Funny money; counterfeiting in the U.S.A.

The United States economy is the biggest in the world, not only with our own citizens spending billions of dollars a day but as the accepted universal currency of business abroad.  But in the shadows, there are plenty of industrious criminals at work counterfeiting our currency, and cashing in.  Counterfeiting U.S. currency is as old as the United States, itself, but the good news is that our Federal Government does a great job minimizing the damage to our economy and weeding out funny money.  Here’s a profile on counterfeiting of U.S. bills.

Counterfeiting in U.S. history.

During our civil war, the north and the south did battle in the banks, not only on the battlefield.  Sinking the economy of the opposing side was a priority, and a large factor why the north won.  Believe it or not, right after the Civil War it was estimated that 30%-50% of all currency in circulation was counterfeit!

Low technology, a lack of speedy communications, and confusion in the banking system fostered the conditions where counterfeiters thrived.  So in 1865, our government founded the Secret Service, with the express priority of reducing the amount of counterfeit money in circulation before it became a tangible threat to our financial stability. 

They did a great job, but during World War II, a new threat emerged – foreign countries printing our bills.  The Nazis produced high quality United States dollar bills, as well as English Pounds.  Luckily, they didn’t have the means to circulate them effectively.

How prevalent is counterfeit money now?

The good news is that the domestic counterfeit industry is largely contained.  These days, American counterfeit bills account for less than .01% of our total bills in circulation.  While this number may sound infinitesimal, that still amounts to about $667 billion every year!

The Secret Service is still doing its part to try and bust counterfeit rings and put criminals behind bars. In the 2013-2014, the U.S. Secret Service seized $88.7 million in counterfeit dollars within the U.S.  Obviously, that’s just a fraction of phony bills in circulation, but they work closely with other law enforcement agencies to break up criminal networks that include counterfeiting, money laundering, drug cartels, and funding of terrorism.

United States counterfeited currency abroad.

Although the counterfeit problem within our borders may be minimized, the majority of U.S. counterfeit currency is produced and circulates abroad. In fact, about 60 percent of live American currency exists overseas, estimated at around $500 billion a year!

Our Secret Service works all around the world to seize false currency.  The Secret Service seizes about  $60-$100 million in counterfeit dollars every year.

For some rouge nations, particularly North Korea, counterfeiting foreign bills is a huge part of their economic GDP!  North Korea recently was successful in producing SuperDollars, counterfeits of such superb quality that they were almost undetectable.  Once discovered, our Congressional Research Service conducted a study and did conclude that North Korea was the culprit.

How are they made?

Incredibly, most domestic counterfeiters use computer technology you’d find in any office!  Almost 60% of the fake dollars found in the United States were made with common laser or inkjet printers!  In contrast, the vast majority of counterfeit bills seized abroad were made with more sophisticated offset presses and mass produced.

How do we deter counterfeiting?

U.S. dollars are updated often to dissuade counterfeiters and make bad bills easier to detect.  Watermarks are embedded into bills, plastic strips in high denomination bills, color-shifting ink, micro-printing are all methods in play to distinguish legitimate currency.  Additionally, the specific composition of bills is unique; part cotton and part linen (the paper counterfeiters use is made from trees) with red and blue microfibers and raised ink.

What do we do with counterfeit bills?

Each bank collects old, damaged, and excess currency and submits it to our Federal Reserve Bank.  This central bank runs each bill through a highly advanced vetting process that can count 40 bills per second.  Their sensors identify dirt content, contaminants, drugs (amazingly, about 50% of our bills have traces of cocaine on them!) graffiti, and possible counterfeits. 

Once false currency is found, it’s sent to the Secret Service for further inspection, where they are further investigated, documented, and shredded.  They shred about 75 million dollars of bills a day! 

Look for our future blog:  How you can detect counterfeit bills!