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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trav7777's picture

noninvasive apparatus such as magnetometers and ultrasonic thickness gauges would seem to be desirable tools to have.

The speed of sound is way different through tungsten

Bob's picture

They must ring very differently when you knock on them then?  Wonder what the pitch is--maybe an electronic guitar tuner will do it. 

Judge Judy Scheinlok's picture

Someone told me that RobotTrader pay's for his little craigslist chippies with fake hundies printed from his laserjet.

Can anyone confirm?

tellsometruth's picture

i had a brief convo with a vp of a electronics co on the chairlift friday... he would agree...thinks just a matter of time till collapse

Don Birnam's picture

Quite a simple solution, really: return fully to coin of various denominations, and dispense with paper altogether. Much more difficult to counterfeit coin of the Realm.

akak's picture

I fully agree!

I would LOVE to be able to use precious metal coins in daily commerce.

Paper "money" is a scam, always has and always will be.  But sheep rarely if ever question the status-quo.

gwar5's picture

You summed it up correctly. It's pretty sad.  I've noticed mainstreet devolving into more lawlessness.

It starts at the top. The only thing to do is withdraw from the system and play defense.


Au Member's picture

Tungsten and Molybdenum bitchez

LostWages's picture

When the Bernank was being questioned about monetizing the debt, CNBS cut away to for some talking head nonsense babble.  I wonder who orchestrated this?  I'm sure they were told break off at that point.

All propoganda and smoke and mirrors.  Releasing GS insider trading news at the same time the Bernank is grilled was interesting also.

XRAYD's picture

The Chairsatan has said recently that other countires can solve their inflation problems because they have the tools to do it. To the best of my knowledge, countries like China and India or those in the middle east, cannot print dollars like the US can - though N Korea is known to have run a counterfeit operation.

So while Ben claims they have other tools, Ben rules because he can create dollars out of thin air even as he destroys its value (it has not been strong during the recent crisis for a reason), supposedly to get other countries to adjust their exchange rates and balance our trade deficits!


Ben would destroy a village in order to save it! 

AldoHux_IV's picture

Time to burn the current system like old dead rot, and allow for a new one to grow.  Start where the decay is the foulest: central banks, treasuries, and the IMF/Worldbank.

pods's picture


Burn The F#cker Down!




lynnybee's picture

.... luv Charles Hugh SMITH  ..... deep thinking & articulate.

ShankyS's picture

Stockcharts may be fucking the little guy/free user by taking access away from those that paid to become members and chart for the masses. Nice. Well done and they did it without any notification.

Judge Judy Scheinlok's picture

We all use bloomberg here cuz we like giving obscene $$ to the big jew mayor so he can push out his national gun control agenda. Thanks wall st for disarming your opponents.

~Judge J

SparkyvonBellagio's picture

Hilarious but the majority of the multi-millionaires/billionaires in the ponzi world of 'high' finance actually believe they have the 'right stuff'.  LOL  


Facts are, they just checked their morality at the door a longtime ago. 



SparkyvonBellagio's picture

I say just let the Gimp have 10 minutes with ol' Benny.


RumCurrency's picture

Not to mention that GDP is nothing but a bunch of worthless paper chasing foreign goods and extremely overpriced domestic services.

tahoebumsmith's picture

Just remember that we have put the ENTIRE future of this country into the hands of a man that said we didn't even have a crisis in 07! When I say entire, I mean when this comes unraveled and the rest of the world has had enough of this one trick pony, we are on our own. And with other countries financing our debts and digging our oil, the foundation we stand on will crumble. The only thing we will have to sustain normalcy is ink, however the only problem with ink is nobody will want the paper the ink is printed on. Global revolutions will soon turn to currency wars and when this happens the dollar is done. When this happens nobody will even care what the FED has to say because they will be looked at as the ones who brought the chaos onto the rest of the world.

william the bastard's picture

You'd be crazy not to own a ton of gold and silver

akak's picture

And that is why you own none of either.

Oh regional Indian's picture

Counterfeit. Counterfiat?

As someone up there said, even tungsten is better. Properly engineered, it gives you light.

This fiat stuff, it burms up all to fast.

And by the way, my personal get-out-of-the-us moment came when I realized thsi very thing, though for different reasons.

And the truth is, currently we are living a conterfeit world. india is just as conterfeit.


nathandegraaf's picture

All of the data is manipulated.  Some of the PMs are counterfeit.  All of our paper money is fiat.  Some of our gold is tungsten. 

Even when revealed to be a scam, PMs are still better. 

Misean's picture

"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."


