Guest Post: Counterfeit Money, Counterfeit Policy

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

Counterfeit Money, Counterfeit Policy

What is the difference between printing money and counterfeiting? There is none.

Counterfeiting is illegal because it is the false creation of value. The counterfeiter takes low-value paper and turns it into high-value money, which is fundamentally a claim on the real productive value of the economy that issues the currency and recognizes it as a proxy means of exchanging that productive value.

Counterfeiting is illegal because the counterfeiter creates no additional value--he creates only the proxy for value. Creating real value--adding meaningful goods or services to the economy--is tedious, hard work. How much easier to simply transform near-worthless paper into a claim on actual goods and services.

If this is illegal, then would somebody please arrest the Board of the Federal Reserve for counterfeiting? The Fed has blatantly printed money without creating any real value to back up their added claims on productive value. Hence they are counterfeiting, pure and simple. A government based on rule of law would arrest these fraudsters and cons at the earliest possible convenience.

And while you're drawing up the indictment, can you also charge them with counterfeiting competence and policy, as they have demonstrated the Peter Principle par excellence: the Board has risen to its highest level of incompetence. Their counterfeit policies have wreaked incomparable damage on the real productive economy.

The essence of counterfeit policy--a fake policy that claims to be something it is not--is "extend and pretend." And the sole goal of "extend and pretend" is self-preservation and the preservation of the Financial Elite which has tightened its grip on the nation's throat as a direct consequence of Federal Reserve policies--notably "extend and pretend."

"Extend and pretend" extends the "too big to fail" Financial Sector's licence to mask its insolvency and its licence to continue issuing debt, leverage and derivatives under false pretences, i.e. that the risk and market value of these instruments are transparent. They are not.

In effect, the banks are also counterfeiters, as they are issuing debt--a claim on future productive value--without adding any actual value to the economy.

Thus the Fed and the Financial Sector are both diluting the base of actual real value with ever-expanding claims on real productive value by printing money and issuing debt. If an economy creates 100 units of productive value, and issues 100 units of currency as a proxy claim on that value to be used as a means of exchange, then there is a 1-to-1 correspondence with the money claim on productive value and the actual value.

If someone prints another 100 units of money and starts buying assets with that money, then they are claiming 1 unit of money still equals 1 unit of production though they have debased the currency so that it actually takes 2 units of money to represent 1 unit of productive value.

This is a con of the first order, which is why counterfeiting is illegal. If counterfeiting is illegal because it is a con, a fraudulent claim on real goods, services and assets, then how can money printing by the Fed (a private bank, mind you) be legal?

It can only be legal in a kleptocracy ruled by a Financial Elite bent on political and financial dominance, a Plutocracy whose wealth is all skimmed from the productive economy via ever-expanding issuance of money and debt.

When corporations and the State are one, we call it fascism. In the U.S., it has taken the form of financial fascism, and the Federal Reserve and Federal agencies (Treasury, Freddie Mac, FHA, etc.) are the handlers and enablers of this kleptocratic financial fascism. They add no value, they only steal value from those who create it.

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arnaldo's picture

Countefeiting is better as it creates something tangible, the Fed instead does not create anything real......

Clueless Economist's picture

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spiral_eyes's picture

When governments get into counterfeiting, other governments will punish them for it. In the end, even the hegemon's actions will have consequences.

Putin and Wen are kicking the dollar off its perch. 

Mr Lennon Hendrix's picture

Yes they are, but they are replacing the dollar with yuan and ruble, so what is the difference?  It's all fiat....

A Lunatic's picture

One man's fiat is another man's treasure.

SilverIsKing's picture

"A government based on rule of law would arrest these fraudsters and cons at the earliest possible convenience."

They're getting to it.  They just haven't found a convenient time to do so.

Badabing's picture

I “vote” against the counterfeiters by buying physical gold and silver!

The Big Ching-aso's picture



FIAT..................Fix It Again Timmy?


