US Federal Reserve chairman Dr Ben S Bernanke is a bad man.
And so are his other central banking cohorts: Sir Mervyn King, Mario Draghi, and Glenn Stevens included.
But we can’t blame them for all the money printing. There’s the legal money printing by central banks. There’s the legal money printing by retail banks. And then there’s the illegal money printing by individuals…otherwise known as counterfeiting.
We love a good old-fashioned dumb counterfeiting story.
We love the hypocrisy.
We love the outrage.
But we love the unintentional wisdom too.
We’ll explain more below…
This week the Gold Coast Bulletin revealed:
‘A Nerang man busted for photocopying $50 notes on to A4 paper and passing them off as currency has been given a suspended sentence.
‘Kyle John Fry, 23, used a home printer-copier to make 84 counterfeit notes and recruited his 17-year-old housemate to pass them off in local cafes, markets and shopping centres.
‘The Southport Magistrates Court was told she would buy a small item and receive change, which Fry would spend on his drug addiction.’
When Bernanke, King and Draghi print money, it’s crucial for the survival of the world economy. When the Aussie government gives away ‘free’ money, it’s a stimulus to get people spending and support the economy.
Yet when Mr Fry takes economic stimulus into his own hands to stimulate the economy, he’s a crook.
Think about it; as long the retailer accepts the fake dough, and as long as other consumers accept it, how is it any different to the dough printed by the central banks?
Both rely on the same system: the willingness of buyer and seller to transact in the currency.
In fact, even in a free market for money you would see paper and electronic money. Various firms would market the virtues of their paper or electronic money compared to others.
But the point is it would be voluntary rather than compulsory. Consumers and businesses would have the choice of whether to accept the currency or not.
Wealth Without the Inconvenience of Work
The problem with the current legal tender paper money system is that it survives purely on the faith people have in the central bank and government to not devalue it. The government also guarantees that the money will keep its monopoly legal tender status.
The way we look at it, if people want to transact in bits of paper that’s up to them. But us, well, we’d prefer a sound money system you can’t copy on a Pixma inkjet printer.
But there’s another quote from the news article that perfectly sums up the current economic problem:
‘Lawyer Bill Potts from Potts Lawyers said his client’s amateur scheme allowed him to go “from unemployment to wealth without the inconvenience of work”.’
That’s it isn’t it? That’s why the bank bailouts haven’t and won’t work. The banks don’t need to go to the effort of attracting deposits and offering good service if the central banks just give them money for nothing.
Cheers,
Kris
From the Port Phillip Publishing Library
Special Report:
How to Make Money from the End of the Mining Boom
Daily Reckoning:
South Africa’s Rivers of Gold
Money Morning:
The Stock Market is Up, What’s Next?
Pursuit of Happiness:
Why it’s OK to Smoke, Drink and Play Frisbee