Counterfeit's of counterfeit...I loved the use of the word "authentic"...BWAHAHAHAHHAHAHAHAHAHHAHAHAHAHA!

FeralSerf's picture

The difference, and it's a big one, is North Korea's counterfeits are "high quality"; the OMB's counterfeits are not.  NK's work needs an expert in counterfeit currency to detect.  Anyone with a triple digit IQ should be able to see through the OMB's caca del toro.

Why anyone still beleives anything that comes out of Washington and their captive media is amazing.  In a court of law anyone that purjured themselves half as much as that gang of thieves does would be  branded a habitual liar.

Cicero: "Mendaci neque quum vera dicit, creditur" (a liar is not to be believed even when he speaks the truth)

"If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political and/or military consequences of the lie. It thus becomes vitally important for the state to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie... and thus, by extension, the truth is the greatest enemy of the State." - Joseph Goebbels, Reich Minister of Propaganda in Nazi Germany from 1933-1945

koot's picture

Peak Fiat Currencies = Revolution

max2205's picture

and here comes the false flag "STUDY"....shit never stops amzining me

gaoptimize's picture

Trump calls stock market a Ponzi scheme on Rush today at 1:19

snowball777's picture

What's less real...the market...or Trump's hair?

Rotwang's picture

Tungsten fakes are easily detectible with ultra-sonic thickness gauges and a calipers.

Arkadaba's picture

Not sure if this story is important (but suspect it may be). I don't follow the bond market - so am unsure:

Racer's picture

I watched an old 1952 film recently called Ivanhoe about 12th Century England (based on a book written in 1819)

I thought it most amazing in one scene...

The Saxons had to raise 150 pieces of some coinage, silver or something to pay a ransom to free Richard the Lionheart.

The Saxons were all gathered in a room with lots of gold and other items spread on a very large table, then the head of the Jews (a banker) for England came in who they had asked to help raise the balance of the ransom (100 of the pieces) and he put down a scroll of paper on the table.
They were very surprised and said what use was that piece of paper, to which the Jew said that there were I.O.U.s, for debts on it and that could be used as payment. So the head of the Saxons keenly said, oh could they change their bulky things for such a piece of paper instead!

ElvisDog's picture

Another funny thing about that movie (or maybe it was in a later remake) was at the end of the movie when the Jewish banker admonishes Richard to watch his debt level or the banker will wind up owning the kingdom. Some things never change.

Boxed Merlot's picture

Buying and holding Au, Ag and any other semi-precious material that could be minted into currency with the anticipation of it increasing in value makes as much sense as trusting that federal reserve produced paper, ciphers and promises will retain value. Coinage is valuable for use as the exchange component in trade.

The reason for the amalgamations is to improve the "hand-ability" of the coins themselves. Our, the US' foundational documents spell out these responsibilities quite simply and succinctly for our temporarily employed elected legislators to obey.

Establish uniform laws of bankruptcy, (revoke the federal reserve's authority to tax), establish weights and measures and coin money. Then, instruct the treasury to issue instruments redeemable in sound currency without interest as legal tender.

I find it amusing that the "face" values imprinted on coins are so fraudulent and misleading that it makes anything else these bozos pontificate over utterly useless rambling.

Sovereign citizens would do best by ignoring these buffoons and their self serving proclamations and return to authentic trust in one another. This isn't rocket science you know. imo.

e_goldstein's picture

just read in the Washington Times that terrorist organizations were responsible for the crash of '08.

I didn't realize that the MSM now considers the FEDREZ, the DTCC, the Squid, the Morgue, AIG and the other TBTFs to be terrorist organizations.

swmnguy's picture

That's an astonishing article.  Astonishing because it actually got printed, and not in any recognized Sarcasm Font.  One of the most preposterous pieces of retroactive CYA water-carrying for the Financial Ponzi grifters I've ever seen.  Worth the read, but be careful; it'll rot your brain if you think about it.  I love the part where they blame Russians, the Chinese, and proponents of Islamic Law.  'Cause it couldn't possibly be the Bernanksters.

Papasmurf's picture

The article is absurd.  The finanical terrorists are those you mentioned.

trav7777's picture

Our culture is counterfeit as well.

People routinely believe things which simply aren't true.  I could tick down the list of them.

Magical thinking and mass dissonance is widespread and the truth has not been more revolutionary than it is now, for a long time.

Shameful's picture

Naturally, culture flows from the top down. If we assume that the people who profit most from the system also control the media and culture industry why wouldn't they meddle in the culture? Seems that damaged people would fit in better then whole thinking people in a system that is economic madness.

newworldorder's picture

Most posters here know this, but I will say it for those that still believe.