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TruthInSunshine's picture

"The international bankers have succeeded in doing more than just controlling the money supply. Today they actually create the money supply, while making it appear to be created by the government. This devious scheme was revealed by Sir Josiah Stamp, director of the Bank of England and the second richest man in Britain in the 1920s. Speaking at the University of Texas in 1927, he dropped this bombshell":

The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.3

Web of Debt - Introduction


economics1996's picture

Here is an excellent article by Joseph Salerno giving a brief description of the process of central bank theft.  For those who are serious financial guys with IQs over 110 I would highly recommend his book "Sound and Unsound Money."

TruthInSunshine's picture

The size of the black/gray market, with transactions taking place outside of officially measured channels, grows by the day, globally.

The black market is estimated to be the 2nd largest economy in the world, after the combined economic output/transactional activity of that of all of the EU Zone Members.

I would not be surprised if it were larger.

As The Bernank and his herd thinkers/fractional reserve charlatans keep suppressing organic, free market forces and dynamism, the black market will only grow larger.

You can buy things 1/2 off in European cities if you agree to not take a receipt, and to pay in cash, right now.


monoloco's picture

It's tough freeing up the manpower with all those dangerous pot growers in California that need to be prosecuted.

pkea's picture

not all fiats made the fiat could be more valuable than another:)

economics1996's picture

I hear our paper stock is better than Mexico's.

General Decline's picture

Wait a minute.... Is this article saying that counterfeiting laws are selectivly enforced?  So there are two tiers of people in America?  Those who are allowed to counterfeit and those who cannot?  I am personally shocked at this revelation.

Ok...enough sarcasm.  What is depressing to me is when I try to explain this simple concept to others, all I usually get are blank stares. 

Vampyroteuthis infernalis's picture

You forgot the golden rule, "He who has the gold makes the rules". You have the money and power, you can make counterfeiting legal for yourselves and cronies. Ugly truth.

ratso's picture

Charles Smith doesn't understand the responsibilities of the Fed - oh yes, I almost forgot, he also doesn't know what he is talking about.  It's too bad that there are so many gullible minds that think this kind of crap has some meaning.

economics1996's picture

I am more amazed every day how well propaganda works.  

Bluntly Put's picture

See, this is what I don't get. They hold the gold as do all central banks in order to control it's price and eliminate its circulation in the economy to function as money. This allows them a monopoly on "value". So, their "value" is debt, and yet they can seemingly issue as much debt as they deem necessary. So, if they can issue as much debt as they want, and scarcity is a fundamental variable in "value" then where is the value in debt?

Essentially they are all con men, our civilization has been conned by illuisionists and magicians of the highest order. Who would have thought over thousands of years of human evolution that the con men would end up controlling the world. Hah! Con men only have value when they can con others who have the real value, so if con men have the value who do they con to steal the value?


Esculent 69's picture

you should see the blank stares i get when trying to explain with graphs that 30% of the tax burden is paid for by the top 1%, or the difference between earned income and capital gains.  I might as well be giving a dissertation on quantum physics and explaining fractal equations. All i get from them is "Yes we can. Hope and Change. It's all Bush's fault" crap. 

Ghordius's picture

a sovereign's right to coin is not called counterfeiting, it's called seigneurage

a sovereign's right to inflate fiat currency is just a tax on the holders of the fiat currency (by the way, this affects foreigners more than US citizens)

this is all part of international law since ages

counterfeiting involves breaking the law - you can't claim now the illegality of a system that in the US is 100 years old next year

the crux of the matter is that the handlers of the legal/financial extraction system are enriching themselves in the process. for this, there is also a word: corruption

and no, it's not fascism. call it a corrupt cleptocracy or a depraved crony-capitalistic system, but don't call it fascism. fascism is perhaps much worse, but still different

for corruption: apply the existing laws

for the derivatives market - the biggest sham in this - bring back online the old laws

GeneMarchbanks's picture

'and no, it's not fascism.'

Here's a Koestler quote: “...the integrative tendencies of the individual are incomparably more dangerous than his self-assertive tendencies.”

As that great man understood, wars are fought over words. If you define fascism as a compulsive collectivist movement, which it is, then it just becomes a question of where you draw the line. DO we have something similar to Mussolini? Maybe, or not. Who is to say? To keep the word in reserve like it is some boogeyman, is a terrible mistake in my opinion.

