy

The U.S. has a deeply counterfeit economy.

Counterfeit money exploits trust by presenting a facsimile of authenticity. A high-quality counterfeit bill (for example, the $100 bills exported by North Korea) are facsimiles of authentic paper notes which then gain the trust of users.

A counterfeit gold bar is a piece of lead coated with a layer of authentic gold. The mechanism is the same: a veneer of integrity tricks the buyer into trusting the validity of the entire bar.

The U.S. has a deeply counterfeit economy.

The predatory mortgages of the subprime era were presented as legitimate mortgages similiar to time-honored 30-years fixed notes with a few "minor differences." These were in effect counterfeit mortgages designed to fool the borrowers and buyers. They were mere simulacra of "safe investments."

Like the counterfeiter who plates the lead bar with a thin coating of gold, the ratings agencies coated the lead bar of toxic, high-risk mortgages with the gold veneer of a AAA rating.

The buyers of the securitized mortgages were promised gold but they were actually buying lead--and the sellers knew it. The trust engendered by the AAA rating and the veneer of authenticity issued by Wall Street was exploited in a vast counterfeiting scheme of breathtaking depth and range.

The budget of the U.S. government as presented by the Office of Management and Budget (OMB) is a counterfeit budget, inauthentic and riddled with blatantly false projections. As late as 2009, in the midst of the Great Recession, the OMB was projecting surpluses in the Federal budget by 2012.

By 2009, the OMB had plenty of data on the recession and the opportunity to revise their previous estimates to more realistic levels.

But instead, the OMB continued issuing pie-in-the-sky estimates which grossly underestimated future deficits:

2009 estimate: receipts: $2.7 trillion outlays: $3.1 trillion deficit: $–407 billion

2010 estimate: receipts: $2.93 trillion outlays: $3.09 trillion deficit: $–159.9 billion

2011 estimate: receipts: $ 3.07 trillion outlays: $3.17 trillion deficit: $–94 billion

2012 estimate: receipts: $ 3.26 trillion outlays: $3.22 trillion deficit: $+48 billion

The reality is that the 2012 deficit is expected to hit $1.6 trillion, a sum that equals 11% of the nation's gross domestic product (GDP).

In other words, the OMB and the rest of the Federal machinery issues simulacra of authentic budgets--counterfeits designed to fool the people and win their trust via artifice and facsimiles of authenticity.

As Bernie Madoff recently observed--and we can suppose he is an expert in manufacturing facsimiles, fraud, embezzlement and counterfeiting authenticity out of lies--the U.S. is a giant Ponzi scheme.

The financial "reforms" are counterfeit reforms.

The "balancing the budget cuts" are counterfeit.

The projections of future growth are counterfeit.

The unemployment numbers are counterfeit.

The inflations statistics are counterfeit.

And of course, the "news" which drives the stock market ever higher is also counterfeit.

When everything is counterfeit, then what's left that's authentic and trustworthy? Essentially nothing.

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johnQpublic's picture

welcome to the new normal

Weisbrot's picture

isnt this the change, you had hoped for?

Fish Gone Bad's picture

This is hope and change you can believe in </humor>

Herd Redirection Committee's picture

Great work by CHS, as usual.  Any one, ANY ONE, who does business with the US gov't is now complicit.  Whether you are personally employed by them, or do contract work for them, you are accepting counterfeit money as payment, but are considering it as good as 'regular' money.  Its not.  The US gov't doesn't have the money to pay you, so they counterfeit (print out of thin air) the money, and pay you with the freshly conjrued dollars.

This stops now.  We aren't going to change this beast from within, but we just may take it down from within, so if you have made up your mind you will continue to accept counterfeit money (can't blame you, as it will feed and clothe the family at the moment as good as 'regular' money) from the Federal Gov't you know the score, and you know what needs to be done.

Its time for a fresh start, like a video game.  Game over, man, game over.

Check out the Capital Research Institute:


vxpatel's picture

Interesting article...

Economic terrorism makes sense, if not, how would you explain doing the same things to get out of this mess as you did to get into this mess. They obviously have no idea what's gone wrong. They think you can just print more money and they'll break free... by putting us all in debt.

Maybe they've latched onto something big and juicy, the American Sheeple.

Problem Is's picture

"The 'change' is in your pocket."

Cartoon Bears

Azannoth's picture

Only 1 question remains, "how long will it take till shit starts floating at the surface?" well not long judging from what is happening in the ME

jus_lite_reading's picture

A while back in 2008, someone with great insight predicted O would be the last US president. Why? The entire global economy would implode, sending everything into chaos.

The end is near folks. Buy silver and gold now. Prepare for 5+ years of survival without electricity and running water.

Fish Gone Bad's picture

Honestly, have you really given much thought to there not being any electricity or water?  People can do without heat and light (in a lot of places), but people absolutely have to have water. 

Mad Max's picture

He said running water, not just "water."  Life without running water is entirely possible.  Life without "water" (note the absence of "running") is 24-48 hours.

Imminent Crucible's picture

Which is why I called in a well-driller. The well cost $5000, but we hit what the driller called an "underground river" yielding 30+ gallons per minute, enough for 10 houses.

The pump will run off my generator, so now I have to lay in a supply of gasoline and Stabil.

