Tell me more ×
History Stack Exchange is a question and answer site for historians and history buffs. It's 100% free, no registration required.
up vote 12 down vote favorite
3

Has any state ever performed an "economic attack" against another state, by printing fake money of the victim's currency?

Or, is it known if someone ever considered doing it, and which were the supposed pros and cons?

share|improve this question
1  
Yes, Greece tried it once (allegedly), but the plan backfired horribly. I remember reading about it in the newspaper, not sure I'll be able to find reliable sources, it was a while ago. – Yannis Rizos Jan 28 at 16:45
5  
No, against FYROM, sometime in the early 90s. I distinctly remember reading the story in a major newspaper, but can't find a source, so treat this as highly anecdotal and possibly false. The story, as I remember it, was that the National Intelligence Service wanted to flood FYROM with fake US dollars and disrupt its (at the time) highly volatile economy. The plan backfired as most of the money found its way back to Greece (the countries may be involved in a bitter dispute that's been going on for decades, but that doesn't mean our economies aren't extremely intertwined). – Yannis Rizos Jan 28 at 16:59
1  
ISTR Germans tried to do something like that around WWII, but fail to recall any details. – DVK Jan 28 at 17:01
1  
This was actually a plot element in Neal Stephenson's Baroque Cycle with the King of France plotting against England's currency. However, I think the only germ of known truth in there is that Newton spent some time hunting down counterfieters. – T.E.D.♦ Jan 29 at 14:54
2  
@YannisRizos I remember reading about a similar plan, again, somewhere in the early '90, but I seriously doubt it went through, most likely it withered in the planning stages. Also, at the time the currency of choice in Republic of Macedonia was the DeutcheMark, and not the dollar (currently it's the Euro) – SWeko Jan 30 at 8:07
show 1 more comment

3 Answers

up vote 13 down vote accepted

Frederick II the Great, king IN Prussia 1740–1786 used to counterfeit currency of the Polish-Lithuanian Commonwealth (PLC) on a large scale, for profit and to economically weaken Polish state. Officially PLC wasn't at war with Prussia but the only reason that this and other hostile activities of Frederick the Great were unanswered by PLC was the weakness of Polish administration at that time. (and that's probably the reason why he did it).

Frederick obtained the dies for Polish coins during his raid on Saxony during the Seven Years' War (1756-1763). They were there because at that time PLC was in a personal union with Saxony.

EDIT: Wikipedia piece about this particular episode of Frederick's activity points to those books in English as sources: Hamish M. Scott, The emergence of the Eastern powers 1756–1775 and Norman Davies, Europe: A History

share|improve this answer
2  
Your answers's good, but are there any sources? – Reliable Source Jan 28 at 22:33
I'd suggest using the editing tools to link some of the text in your answer to the wikipedia page you mentioned, as well as web references to those two books (I like Amazon pages as they tend to have reviews). Do that and this gets a +1 from me. – T.E.D.♦ Jan 29 at 17:19
@T.E.D. I suppose you can find mention of that in pretty much every modern book about Prussia's or Polish history or Frederick's biographies. I don't know why Wikipedia used that particular books as sources as they are quite general. I see no reason to promote them out of a multitude of possiblities. – Jake Jay Jan 29 at 18:10
1  
@T.E.D. I also don't want to promote Wikipedia by quoting it, as it is full of biased statements and shouldn't be considered as reliable source. – Jake Jay Jan 29 at 18:26
2  
@Jake this is history we're talking about here. There are no unbiased sources. – corsiKa Jan 30 at 15:38
up vote 2 down vote

During world war 2 , Germany carried out Operation Bernhard , one of the biggest currency counterfeit attempt in history , to destabilize the economy of Britain and the United States.

The operation was named after(and started by) NSDAP member and SS Major Bernhard Krüger , who led the operation from a segregated factory built at Sachsenhausen concentration camp, manned by 142 Jewish inmates.

The operation was started initially , to forge the Bank of England pound notes in denominations of £5, £10, £20, and £50.

By 1945 the production had successfully reached 8,965,080 banknotes with a total value of £134,610,810.

Interestingly after the war , the a part of this counterfeit currency fell into the hands of the jewish underground , who used it to bring displaced persons back to Israel.

share|improve this answer
up vote 16 down vote

The US government alleges that this has occurred - see Superdollars. Very high quality counterfeit $100 bills flooded the US market. Although it may be that these were merely a way that the responsible institution was funding operations, it is commonly believed that these were also intended to cause inflation within the US by increasing the money supply. I don't see any information about the total value of the counterfeitted currency, or how that relates to MB or M1. One would need to have that value in order to have any hope of estimating the inflationary impact. (and one would have to resolve certain controversies between classical and liberal economics).

That article also references Operation Bernhard, which I think @DVK mentioned.

share|improve this answer
2  
you don't need inflationary impact. Merely destroying or severely disrupting the general population's trust in their currency is enough. So you inject a large volume (millions of bank notes, preferably lower denominations even as those are in wider circulation) into the system, then start rumours about it and ensure that some of the stashes are found by law enforcement. – jwenting Jan 29 at 6:52
I'm unsure about this answer. While it is interesting, and somewhat related, if the source of those bills is unknown, it doesn't really qualify as an "attack BY a state". – Lohoris Jan 29 at 12:43
Could you expand on that? I'm not sure I understand. In my opinion, If one state takes an action that has the intended purpose of diminishing the economic viability of a second state, I consider that to be an attack. (That sounds argumentative, but it is intended to be a sincere question). – Mark C. Wallace Jan 29 at 12:50
2  
@MarkC.Wallace I mean that in this case we don't know who printed those money, so we don't know if it was a state or a private organization. – Lohoris Jan 29 at 15:05
1  
That is a stellar point. We have traditionally assumed that only state actors can carry out certain types of attacks, but the modern world is teaching us that some NGO's have the power to engage in asymmetrical warfare. +1 – Mark C. Wallace Jan 29 at 15:12
show 1 more comment

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.