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Your funny money, and profiting from scarcity

By       Message Gene Messick     Permalink

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Christmas Day 2008.  On this day of gift giving, I decided today's as good a day as any to re-gift research I've been doing about our money. Not the Money Supply or lack thereof, nor imaginary Dollars your government creates, now by the trillions. This is about the pieces of paper you use to pay for things, and some information you might want to know to protect yourself in these troubled times.
How do you know when someone hands you a piece of US paper money that it's actually what you think it is? That this greenback Federal Reserve Note IS in fact "legal tender for all debts, public and private", as it says it is?
How do you know it was printed by your government in Washington DC, and not in Iran, North Korea, or any of probably hundreds of print shops around the world working with intense dedication to produce exact replicas, for profit, or for political reasons?
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We are just concluding 8 years of GwB's Administration, which has the dubious distinction of creating more people around the globe who hate America than any previous Administration. The litany of ways they express their hatred fills millions of books, with many more clever attempts awaiting discovery. Many, if not most, of these Plans are aimed at destroying our Economy, as if our government were not doing enough on its own.
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Thanks to all of this, we live in perilous times, where trust in almost anything economic is eroding faster than a beach sand castle when the tide comes in. How many more Bernie Madoffs lay undiscovered?  Frankly, seeing the idle rich fleece the idle rich of $50 billion makes me think Bernie should be given an Award for teaching them a lesson. 
But not one actual piece of paper money was ever handed over to Bernie, unless perhaps there were suitcases of cash being delivered in the dead of night. This is not about the trillions upon trillions of imaginary dollars that float between the account books of one corrupt bank to another.
This is about the actual pieces of paper that us ordinary folks pull out of our wallets to pay for something. How do you know it's "real"? As trust in our banking system erodes, all sorts of abnormal economic things are happening, not the least of which is the tendency to hoard anything of value, which includes paper money. Cash also flows more freely these days.
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Can you trust the $20, $50, or $100 bill someone passes on to you?
This came home to me when I began noticing more store cashiers taking out a pen and marking the $20 bills I paid with. So I started asking questions. Got a lot of interesting answers, and a lot of "I don't know" answers. The pen marks light on "real" money. It marks dark, some of the time, on funny money. 
So then what? Does the store refuse the bill? Guess so. What then? Are you out $20? Or can you pass it somewhere they don't mark bills? My Credit Union says they check their notes and send the counterfeit ones back to the FED, where they are shredded. Apparently at coin shows, you can buy novelty bags of shredded counterfeit money, for whatever use you might have for them.
Everyone I asked said the amount of funny money in circulation is rising dramatically. No surprise there. So I asked a dealer in collectible banknotes if there was a market for counterfeit money. Of course there is. There's a market in our "free" economy for most anything. Just find a willing buyer. The market for out-of-use banknotes, "real" or counterfeit, commonly brings prices far in excess of whatever denomination is printed on the note.
One interesting tid-bit I collected was this: the FED doesn't print $500 or $1000 bills anymore. So what if you are offered one? Should you take it? Well, if you can assure yourself that it's "real" and not funny money, sure. These notes are still legal tender. And there's another reason. Because the supply is limited and shrinking as the FED retires them, $500 and $1000 bills are certain to increase in value to banknote collectors, IF you can afford to hang on to them! How much? How fast? Who knows? But, as with all collector items, the better condition it's in, the higher the price it will bring.
So, what's the point? The more you know about your money, the better you can protect yourself. Once upon a time a piece of US paper money represented a fixed amount of gold held by our government -- payable on demand -- referred to as the Gold Standard. That's not true anymore, since the US went off the Gold Standard during our previous Great Depression, so the FED could begin printing tons of notes with only the "full faith and trust" in our government backing them up. Sound familiar?
If this interests you, simply type "gold standard" into Wicipedia, and you'll find enough to boggle your mind. It begins with this definition: "The gold standard is a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold. The gold standard is not currently used by any government, having been replaced completely by fiat currency, and private currencies backed by gold are rare."
The price of gold was fixed by our government before our last Depression, and honored around the globe, at the astounding rate of $35 per ounce. In our current "free market", the price of gold fluctuates wildly, having recently been upwards of $1000 per ounce, and will surely rise dramatically in the future. Some investors are saying gold will hit $2000 within two years, and maybe double that ten years from now.
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But then, there were also some trusted investors also said to invest mountains of money with Bernie Madoff. As always, buyer beware. But for us ordinary folks, our daily lives are lived on a more down to Earth level.
Type in "counterfeit money" into Wicipedia, and among lots of other stuff, you'll learn about Counterfeit Banknote Detection Pens.
You can buy these pens at most office supply stores for about $3 each. If you care to protect yourself, you might consider investing in one. In these troubled times, you may be glad you did.
 
 

 

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For 17 years Gene Messick studied and taught Design at NC State University and Cornell. Co-founding the Visual Design Program at NCSU, he established the Photography Program at Cornell, where he taught in the Architecture Department, most interested (more...)
 

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