Thursday, June 02, 2011

Counterfeits Damage Economies

Fake money has always been a problem, ever since the first coins were minted thousands of years ago. The legal principles and economic harms are the same today, but the technology is different. Dr. Levon A. Saryan, a materials scientist in Wisconsin, reports that

fake U.S. Trade dollars [were] recently shipped from China to a recipient near Chicago, bring[ing] into sharp focus a growing epidemic.

Counterfeits have traditionally been difficult to make and easy to detect; advances in technology, however, are reversing that situation: fake coins are now easy to make and difficult to detect:

Most of these fakes are not hard to identify in a crowd; they have certain diagnostic features that give them away. Gradually, however, the quality of these fakes has improved to the point that experts are being routinely deceived.

These sham coins are not the work a few lone criminals, hiding in basements or abandoned warehouses. They are being produced in a sophisticated manner by entire factories. There are multiple such operations, including

one of the largest fake coin factories in China, the Big Tree Coin Factory in Fujian Province, owned and operated by Lin Ciyun. The presses in this factory were originally used in a U.S. Mint facility, then transferred to China in the early 1900s for their coinage production needs. Later, in the mid 1950s, the Chinese government scrapped the presses and sold them to private buyers. Mr. Lin bought at least some of the presses and now uses them to produce (by his admission) over 100,000 forged coins per month. With the assistance of a handful of expert machinists, he is able to strike coins at exactly the same pressure and technical specifications as those used in 19th century U.S. mints.

Remember, these coins are worth hundreds of dollars each. These aren't the quarters and dimes we use in everyday vending machines to buy Coke or Pepsi. These are also highly illegal, because such coinage is the legal tender of the land. These operations are, then, both damaging to the U.S. economy, and a direct serious violation of national and international law.