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The Reserve Bank of India came out with advertisements titled ‘Know your Bank Note’in newspapers across the country to educate people in spotting counterfeit currency. Indians were exposed to terminologies and technologies there were unaware about earlier like watermark, latent image, micro lettering, see through register, optically variable ink, security thread, intaglio printing, omron anti-photocopying feature, flouresence et cetera. Most people never knew that the note in their hand had so many in-built security features. Most people, even now, do not understand the need for it!

Why should Reserve Bank be so concerned about counterfeit at all? Are these notes a threat at all? Aren’t they too the paper that the original currency is? To explain a full impact, we will need to visit some of the fundamentals of macroeconomics but I am refraining from that. Ludwig von Mises pointed out, money is the only commodity that does not confer a social benefit when its supply increases.

Counterfeit money decreases the value of the real money in circulation. It definitely offers benefits to the counterfeiter but it diminishes the wealth of rest of the population albeit marginally. Counterfeit money results in inflation, as there is more money in circulation. Counterfeit money results in losses for companies and individuals, because, once detected, no reimbursements are given for the currency. Counterfeit money makes more and more people to opt for non-currency routes of transaction.

These are direct effects. Presence of a large amount of counterfeit in the system can mess up the entire economy. It reduces the control of the government machinery on the economy. Let’s try to see how.

More counterfeit notes in circulation means, people will have more cash in their hands which is not earning interest. People will tend to deposit this excess cash in bank. Banks will now have vault cash, thus increasing reserves in the banking system. Banks will then turn in this cash to buy Treasury Bills or GILT edged securities. An increasing incidence will put a downward pressure on interest rates. To prevent this, Reserve Bank will have to soak in the excess cash, and so the Treasury will issue securities to the public, thus making it liable to pay interest to the public from the treasury. In the long run, this liability will be covered by increased taxes!

So you see, counterfeit is not good at all for anyone. So, it was good that the Department of Currency Management came out with such advertisements to educate the public. But do you know what happened? Read on.

It was not the public alone that was making the best use of these advertisements. Those who were counterfeiting, understood every aspect of the original, and started working on incorporating all the security features into the counterfeit too! It is learnt that, counterfeiters in Pakistan (why Pakistan is subject of another blog) invested heavily into making the counterfeit as close to the original as possible (thanks to the Reserve Bank) and it seems they have succeeded in their attempts.

Now more interesting is the route they used to channelise these counterfeit into India. They did not do it directly. All these counterfeit, was introduced in the kingdom of Nepal (Nepal allows Indian rupee transactions)!! It was going to be difficult for the Indian government to keep a check on the rupee transactions in Nepal! Aren’t these people really smart and serious about their profession!?

It was only recently that the government realised what had happened! The bragging of its security measures only made the enemy of the Indian prosperity, more adept and more prepared! When they came across these almost original counterfeits, they realised that there was no way to detect the difference with the naked eye. Apart from a slight lack of clarity in printing, there was no way to make out the difference! The government has no clue now, about how much counterfeit money has infiltrated the system! Is a fraction of the rising inflation, a result of this infiltration!? We can’t rule out a possibility.

Now currency is not the only area which is bogged by counterfeit. Counterfeit goods are a menace too. But much more dangerous and damaging, having eternal consequences, is the impact that counterfeits do to our beliefs, ideologies, and life principles. How can I make such a statement at all?

I will explain it, but before that it is important to understand that however close the counterfeit is to the currency, it will still only be a counterfeit, because it comes from the wrong source, it doesn’t have the backing of the right authority (the Reserve Bank). The counterfeit only challenges the sovereignity of the authorised, legal, right authority.

On similar lines, ideas and philosophies that are not backed by the right authority are counterfeit. There are no hundred or a million authorities. One, and only one. There is only one authority who commands the universe and is the Sovereign. Its for each individual to check and test for himself what kind of view, ideology or belief he cradles in his bosom. Is it the original or a counterfeit at its best?

There were times in the past, when counterfeits were very obvious, but now such ideologies and philosophies come in so well camouflaged that an untrained eye, a naked eye, cannot spot it. You will need a magnifier and a right kind at that to detect the discrepancies. We all need to look more closely, more deeply into what we believe. Ultimately we become what we believe. Our beliefs command our destiny. Its time we take out some magnifiers and look more closely.

Well, it shouldn’t happen that you hold a counterfeit at the end of your life, because, be sure, you ain’t gonna get any reibursements for it!

‘Know you Bank Note’ for sure. ‘Know your Belief’ too.

Tags: , counterfeit beliefs, counterfeit currency, counterfeit notes, flouresence, Inflation, intaglio printing, latent image, micro lettering, omron anti-photocopying feature, optically variable ink, security thread, see through register, watermark

This entry was posted on Friday, May 30th, 2008 at 1:36 pm and is filed under Articles, Economy, Finance & Money, Geo, Politics, Purpose of Life, Religions, Society, Spiritual, Thoughts, Trends, Troubles & Problems. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.