Ghordius's picture

I disagree strongly (and perhaps melodrammatically)

history shows that every political body can fall ill, from time to time. to keep up the medical analogy, in order to heal itself early, it has to correctly diagnose the problem, in this case corruption, similar to infection. only then you can cure it without getting to the stage of a fever - which can be fascism, among others.

as doctors study the different illnesses of the body, the elector has a duty/right to educate himself and others, or suffer tyranny

I think the Founding Fathers would agree with me - I could go on for pages on this


GeneMarchbanks's picture

You can soften the language if you wish, certainly it appears to be a solution for mitigating aggression. My suggestion is to read the Black Swan of Cairo by Taleb on his site. A roadblock for the Empire is now slowly turning into an insurmountable brick wall. From now on it'll be a series of crises for the West that I know for a fact few are foreseeing. Genuine problems are going to be met with complacency and clumsiness and collectivist groups will promise rescue which will probably turn violent at some stage. This so called democracy has in fact been trending in uniformity for some time now and if you identify these: corporatism, expansionism, state propaganda and anti-socialism as fascist, then yes, use the word in a free manner. The above mentioned are to my view not only obvious but blatant.


CompassionateFascist's picture

Socialism  is (Red) Fascism, you stupid F**k.  

GeneMarchbanks's picture

No. There is a contrast. Both are a reaction to capitalism.

Ghordius's picture

Oh. No, I don't try to soften anything. perhaps it's really only this: while lots of fascist regimes end collectivist, they usually don't start collectivist-as-such, only restrictive in personal and economic liberties because the political body feels some individuals had too many freedoms - the corrupt ones.

the fascist regime is the call for a strong hand that cares, and cleans/symplifies the mess the corruption made - answers the call for help that the socialists and communists also try to cater to.

first freedom, then corruption of freedom, then revulsion, then the path can go to red-collectivist or/and switch to black-restrictive, then revulsion, then freedom again.

Ghordius's picture

I'll make a practical example: on the way to fascism, the political will of the supporting group solidifies, for lack of a better term. the party doctrine gets fixed and the leaders will not be questioned anymore. this leads to extreme faction/party discipline. Laws become shorter, lobbyism is strongly simplified, special interests have to take a step back. political pork is usually given by the leadership, exclusively. it's all about action, not words. It's about not having discussions anymore, with some draconian measures for those that are identified as the former corruption.

of course this is not describing how bad it becomes afterwards

Russia is going through it, Hungary is sliding into it, but of course we have also all the usuals like Syria, Iran, etc. etc.

the US of A are not there, it's still about corruption

nmewn's picture

"...history shows that every political body can fall ill, from time to time. to keep up the medical analogy, in order to heal itself early, it has to correctly diagnose the problem, in this case corruption, similar to infection. only then you can cure it without getting to the stage of a fever - which can be fascism, among others."

Its my understanding that fascism AND socialism AND comminism spring from one warped vision.

A statist vision.

Fascism just tried to skip over the whole "communal" thing. But as history has showed (and is showing now) they all ultimately lead to one place.

Enslavement of the masses instead of the liberation of them.

Ghordius's picture

"history has showed (...) they all ultimately lead to one place" - might be, I'm focussing on where they start

"Enslavement of the masses..." - I fully agree

on the statist vision, I disagree. very often you have fascists fighting socialists/communists exactly on the this point, and the fascists usually collect the approval of the masses that are against the statist vision

nmewn's picture


My point is, the people shouldn't allow themselves to be seduced from the start by them. 

Both systems (as envisioned) end in the same place, always. Its not because they were done wrong. Or that fallible men tried to make them work but being fallible couldn't. Its that both are wrong for the free man. And men are meant to be free.

You are correct that socialists/communists and fascists are in a perpetual state of war with each other.  But its rather like two brothers fighting over the last slice of pie at the dinner table isn't it?

Both will fight to exhaustion or death over something neither one of them put any effort whatsoever into making and neither of them will be around in the long run to clean up the mess they made ;-)

GoinFawr's picture

Your denial is an ugly thing, 'last year's man' that you are.

