If it was created by one man.. It can be re created by another man.

I’m always intrigued by counterfeit fiat currency as it exposes just how fragile the system is and shows just how much faith we put into a piece of paper/plastic. Aside from daily purchases I dump fiat money as fast i can into tangible assets and back the rest of my holdings up with physical bullion as a bit of an insurance policy..

You’ve had ‘fiat money’ in reality ever since there’s been ‘money’, northman. All money is, or is based on, ‘credit’. In essence, it’s a portable system of bookkeeping using some tangible symbol as an indication of a ‘debit’ or ‘credit’ instead of entries in a ledger.

It’s not the ‘bullion’ itself that gets you what you want in exchange for it, it’s the BELIEF that it will, so long as that belief holds good.

And that hinges entirely on whether anyone who has what you want is willing to part with it and will ACCEPT bullion in its place. Without those two conditions present bullion is no more ‘money’ than Bank of Canada notes, either genuine or counterfeit, are.

Under many conditions witnessed historically the likelihood of bullion being acceptable as a ‘medium of exchange’ can be as remote as paper money filling the same role. Some of the other commodities that have been used in its place, such a chocolate bars, or even cigarettes, for instance, might prove to be more acceptable. There can be great truth in the old saying, “A bag of gold in the desert is not wealth.”

Your right about the credit based system however your analysis about bullion is off base. . If i buy chocolate and cigarettes today as a medium exchange for years down the road it will stale and worthless and probably priced out of the market when you really need to get your hands on it. The nice thing about preciuous metals is they can’t be created out of thin air. Any prudent bullion investor knows that the belief system still plays a small role in precious metals but this is a small unlikely risk as precious metals have several other uses that can be traded for what ever happens to be the medium of exchange at the time. A bag of gold in the desert will still be gold once the bag has rotted away. I’m not a gold bug anyhow although i do hold some placer gold which I have foun myself. It looks pretty but really has finite uses. Silver on the other hand is an incredible opportunity and the fundamentals outweigh perceived future risks.

I will try to stay away from these 100 dollar bills. The 20s are bad enough, sticking together like they do. Twice (when they first appeared) I accidentally gave two instead of one to stores cashiers.

In both cases they were very honest and told me that I had made a mistake! Since then I separate them carefully and count everything that comes out of an ATM.

It must have cost an enormous amount of old style fiat money to replace it with the latest iteration of fiat money…that’s Ottawa, I suppose.

Prior to the introduction of the new polymer money, I read several articles about how contrary to the claims of both the government and the company producing the new money, that the bills are in fact easier to produce counterfeit copies. I am not surprised that this has occurred. The problem is that people let down their guard, trusting what they have been told about the new bills. Due diligence is always needed when handling money.
I actually felt the old bills with the microprint and distinctive material were very secure against counterfeiting and that the government invested a large amount of time and money producing bills that for me are less secure and as other people have indicated come with the difficult problem of sticking together.

Economies based on securities and modern man made “mediums of exchange” will ultimately fail, as witnessed by the 1929 stock market crash which brought on the worldwide “great depression”.

The oldest medium of exchange is the “trade and barter” system, which became a far more frequent system of exchange, during that great depression. The trade and barter system cannot be counterfeited, and it’s use pre-dates all other methods of exchange!

When the essentials for life (food and water) become that scarce, what is the point in having gold, silver, or money for that matter?

The old Cree Indian Prophecy remains true; “Only after the last tree has been cut down, Only after the last river has been poisoned, Only after the last fish has been caught, Only then will you find that money cannot be eaten.”

Northman, I think many people hold gold or silver mostly as what they believe will be a hedge against the ongoing inflation that affects all paper currency over time. As you say, because “it can’t be created out of thin air”, its value as a medium of exchange changes more slowly than does that of paper (or plastic, now) banknotes.

In a hyper- inflation, such as the one in Germany in 1923; or in every country where the Communists have come into power and immediately set out to destroy the currency so that the basis of credit will be transferred from it and centralised into their ‘administration’; or in some other situations, it’s no doubt been a life-saver for many people to have a bit of ‘bullion’ in one form or another. (As long as you don’t get caught with it, that is ~ then it might be a life-ender!)

But it can have some drawbacks, too. The USA, for instance, outlawed the use of gold as a medium of exchange INSIDE the USA in the early 1930’s when it raised the official exchange rate to the US dollar from a little over $ 20 an ounce to $ 35 an ounce. Externally.

Americans were not permitted to exchange paper currency for bullion inside the USA. Any internal debts that were incurred prior to that price increase that specified payment in gold had that provision nullified, and the creditors were forced to accept paper currency instead. So the US government purposefully tried to induce an ‘inflation’ at that time, without anyone who held bullion being able to benefit from it.

True, they were then able to exchange their bullion for ‘more’ American dollars than what it had cost them to acquire it. But with the rise in prices that then began to accelerate, (and has kept going virtually unabated since, with a few minor exceptions), if they didn’t quickly spend those dollars what they’d BUY over any length of time was rapidly diminishing. (And the more they spent, the more rapid inflation occurred.)

