Beware the Supernote!
Kim Jong Il is all about the Benjamins, baby.
Published on July 29, 2006 By singrdave In North Korea
Sadly, those American $100 bills are coming from Pyongyang, North Korea. They are perfect, from the pictures to the ink to the watermark. The masterful forgeries cannot be detected, unless taken to the "local" US Federal Reserve Bank.
From Slate.com:
The FBI claims an international ring has trafficked weapons, drugs, fake cigarettes, and more than $5 million in "Supernotes" to North America. What are Supernotes? Counterfeit $100 bills of very high quality. Supernotes are incredibly deceptive. They're printed on cotton-fiber paper using the same expensive "intaglio" printing presses used by the U.S. government. An intaglio press creates tiny ridges on a piece of paper by forcing it into the ink-filled grooves of an engraved plate at very high pressure. That's what gives dollars—and Supernotes—their characteristic feel.
A member of the Congressional Research Service reported that the government of North Korea produces millions of dollars a year with intaglio presses. In the meantime, the government ordered an extensive redesign of U.S. currency in 1996. (Supernote versions of the new $100 bills have been discovered.)
The Treasury Department estimates that 60 percent of U.S. currency is held overseas, where Supernotes seem to be in wider circulation. In 1998, Russia's central bank estimated that $4 billion in Supernotes were floating around the country. And this past March, Supernotes turned up in Peru.
If you think this program is insidious, it is. North Korea is producing hundreds of millions of fake US dollars a year. And those North Korean $100 bills don't stay in North Korea, my friends. They're not for internal use -- they're using that funny money to finance their government's operations. Treasury officials have admitted that the recent changes to the dollar printing processes are to counter North Korean Supernotes.
From the Washington Times:
North Korea's government has produced more than $45 million in high-quality fake $100 bills since 1989 and is the world's only state-sponsored producer of the so-called "supernote," according to U.S. law-enforcement officials.
The recent arrest of Sean Garland, head of the communist Workers Party of Ireland, provided the first confirmation of the Pyongyang government's links to the supernote or superdollar, which was discovered as part of a 16-year-old probe by the U.S. Secret Service, which is in charge of investigating illegal money production.
Vic Erevia, assistant special agent in charge of the criminal investigative division at the Secret Service, said the probe resulted in 160 arrests linked to counterfeiting and related activities worldwide.
Meanwhile, the State Department yesterday defended Treasury Department sanctions imposed in September on the Banco Delta Asia in Macao for its role in North Korean counterfeiting and money laundering.
North Korea has produced 19 variations of the supernote since it first appeared in Manila in 1989, law-enforcement officials said. Each variation was an improvement and looked and felt almost identical to genuine $100 bills. A close look shows the printing on a supernote is slightly lighter than that on a genuine note. The bills were printed on North Korea's intaglio-process offset printing presses bought in the 1970s. The machines are used by governments worldwide to print currency and by private firms that do so. The North Korean supernotes are considered the highest-quality forgeries.
So remember: next time you have an American $100 bill in your hand, it may be fake. Kim Jong Il's fingerprints may still be on it.
I've always avoided reporting on the Federal Reserve. I know it's more important than much of the stuff I cover, but it's so boring. How can I succeed on TV reporting on the Fed? Fed chairs even work at being dull.
ReplyDeleteAlan Greenspan said he tried to be obscure because he didn't want to spook markets. He called his obfuscation "Fedspeak." It's a far cry from the clarity of his language -- and principles -- when he was young and a disciple of libertarian Ayn Rand.
Outgoing Fed Chairman Ben Bernanke and his likely successor, Janet Yellen, are almost as boring.
But we should watch what they do. The Fed can destroy your savings and your future. The current crew of Fed bureaucrats has raised the Fed's balance sheet to a stunning 4 trillion dollars.
As Sen. Rand Paul's father, retired congressman Ron Paul, put it, "No secret cabal of government officials should have the authority to create money out of thin air."
He makes a good point. For three decades, Ron Paul was virtually alone among politicians in questioning the Fed. But now there are more.
Jim Bruce's documentary "Money for Nothing" is a great beginner's guide to the Fed. Bruce points out that the last two Fed chairmen, appointed by both Republicans and Democrats, have quietly increased central planning of our economy. Government now controls more of our economy than ever before. This is not a good thing.
The Fed was created to prevent bank runs. It would be a lender of last resort and create stability.
Yet 16 years after the Fed's creation, the Fed's low interest rates fueled the Roaring Twenties and led to the greatest stock market crash in history. Then the Fed's tight money worsened the Depression.
I'm told they learned from their mistakes. For four decades after that, the Fed usually kept increases in the size of the money supply gradual, steady and predictable. Except for one nasty period, inflation has been kept in check.
But now the Fed is charged with two sometimes clashing missions: preserving a stable currency and reducing unemployment.
There's great pressure for the Fed to time these decisions just right in order to avoid economic downturns and -- some argue -- to make current political officeholders look good. Increasingly, investors and Wall Street analysts obsess over what the Fed will do, instead of paying attention to inventions, productivity and real wealth-creation.
The Fed, created to shore up capitalism, has become an instrument of government economic management not so different from a socialist planning board: a tiny handful of powerful people attempt to fine-tune the entire economy. Its main mission has become continually goosing economic activity through infusions of new cash to maintain the illusion that good times will never falter.
The result isn't stability, but one economic bubble after another.
The Fed's manipulations fit well with President Obama's "stimulus spending" efforts. But neither seems to do the trick. This post-recession "recovery" is among the weakest ever. Japan's central bank tried the same stimulus for the past 15 years, since its economic crash. That didn't work either.
Instead of following Japan's example, we should learn from Canada. The Canadians had no central bank when the Great Depression began, just private banks issuing currency backed by gold. During the 1930s, not even one Canadian bank failed. Thousands failed in the U.S.
The massive bank bailouts a few years ago -- taxpayer money showered on the richest institutions that have ever existed -- are based on the assumption that those banks are "too big to fail."
It would be more accurate to say that those banks and the Federal Reserve that dominates them are too big and too powerful, so much so that they risk dragging us all down with them if they fail. No dozen people should be granted so much power.