Eg.  Jesse's Cafe American sums it up:

"Faced with the risk and rigor of 'free markets' and the drive to zero economic profit through increasing competition, there is the impulse to create monopolies, manipulate prices, and control information to line one's pockets.

It is the natural tendency for clever people to stretch the rules and even break them to gain an advantage over other participants. This is what makes the idea of the natural efficiency of free market systems so laughable. They work fine as long as there are no people involved in them. Freedom and justice take hard work and dedication, and are not the natural state of the world.

This is a basic principle of transactional systems, whether ownership resides in the capital or the labor end of the equation. It explains the quicker failure of state communism since it concentrated power in the corruptible few from the start rather than dispersing it more widely in 'the market.' It is the government of the few versus the government of the many. The one percent are the one percent, no matter the color of their flags."

And just in case that didn't paint enough of a picture for you,
Walmartism illustrates nicely what always happens to your pipedream, regardless. 

In my opinion, you're likely a low level bank minion, ironically ext(r)olling the supposed virtues of their 'deregulation' under the guise of a proponent for 'liberty'.  You use all the same outdated, easily refuted arguments they do anyway.

hahaha, I've got you and your team of fluffers working double time these days, 'spreading the myth'. But you just can't alter this,

facts are so darn stubborn...

Time again for you to close your eyes, stick your fingers in your ears and scream,

"The stars at night, are big and bright..." <clap!clap!clap!clap!>

nmewn's picture

Well, well well, if it isn't my favorite trollish "man/woman/it without a country".

Sooo, you comin outta the closet here as a fascist or a communist? Or some sort of amalgamation of the two because neither have ever worked out in totality?...perhaps a "progressive"?

I would think its some sort of blended nonsense involving the state heavilly...but I also know you hate to put yourself out there with any sort of program, as then, you would have to explain its faults & virtues.

Much better to stand back, acting omnipotent, while taking pot shots at something that hasn't existed for generations. Yes?

So, now, please enlighten this wholly unworthy peon observer of society & economics that now finds himself groveling in your divine presence. What is the best system as it relates to the betterment of the human condition in your opinion?

Try not to strain yourself but, give me the country or economic system that puts all others to shame. My money is on the fact you won't or can't...prove me wrong GF.

As an aside, what the fuck is GoinFawr anyways?

GoinFawr's picture

" you comin outta the closet here as a fascist or a communist?"

Your political spectrum is so narrow that to you that's anyone who doesn't happen to worship the delusional world of capital shitting unicorns that only ever existed in you and your ilks' heavily conditioned domes.

"Much better to stand back, acting omnipotent, while taking pot shots at something that hasn't existed for generations"

You mean when there were still indigenous populations left to be 'flushed out of their dens'; their lands and resources yet to be plundered? Before the Great Lakes of North America were poisoned by the likes of you who assured us that 'dilution is the solution' and any and all civil oversight was unnecessary? Yeah, those were great expansionist times in NA, if you happened to be light skinned and willing to murder and steal, or profit from them. Again, the fantasyland you envision never existed.

"So, now, please enlighten this wholly unworthy peon observer of society & economics that now finds himself groveling in your divine presence. What is the best system as it relates to the betterment of the human condition in your opinion? Try not to strain yourself but, give me the country or economic system that puts all others to shame. My money is on the fact you won't or can't...prove me wrong GF. "

Well now, I've provided examples on many occasions. It must be a 'strain' for you to be so wilfully ignorant, and actually expect me to believe that you missed all of them. Cripes, on this very page I've already linked some excellent cases. So I don't see the point in repeating myself on that subject any further as you're obviously incapable of processing new information.  Rest assured that I've already proven you wrong, time and time again.

"I would think its some sort of blended nonsense involving the state heavilly (sic)"

Of course you would write that in order to negatively preface anything I might introduce.  You couldn't possibly cling to your ridiculous pipedream if you didn't, even though it's really a 'blend' itself. An ideology which, ironically, inevitably involves the state 'heavilly', as Marx was absolutely correct in pointing out. I mean, look the fuck around you. And no, I don't think he had the solution. Balance isn't 'nonsense', judging by the balance sheets. But your sophomoric absolutism sure as hell is.

