Your new $50 bill

Check out the new colors. The redesign, of course, is designed to stymie counterfeiters. Counterfeit money was a huge problem in the eighteenth and nineteenth centuries:

The London Gazette of 1848 gives some idea of the impact of forgery on daily business. Nothing could be purchased without a dispute. Over every counter there was a wrangling from morning till night. The workman and his employer had a quarrel as regularly as the Saturday came round. No merchant could contract to deliver goods without making some stipulation about the quality of the coin in which he was to be paid. The simple and careless were pillaged without mercy by extortioners whose demands grew even more rapidly than the money shrank. The cost of necessities of life rose fast…the labourer found that the bit of metal, which when he received it, was called a shilling would hardly, when he wanted to purchase a pot of beer or loaf of bread, go as far as sixpence.

Here is a brief history of banknote security features. I’ve read estimates of one third to one half of American and British money supplies being counterfeit rather than real during this era.

What if modern technology made counterfeiting unstoppable? I can think of a few outcomes:

1. The value of money would fall to its marginal cost of production. This would likely be very low.

2. People would stop accepting cash.

3. Penalties for counterfeiters would increase dramatically.

That being said, it is hard to do away with cash altogether. And serious counterfeiters might reside abroad in rogue states. So we are left with #1. The net result would be a huge tax on the underground economy and on dollar economies abroad.


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