The vast majority of citizens do not really want to know what is going on financially in this country! Ignorance is bliss.

Don't believe me? Then answer this question. How many hallway/lunchtime conversations have you heard at work on the direction of our county lately? If not at work then how about conversations at church, gyms, clubs, professional associations?

If people are not satisfied - What are they willing to do about it?

KickIce's picture

The Grand Illusion

earnulf's picture

While I believe the price of PM's will continue to rise, with periodic drawbacks, I don't believe the world is quite ready to sink to the level of severe hurt without somebody getting the bright idea to set off a nuke.   The first thing that the US is concerned about when there is unrest in a country is where are the nukes and who has the triggers.   

Having said that, serious disruptions in the supply chain are inevitable and that will create more chaos that anything else.   Just look at behavior when there is a hurricane or a major winter storm and you know how prepared the "average american" is for a crisis of any kind.     When the banks go on holiday, the atms and the credit card kiosks go with them and unless you have something of value to us (first fiat, then barter), you won't get much of what's available.

Anyone who cannot live without going to the store for two weeks will be part of the herd who may not make it through any kind of disruption.   Don't plan on the government to bail you out, if you haven't planned for yourself and your family, then you get what the little boy shot at, nothing.

Serious Panic doesn't set in until three or four days pass, then you start separating the men from the sheep.   

PM's are long term insurance, just don't know how long the long term is

chumbawamba's picture

Is this supposed to be surprising?

I am Chumbawamba.

plata pura's picture

End corporate person hood! Bitchez

topshelfstuff's picture

Just this past week on TV, I think it was the Discovery channel, they had an hour on counterfeit dollars, and had Bogota Colombia as the world's counterfeit capital. I just googled this, and some say Colombia, and Peru is up there too. Seems like this is no secret except being in the Media. Here's a few notes:

PROTECT THE PRINTING PRESSES) Unlike the superdollar case [an a yet unsolved case from the early 1990s], agents know where the Orlando bills were printed. On Feb. 11, Colombian police raided the printing plant on a farm near Cali.
The $20 million worth of counterfeit bills was the largest seizure in the country’s history, according to the Secret Service. Colombia is the world’s largest producer of counterfeit U.S. currency, followed by Bulgaria.

Venezuela’s currency, the bolivar, is the usual choice of Colombian counterfeiters. It’s almost as inexpensive as the Iraqi note — worth less than a penny each — and is printed on paper from the same company in Massachusetts that supplies the U.S. Bureau of Engraving and Printing, Billings said.

a German news service says:

Is the CIA counterfeiting dollars and blaming it on North Korea ?

March 11, 2009 by Infowars Ireland

According to the Frankfurter Allgemeine, a respected German paper, their source may in fact be far closer to home than most people suspected [Translation by Watching America] …

The American secret service, the CIA, could be responsible for manufacturing the nearly-perfect counterfeit 50 and 100-dollar-notes that Washington pins on the terror regime of North Korea. The charge comes after an extensive investigation in Europe and Asia by the Sunday edition of the Frankfurter Allgemeinen Sonntagszeitung of Frankfurt, and after interviews with counterfeit money experts and leading representatives of the high-security publishing industry.

North Korea is one of the world’s poorest nations and lacks the technological capability to produce notes of such high quality. According to the Frankfurter Allgemeinen Sonntagszeitung, North Korea is at present unable to even produce the won [the North Korean currency]. The sources, which do not wish to be identified, allege that the CIA prints the falsified “Supernotes” at a secret facility near Washington to fund covert operations without Congressional oversight.

U.S. officials have not responded to the story.

Secret CIA printing facility

South Korean police have stated that indeed, on several occasions in Seoul, considerable quantities of counterfeit dollar notes have been found in the possession of people from Shenyang and Dadong, Chinese cities near the North Korean border. But according to the South Korea police, the last time they detained a North Korean diplomat carrying large quantities of Supernotes occurred many years ago.

America’s accusations against North Korea are therefore on very shaky ground. And now the pendulum swings back: A rumor has circulated for years among representatives of the security printing industry and counterfeiting investigators that it is the American CIA that prints the Supernotes at a secret printing facility. It is in this facility, thought to be in a city north of Washington D.C., where the printing presses needed to produce the Supernotes is said to be located.



Occams Aftershave's picture

i wonder what the functional difference is between the secret CIA printing facility and the Fed's more overt printing facility.  What does it matter at this point?

Occams Aftershave's picture

the Government lies to suit its purposes.  This is news?  We are shocked?