war in the field is fought by men and arms but every so often battles are fought by other means though they take place out of sight they can be just as destructive if not more since the 1980s millions of near-perfect counterfeit 100 bills have poured into financial markets the banknotes dubbed as super dollars were likely produced by pyongyang since the bulk of them were discovered along the border of china and north korea.
The counterfeit operation raised alarm bells in washington and reasonably so at stake was the credibility of the us dollar and thereby the security of the u.s economy the tools of economic war can bring down governments and no other is as devious as counterfeiting currency for whoever controls the money supply of a nation it became the world’s first superpower
but in turn mismanagement of the ensuing inflation shocked the spanish empire to its core and heralded its downfall if handled recklessly a currency can ruin its proprietor counterfeiting therefore is an old time-tested yet unusual tool in economic warfare it was infamously used during the american war of independence by mass printing dollars the british empire disrupted washington’s ability to reimburse its soldiers and nearly brought the fledgling nation to its knees the napoleonic wars world war ii.
And the first gulf war have seen countries on all sides trying to disrupt demoralize and devastate their foes by propagating false currency but to grasp the full destructive potential of counterfeits one needs to consider the seven years war in the 18th century when prussia was pitched against a larger and wealthier russia frederick the great came up with an ingenious plan since the prussians shared the same currency as in poland bohemia and saxony the prussian king re-minted silver coins with large quantities of copper in doing so he multiplied his treasury many times over poland at the time was a neutral party in the conflict.
but because it was stuck between boring parties the polish leadership allowed the foreign armies to march through its territory in pursuit of their respective missions however as the foreign troops wandered across polish territories they deliberately flooded the country with inferior coins traders noticed and exposed the which crippled confidence in the currency and plunged polish lithuanian commonwealth turmoil.
Overview Of North Korea And US
Meanwhile the prussians had abandoned the inferior coins before inflation had affected them thus without firing a single shot the mighty polish empire fell into an irreparable crisis this instability was later used to justify the partitioning of poland so not only did counterfeiting provide the prussian king with the funds to win the war against russia but it also brought the polish economy to a grinding halt and ushered in centuries of foreign domination the lesson here is that the circulation of currency matters now things have changed
since then paper has replaced silver and modern banknotes have security features designed to prevent counterfeiting from special paper to color shifting magnetic ink micro printed washer marks and metallic micro threads all meant to indicate authenticity forging modern banknotes is not easy yet.
In 1989 the u.s secret service discovered a stack of unusual but seemingly innocent denominations the 100 bills locked and felt like authentic dollars the banknotes were made of the exact cotton linen blend printed with the same swiss quality ink and even the security fibers threads watermarks seemed the same but closer forensic testing revealed some microscopic mistakes in shading difference alignment issues and incorrect line widths though.
it was undetectable to the naked eye the stack of banknotes was fake they were so close to perfection that one forensic investigator described them as us dollars just not made by the us government the secret service classified the fake bills asnote family c14342 but informally they were called super dollars as soon as the level of expertise and forgery was revealed the reminifications dawned on the americans when produced in large volumes say in hundreds of billions the super dollars could.
Theoretically degrade the value of the us dollar in global markets the stakes were high at risk was the credibility of the u.s dollar and by extension the security of the u.s economy as the world’s undisputed global currency the us dollar is used fervently in international business including sale and purchase of strategic resources due to this status as the universal means of exchange roughly 60 percent of all national financial reserves are held in u.s dollars and more specifically u.s sovereign bonds because of the high demand for its currency washington can acquire loans at a consistently low price in addition since international trade requires u.s dollars american sanctions are a much fair threat and an effective tool in foreign policy these advantages have led to the u.s dollar
being referred to as america’s exorbitant privilege. the super dollar was a genuine threat to the establishment even though the denominations were forgeries of only banknotes and not sovereign bonds the principal could bring everything crashing down like a house of cards although no definitive proof has been made public the counterfeit bills were believed to originate from a single source north korea.
the fact that most of the counterfeits were discovered by the china-north korea border was a giveaway within north korea the most likely producer was the secretive office 39 which predominantly focuses on maintaining foreign currency funds for the pyongyang elite office 39 is tasked with gathering foreign exchange reserves to buy the loyalty of the political elite in pyongyang south korean analysts claim that between 1994 and 2005.
More than a quarter of a billion super dollars have entered global circulation that’s a significant sum but still only a drop to the bucket of the 1.5 trillion dollars in circulation even more worrying than the super dollars are forgeries of u.s treasury bonds which have also popped up in the same markets as the north korean counterfeits in 1999 filipino officials seized more than 110 billion dollars in counterfeit u.s sovereign bonds the denominations
ranged from tens of thousands of dollarsto 500 million dollar bonds two years later in the same market more than two trillion dollars were seized in counterfeit US federal reserve bonds the biggest confiscation however occurred in italy what began as an investigation into a regional criminal syndicate in the south of italy quickly turned into a protracted investigation across several countries by chance in a warehouse in switzerland american italian and swiss law enforcement discovered false us treasury bonds worth up to an extraordinary six trillion dollars the source of the bonds originated from hong kong a place where the north koreans happened to do a lot of business in and the italian syndicate had tried to sell the bonds at the global markets the gang was nowhere near to sealing a deal ikely because the forgeries bore denominations that do not exist now,
while the north korean office 3 and the italian criminal syndicate lack the capabilities to produce hundreds of billions of false us banknotes and u.s treasury bondstheir filled attempts show that with the right know-how technology and political will the us dollar can be hijacked at least in theory every fake dollar produced contributes to the pockets of adversaries while also directly undermining the value of the us dollar the cost-benefit analysis works against the interests of washington suppose a hostile country with a largeindustrial capacity say china or russia would decide to engage in counterfeiting to reduce confidence in the u.s currency it could spell an asymmetric disaster for washington at best such an assault would devaluethe dollar and weaken.
the u.s economy at worst industrial scale forgery could destroy the confidence in the us dollar as a means of exchange it would cause the global demand for the us dollar to plummet and trigger a race to exchange u.s government bonds for cash the american treasury would then be forced to print excessive amounts of money or default on its debts hyperinflation or the inability to procure loans could in theory lead to the complete incapacitation of state apparatus point in case currency may no longer be made of silver coins but its ability to bring down nations remains the same there are of course measures to prevent things from spiraling out of control but while the north korean stalemate heads into the future counterfeiting as a means of war will be one to watch for because as long as economies require confidence acts of war will thrive on the seed