"As an aside, what the fuck is GoinFawr anyways?"  Hehe, my that's rich coming from you 'nmewn'; which makes a nice case in point.

Thanks for the chuckle, tex.

nmewn's picture

"Well now, I've provided examples on many occasions."

Just as I wagered. You won't or can't provide the economy or country that puts all others to shame. You cannot articulate in your own words what or where it is. And you know I don't click on links of those I do not trust, that would be you. Which "ironically" has much to do with economy and ideology.

But this is a diamond in the rough we will have to explore fully if you feel up to it when I return from work this evening...

"An ideology which, ironically, inevitably involves the state 'heavilly', as Marx was absolutely correct in pointing out."

How so? Which part of his Manifesto are you referring...all of it?

Ghordius's picture

so all it all, beside a sprinkle of unnecessary ad hominem vs mnwn, you agree with me on corruption of a regulated market (since I read Jesse's POV as postulating that unregulated markets are quite illusionary) in a decaying rule-by-law legal environment being the starting point of of troubles that lead to a reaction in fascist/communist paradigms?

I understand mnwn is following the Austrian School of the free market between free agents - you seem to point to the fact that when the agents have a massive difference in market power/size you can kiss goodby to "free market". Am I wrong? And I thought your were kindred-in-spirit.

nmewn's picture

GowinFawr's position is...far as I can tell, if I were to sell you an apple it must be reported to the state or even if I gave you an apple it must be reported to the state.

Regulation of any and all seems to be key to her/his world view.

But of course, its hard to tell what any of her/his positions are as he/she refuses to take one, in my opinion GoinFawr's position is just simply a collectivist-statist one.

You should ask her/him the simple question of where it calls home.

It will act like you just ran over its Unlike the rest of us, who freely share at least what continent we live on, GoinFawr refuses even that.

For reasons of its own, which is fine, but it certainly subtracts something to the element of trust. Which is why I don't click on any link offered by him/ I said above.

Yes, I'm a fiscal conservative and libertarian for the most part socially. I believe the Austrian School is the proper way to view an economy as it is the participants (the individuals) in it that make any economy.

Not the state.

This does not mean un-regulated economy because individuals make up an economy...and we know people are full of the same greeds along with the goodwill & charity that is...the individual. Just as it does not mean using the power of the state to force an economy in its policy direction...which leads to cronyism, taxpayer subsidized solar and ethanol is the classic example of the opposite of a private monopoly, for example.

At any rate, glad you stuck around to find, perhaps, a more kindred spirit ;-)


akak's picture

Ghordius said:


Ghordius, I am not trying to pick on you here, as your English is generally excellent, but you make a very common mistake among non-native English speakers here with your above use of the word "since".  One can NOT properly, or logically, use in English the word "since" as you did above in reference to past time --- it makes no sense.  What you should say is "FOR" instead of since, or "since (a specific time in the past)", or "since ages AGO", as follows:

This has all been part of international law for ages

This has all been part of international law since the Middle Ages

This has all been part of international law since ages ago


You might want to look into the use of the English word "ago" in reference to past time, in particular --- I have noted that many non-native English speakers have a lot of difficulty with the use of "ago" for some strange reason.

DoChenRollingBearing's picture

The DoChenRollingBearing Threadjacking:

"How Long (Can This Keep This Going On)?" is the new article at my blog.  I also write about gold, review Barron's, and other material I hope will entertain my readers.  Would you like a look?  Gmail me at my name and assure me you will behave.  I make people jump through this hoop to keep out spammers & bots.

BLOTTO's picture

You can't counterfeit Gold or Silver... Ive tried.


Mr Lennon Hendrix's picture

Funny....that is exactly what the Federal Reserve has done for 99 years.  The alchemists dream was completed when true fiat replaced real monie internationally in '71.

BLOTTO's picture


Wouldnt that be considered more as - manipulation and lies?

NotApplicable's picture

When reality relies upon perception, bias is just as good as fact, if not better.

Esculent 69's picture

When tshtf we can have battles at all the football, baseball, and hockey arenas around the country where the banksters are the gladiators and the former althletes/criminals can be the lions and we'll all eat cake while waiting for this futher mucker to burn. BYOP (bring your own pot)