Some of us are really taking this seriously.

forexskin's picture

look into a diesel genset, preferably low (>1800) rpm. diesel keeps much better than gas.

Rahm's picture

Big Berkey.  Pick up a few.

Shameful's picture

I'm as pessimistic as they come, but 5 years is unlikely. I expect a lot of big towns to turn into charnel houses but that sort of thing tends to burn itself out relatively quickly, few months max. Don't get me wrong, not fun places to be and might be downright apocalyptic for the time it happens depending on how distribution channels collapse. I just doubt it's a long term return to 1890, unless Uncle Sugar decides to say "When in doubt, nuke it out".

If they can have running water and power in Caracas and Johannesburg I have to think such things will not wholly vanish from the West for that period of time. Though some towns like LA will be a rough place to be when the cheap food, fuel, and gov handouts end.

Bob's picture

Completely agree.  And preparing appropriately to that. 

redpill's picture

"When everything is counterfeit, then what's left that's authentic and trustworthy?"

Need it be said?  Gold & silver bitches!

HamyWanger's picture

Have you ever seen a pristine-looking JohnsonMattey 10oz. bar cut in two to reveal a tungsten core? I did. 

redpill's picture

Not provacative enough Hamy.

I wonder what the core of SLV is made of if you chopped the brokers in half?

HamyWanger's picture

The awful truth is that there is even counterfeit Silver Eagles.

I know several Chinese laboratories who are making them. They are currently flooding the US market with large quantities. 

It is a tungsten-chrome alloy which is polished via laser. You can't differentiate real silver from it. 

I'm sure most silver bugs here have some of these innocent-looking coins hidden in their stashes.

redpill's picture

Better, but now you're ruining the suspension of disbelief.

samsara's picture

When would these have first hit the market do you think harry?


HamyWanger's picture

They started mass production when the Oz price reached $20. 

I believe they are now about 60% of the annual Eagles sold in the US, and 25% in Europe. 

gdogus erectus's picture

redpill - genius.  That is the funniest exchange I've ever seen between a troll and a poster.  Absolutely laugh out loud funny.  How far we have all come.

Guy Fawkes Mulder's picture

They see me trollin'

They hatin'

They hopin' that they gon' catch me writin' dirty...

Bob's picture

Yo, Hamy ain't no troll!  He's fambly. 

Guy Fawkes Mulder's picture

Agreed. Trolls are only offensive to the unenlightened.

narapoiddyslexia's picture

Hamy probably works at McDill Air Force Base, pursuant to the following Google-cached contract solicitation. The original has been removed since being outed here at ZH.

Bob's picture

It's about time the guverment showed a decent sense of humor.

tj3's picture

Hey Fawkcy, I only flagged him as to Honor him. Sometimes, espcially for trolls, flags are a good thing.

ps. imho your avatar is win

Guy Fawkes Mulder's picture

I love seeing big numbers.

YHC-FTSE's picture

Not too many! I don't want to see his posts disappear. Then where would we get our daily giggle?

Andy_Jackson_Jihad's picture

While Hammy may be a troll he is probably correct in spirit.  Just look around youtube for take gold coins with a tiny "replica" written on the bottom.  I'm not a chemist but I didn't think gold was an easy thing to just electroplate on to tungsten.  So those chanks making the "replicas" are able to mold or stamp tungsten (very high heat...tungsten is used for arc welding tips!) and some sort of cyandine based solution.

Pretty advanced stuff that has lots of scalability.  Chineese fakes won't be made in some 2-bit shack or garage.  If/when it happens it will be an industrial scale.

Damn, those f*ckers fake everything.

bigkahuna's picture

bullshit -- disinformation. Where are your supporting links.

gorillaonyourback's picture

you believe, lolol.  im from missouri.  please have some reference articles or proof, i know your spook friends can create some silly article that i can read but remember your gonna need a p-value

tellsometruth's picture

support your local mine and mint

MrBoompi's picture

APMEX better not be selling these!!!

britinbe's picture

good that I bought my collection a good few years ago then...........

MolotovCockhead's picture


 I know several Chinese laboratories who are making them

You sound like you know everything!! That makes me suxpect you are a counterfeit too.

fiftybagger's picture

Hey Hamy, you might want to get your shilling straight.  Tungsten is far too heavy for fake silver.  That would be moly.


AU = 79

W = 74

AG = 47

MO = 42

You might want to glance at a periodic table occasionally before you shill

gorillaonyourback's picture

well done dude, gotta reveal hamy for what he is.

Stares straight ahead's picture

These sound expensive!  I'll take 400 of them please!

SparkyvonBellagio's picture

Dude, get a powerful NEODYMIUM magnet.




If it does it's a FAKE.

Cash_is_Trash's picture

Tungsten trumps paper notes.

See how far this fiat regime has taken us?

redpill's picture

One lump of tungsten in hand is worth two federal reserve notes in the bernank's beard

Cognitive Dissonance's picture

Will that be one lump or two?

FeralSerf's picture

Plus it makes excellent bullets.


Cash_is_Trash's picture

Aren't they Depleted Uranium (DU) substitutes?

jus_lite_reading's picture

BS. Buy yourself a smelting kit and an acid test. Every serious gold investor owns one.