Okay so I actually asked one of my friends about this before posting here. And she promised me “please, get serious or you’ll get plenty of fun made on your expense + some embaressment” when she did not have answer to the question and I told her that I might post it here. The question is: How does a country detect if some other country is printing its currency or not? This is pertinent according to me in the scenario like Zimbabwe where hyper-inflation and dollarization exist. 80% of the country is below poverty line. Assume that the president (with support of his fellow corrupt politicians) decides to start printing Botswana’s currency (and other currencies as well) in the amounts that it goes unnoticed. 1. Is this an absolutely unrealistic scenario? 2. What are the mechanisms that the other countries adopt to detect this? I know that there is a particular number on each note for identification but is that a sufficient measure that can’t be circumvented? 3. If this has been detected (like a sovereign default), what can other country do about it? Remember I am talking about something which I know will be illegal, and that the money in the system is reported by the government. But I am assuming that the president does a kind of “reverse-shrinkage” of money implying that the money flows in the market but is not disclosed in the system! Assume that a lot (including presidency) is at stake in this scenario for a lot of people and if they do not do this, a revolution is imminent. Thanks as always for all your responses (including sarcasm). Much appreciated.
I’m no expert but doesn’t the inflation rise beyond what could be expected under normal circumstances. http://en.wikipedia.org/wiki/Inflation
No inflation should not rise beyond normal because I am assuming that the president is NOT just printing the currency of one country in large amounts. It is logical to assume that he would try and print various currencies that are accepted in the market. Also, he would print the currencies in a limited amount just enough to keep the inflation a little in control. Don’t you think that a lot of manipulation is possible and this may actually be used as a tool to ruin some poor economy (apart from saving his own)?
Lots of times in history people have undermined another nation’s currency by doing this. We did it to the Germans in WWII and the Brits did it to us in the Revolution. Currently, the UN is in charge of making sure that nobody does it to anybody else. If Zimbabwe did it to Botswana, the Botswanans would complain about it and if everything went right the UN would handle it by adopting some resolution and then maybe or maybe not enforcing it. Of course, the Botswanians could always invade Zimbabwe.
That makes a lot of sense JDV, just one more doubt : What would be the ways in which other countries can detect this (assuming that Zimbabwe does this to a very limited extent to various currencies)?
Like in “Team America, World Police,” when Hans Blix tells Kim Jong Il that if he must let him in for inspection, “or else…” “or else what?” sayeth Kim Jong Il. “Or else we at the UN will write you a letter saying that we are very angry with you, and we will explain in great detail just how angry we are.” – Incidentally, I’ve read that the world’s best fake $100 notes are from North Korea. Soon they may need to start printing other currencies too.
anupamjain008 Wrote: ------------------------------------------------------- > That makes a lot of sense JDV, just one more doubt > : What would be the ways in which other countries > can detect this (assuming that Zimbabwe does this > to a very limited extent to various currencies)? If you see a US $100 bill with a picture of Mugabe on it instead of Franklin - it’s fake.