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Article Review: Counterfeiting Money Is a Crime — Whether Done by the Fed or A Private Individual
The article, “Counterfeiting Money Is a Crime — Whether Done by the Fed or A Private Individual” appeared on the Mises Institute website on the 13th of April 2019. Written by Patrick Barron, a consultant in the banking industry, the article sheds light on the economic effects of counterfeit money. The author explains that both individuals and the Fed can produce counterfeit money with different explanations, but the resulting effect is the same. From the article, the Fed produces money with an aim to increase supply but ends up with the same negative impact of counterfeit money from individuals.
The article begins with an encounter that the author had with representatives from the Fed in Iowa. The team from the Fed was going around the country explaining its functions to citizens. He describes the group as being young and very personable, but obviously unacquainted with the core functions of the Fed. The author makes a quirky version of his recollection of the vent where the team failed to give a satisfactory answer to a question he posed (Barron). He goes on to assert that there is no difference between the actions of a private counterfeiter and the actions of the Fed printing money. The only difference is that the counterfeiter’s activities are considered illegal and detrimental while the Fed’s are within the law.
According to Barron, the Fed only highlights the positives of printing money such as benefits to the housing sector. The truth of the matter is that in the long run, the monetary expansion policy disrupts the structure of production leading to gains in the short term but losses in the long term (Barron). The losses are more significant than the aggregate benefits. This happens as the counterfeiter makes purchases with the money and lives a good life while the money is passed onto other people. They acquire property at no cost, and this affects the production process. The effects of the Fed printing money are infinitely more destructive to the economy. In nineteen years, the Fed has increased the monetary base by about three trillion dollars.
From the article, it is clear that the author disapproves of monetary expansion policies of printing money. This is evident in how he equates the Fed’s actions of printing money to the criminal act of making counterfeit money. According to him; both acts are illegal. He reinforces his argument with an account of an encounter with a team from the Fed which was unable to respond to his questions on the benefit of printing money for the economy. While a non-economist may not be able to analyze the effects of this action, the author seems to be a credible source given his career in the banking sector. At the end of the article, his credentials are listed including teaching at the Graduate School of Banking in Iowa and consultancy in the banking industry, his analysis of the subject matter has been simplified to appeal to diverse audiences especially those unaccustomed with the workings of monetary policies.
Works Cited
Barron, Patrick. “Counterfeiting Money Is a Crime — Whether Done by the Fed or A Private Individual” Mises Institute. 13 April 2019. Retrieved from https://mises.org/wire/counterfeiting-money-crime-%E2%80%94-whether-done-fed-or-private-individual Accessed 15th April 2019
