War and Money

by Elaine Schwartz    •    Mar 7, 2011    •    508 Views

A ship carrying freshly printed Libyan currency was intercepted near the coast of Great Britain. Assuming that it would be used to fund the Gaddafi regime, the British seized the cash and stored it in a “secure location.”

Like many nations, Libya outsources currency production. Making good currency is tough. Just keeping up with constantly changing counterfeiting techniques involves precise skills in which firms like Crane in the U.S. and De La Rue in Great Britain specialize. According to World Bank rules, printers cannot produce money for individuals. The order has to come from a central bank that has registered with the World Bank.

The Economic Lesson

Typically new money is used to replace worn out currency. The life of a dollar bill, for example, is approximately 1.8 years.

During the American Revolution, new money was used to pay the troops. With a military guard nearby, and a warning “not to leave his press exposed when absent from it,” Paul Revere assisted the American Revolutionary war effort by printing Continentals. Perhaps, though, Revere’s greatest regret was that he was paid with the money he made. The money issued under the authority of the Continental Congress soon was “not worth a continental.” So much had been issued that, in colonial terms, “A wagon-load of money will scarcely purchase a wagon-load of provisions.”

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