Great for ‘creating jobs’, and ‘putting people back to work again’, but also great for cheating them by making them believe they’ll be getting something that represents the equivalent of the effort they’re expending, when they’re not. Anyone who cares to think about it, can see little has changed since.

And in a relatively short-term induced ‘deflation’, (which those who control and manipulate the international ‘money markets’ can easily arrange ~ and do, when it suits their purposes), those who hold bullion and need to use it to buy the ‘necessities of life’, can take quite a bath, too.

Correction:- What I should have said above was “Americans were not permitted to PURCHASE bullion with American paper money inside the USA.” Those who had bullion could not use it in payment of debts, i.e., as a “medium of exchange”. That became illegal. They could sell their bullion to the government at the new exchange rate, and were strongly encouraged to do so.

For those of you who are seeking more practical information on the subject of “counterfeit $100 dollar bills”, click on the Bank of Canada link below that contains useful information on how to spot counterfeits in the new polymer bills!

http://www.bankofcanada.ca/banknotes/bank-note-series/polymer/

You’re welcome :D

People#1, the big problem with ‘barter’ nowadays is that more and more people all the time really have nothing TO barter.

Except their ‘labour’.

And in a world where there is an ongoing and ever increasing ‘division of labour’, and a huge displacement of same by increasing technological progress, much of that ‘labour’ is no longer going to be in demand by anyone who’s willing or able to exchange anything for it.

You can’t, for instance, barter a small part of something like a modern car to very many people for food, clothing, or shelter ~ it’s really only of any use to the manufacturer who’s assembling that car. Today, wealth isn’t produced like it once was, at a time when “all craft was handicraft”. Now its production is almost wholly dependent on processes which are more synthetic in nature.

This is one of the main reasons for the limited success of various barter based ‘local currency’ LETS schemes that pop up from time to time in various places. They are based on an exchange of ‘labour’, and that labour is all too often superfluous to what anyone needs or wants.

So to go back to ‘barter’ is something highly unlikely to ever happen unless there’s a complete breakdown in the economy as we now know it.

That breakdown may yet occur, I’ll admit. But we would be much wiser if we tried to find ways to prevent it ~ and the first efforts should be to try to understand that modern money should not be primarily a “medium of exchange” (though it is just that, to a limited extent, still), nor a “measure, or a store, of value”, (which it really never can be), but rather is EFFECTIVE DEMAND for goods and services.

It is, in essence, a ‘ticket system’, and nothing more. It is the means by which consumers, and all of us are consumers, so long as we’re alive, give their orders to producers, (which, as a matter of physical reality, fewer and fewer of us now need to be) as to what we do, or do not, want them to produce.

Money is an agency of distribution. And if it fails us in that regard, it is not because we’re not ‘productive’ enough, (for the problems of the world today are more ones of ‘glut’ rather than those of actual ‘scarcity’), but because it is not allowing the adequate distribution of what already exists as, when, and where it’s required and desired.

socredible; I see signs of intelligent life in your comments, so you are not a sack of hammers :D

In your comment you state; “So to go back to ‘barter’ is something highly unlikely to ever happen unless there’s a complete breakdown in the economy as we know it.”

Really? I think most of us have heard about Kyle MacDonald, a 26 year old Canadian, known around the world for trading a paper clip online up to a house in 14 trades.

Trade and barter is far more common than anyone cares to admit, particularly the government, as the “taxman” is always left out of those exchanges.

Here is a link to an online trade and barter site for antiques, auto & transport, books, cameras & photo, clothing & accessories, collectables, computers, electronics, games, movies, music, sports, toys, travel & events, services, etc.

In fact “trade” is a part of virtually every child’s life who traded hockey and baseball, or more recently pokemon, cards… I could go on and on socredible but I have to run. Thanks for the “intelligent” discussion :)

I forgot to insert the online trading link, here it is:

http://trashbank.com/

There are many more site like it, just do a search :)

I keep wonder what the advent of 3D printers is going to mean for counterfeiting in the future. Think of the possibilities in terms of programming and then printing your own money. Made easier if they’re polymer based I would think.

Inflation would soon put polymers and laser printers, and everything else, out of everyone’s reach. Happened already in Zimbabwe with ‘legal tender’ money. Mugabe printed so much of it he had to stop because the price of paper and ink was increasing faster than he could print enough to afford them. We’ll likely be in a ‘cashless’ society in the not too distant future anyways.

I went to that on line trading link. Went to each of the 20 or so categories. Other than 3 or 4, they rest had the following words: “There are no items found at this time. Please check back later.”

Looks like a very successful site … NOT!!

Inflation will soon put living out of everyone’s reach ….. well, everyone other than the world’s richest 1%. ;-)

@ gus;

Try this site then:

http://bartertradecanada.com

My point is, the old “barter and trade” system exists, and is used more extensively then most people think.

Maybe Kyle MacDonald used the bigger online sites in the USA? What he managed to do with a paper clip still amazes me! What’s that new television series about two guys who trade up like that… Barter Kings?