Saturday, August 4, 2012

The Counterfeiter

     After months of design, building and testing, my project is complete. I have created a state of the art, high end printer than can replicate any type of fiat currency. I now have access to unlimited amounts of dollars and can use them as I please. Wanting to start fresh, I quit my job and move to California. Enjoying this newly found “wealth” and the luxuries that it brings, I print as much as I desire and spend like it is 2006. Thinking of my future, I realize I need to start making bigger moves if I want to keep this gravy train going. So every night, I go to the high-end car clubs and expensive night life scenes to make connections with those of the upper class. When they ask me my story and what I do, I give them a tale of venture capital success and wise investing. Bullshitting a bullshitter is easy they say. A few months pass and after becoming friendly with many of the local city officials and businessmen, I begin investing in the local shops and small enterprises around the city. This helps legitimize my cash flow and eventually leads me to my first capital investment opportunity; a massive, brand new mall near the downtown. It took me a few days(and a lot of ink) but after printing the seed money needed for the mall and flushing it through my other businesses, everything is beautiful. I have found the way to produce wealth without work.
     Whenever a new commercial venture arises, I have the capital ready to make it a reality. Within 5 months of my first investment, the city sees a decent uptick in economic activity. Another 8 months down the road and consumer spending is booming. After the creation of the mall, sales and revenues move higher and unemployment is dropping fast. All the new shops are creating jobs and the mall is drawing consumers from all over. This city is happenin'. New businessmen and entrepreneurs see the influx of wealth and decided to borrow money from banks to start their own ventures. I keep printing and investing, allowing a smooth cycle of money to come into the market, covering my back-door scheme. The massive flow of new demand rushes in and the economy adjusts to satisfy the desires of all the new consumers. Everyone sees the value of their houses rising, the availability of jobs and a great increase in their standard of living. Something fantastic has happened.
     With recession around the country, the media flocks to the city to find out why this is happening and how it can be replicated elsewhere. A few eager politicians jump on the bandwagon and tout how they worked with a few gentlemen and figured out a way to jump start the local economy. Eventually, it gets down to the wire and the media discovers who is at the heart of this “boom”. They ask how it was done. I give a standard answer that, “A few smart guys said, “Lets make this city great again.” and we did just that”. The media and newspapers label me as the poster boy of the American Dream. Politicians, talking heads and economic intellects accept at face value that there is robust economic growth and that this boom is here to stay. A few more months roll by and my whole life seems like a vacation. Slowly I come to terms that the people, media, politicians and businessmen have been duped by my counterfeiting and are confusing my inflation of the money supply with actual savings and capital in the system. But no one seems to notice nor care. And that is fine by me.
I look back at what I did and think about how simple it all was. Just print money and “create” “prosperity”. Not only did I think I was invincible but I thought I was a savior.
     One night after a little too much partying and womanizing, I head back to my abode, when I see a van peeling away from my private drive. I am caught off-guard and ready myself for confrontation. The night passes without any further incident, yet, as time goes on, I begin to get paranoid. I notice shady vans driving by my road, the Bluetooth in the car acting strange and mail disappearing. I get fearful that someone is up to my gig and I halt the printing press. I have enough revenue streams to beat the heat and figure that any further business ventures will just have to wait. As the days and weeks roll by, I keep pushing off more investment opportunities and struggle to deal with my already large unsustainable investments. Since I pumped so much cheap cash into the system, the price of money became inexpensive. All the financing that was occurring within the city was only possible because of the downward pressure created by my manipulations. With me out of the game, lending starts to tighten up. Banks begin to see a pullback in what they thought were real savings and individuals and small business owners, going the traditional route, find it difficult to get loans.
     Our city went from a moderate sized, stable economy – based on real growth – to a city based on consumption and debt, creating over-capacity, to supply an illusion of higher demand.
     I began getting angry calls from politicians and businessmen, demanding that I figure out what happened and how to fix it. A few businesses start to feel the crunch as interest rates begin to rise and a small chain of foreclosures sprout up. This type of situation becomes more common place each day and eventually, my investments too begin to turn sour. People are confused as to the sudden drop in growth, but I keep quiet and hope that confidence returns. The mall gets crushed with lack of sales and store owners see no point in paying inflated prices for storefronts that cannot generate the necessary revenue. Homeowners too begin to walk away and after a few months, it looks like our city has lost all its fuel. I tell the well-connected individuals that I don't see the opportunity anymore and that when the time comes, I will put my capital back into the market. But there wasn't time for that.
     A crushing weight on my chest and an odd odor in the air is all I remember. The blindfold finally came off after what seemed like a few hours and I find myself sitting in a room with a TV, blaring alerts of numerous bank runs in the city. I glare at a federal agent standing outside the door talking on his headset and tune back into the news report. Once the Feds caught onto my counterfeiting scheme and hid me away, news got out about a massive counterfeiting scam. This caused people to panic, hoping that they weren't victims of the counterfeiting debacle. As I sat there and watched, Agent Samuelson walked in and sat next to me. He pulled the chair close, leaned in and whispered, “Do you know what you've done?” I looked down and took a breathe, responding quietly, “I cheated the people through inflation and ruined lives.” Agent Samuelson perked up and laughed, “Not at all! You proved Lord Keynes correct! Monetary stimulus does work!” Totally distraught and confused I stated, “Don't you see the massive crash that came from my counterfeiting?” “Nonsense!” Samuelson replied, “That is a failure of the private sector! Those stores were being reckless!” I asked him why I was in this position and what they were going to do to me. Samuelson proclaimed, “We aren't here to arrest you! We are here to appoint you Chairman of the Federal Reserve! Welcome Mr. Bernanke!”   

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