Why Counterfeiting Has Disastrous Effects on the Global Economy

Counterfeiting is a serious offense that disrupts societies in several ways. Inflation, black marketing, and loss to industries are just a few of the detrimental side effects of counterfeiting.

What is Counterfeit Money?

Counterfeit currency is added to circulation by those who make it to deceive. It is often dropped off and put in circulation at small shops and gas stations. Many counterfeit bills are easily detectable, either by distinguishing properties or with a counterfeit marker. However, there are some bills in circulation that are counterfeit and indistinguishable from real currency.

Counterfeiting can even be used as a war tactic, faking a rival nations cash and dropping it in their country to destabilize economies. This was the case when Nazi Germany created imitation dollars and pounds, dispersing them in America and England.

How does Counterfeiting Affect the Economy?

It isn’t just counterfeiting currency that can hurt the economy. Counterfeit goods are just as damaging to the economy as imitation currency. Counterfeit goods lower prices, discourage legitimate manufacturers and drive away business. Counterfeit goods are not subject to safety inspections either. This means dangerous ingredients could be used in their manufacturing.

Black Market Trade

Goods purchased with counterfeit currency are often dropped at very low prices for legitimate currency. Certain goods could even be purchased in such numbers that it creates the opposite: high priced items only available from illegitimate sellers.

Banks Won’t Reimburse Fake Currency

Banks won’t be the ones taking the brunt of the damage from counterfeiting. It’s businesses – both small and large – that take the hit. Banks often will not reimburse a company when a counterfeit bill is deposited.

Global Impact

Extreme amounts of counterfeiting lead to distrust among other countries. Countries do not want to do trade with countries that are flooded with fake bills. Counterfeiting could completely ruin a country not just from an economic standpoint but from a geopolitical one as well.

There are counterfeiters in every country in the world. Government agencies are looking closely into counterfeiting to prevent extended amounts of economical damage. This is a problem that every country has to deal with, and there seems to be no way to stop it for good.