How fake currency can distroy country's econmy.?

Question

Recently Pakistani intelligence agency I.S.I. has made startegy to launch fake currency specially Rs.500 and Rs. 1000 fake notes in the Indian market. Can any body tell how this will jeopardize Indian econmy.

Answer 1

It is called "Waging the Economic War"

You can destabilise your enemy country by so many methods

1. Waging war or military agression is one way (1962 war, 1971 bangaldesh war, Kargil war, etc.)

2. Instigating "internal unrest" by funding sabotage opertaions through espionage network

- training terrorists & financing them (Kashmir problem),

- infiltrate or sending ISI agents to various places and creating terror causing extensive damage to the life and property ( Mumbai, Coimbatore, Bangalore bombings),

3. dumping of goods at cheaper rate (what china does) and destabilising or killing the industries and thereby causing extensive damage to the economic development

4. Counterfeiting or priniting the enemy country currencies in their govt. press and sending them inside India to destabilise the economy.


- how fake currency will destroy our economy?

- a. The fake currencies will be used to fund the terrorist operations

- b. It will create a fear among the people that fake notes are in circualtion. Indian currency will lose confidence among the public. It will force the RBI to withdraw certain currencies.

- c. The fake currencies will increase the money supply and thereby result in inflation disturbing the economic growth. This will also add more to the already existing parellel economy (black money or unaccounted money in circualtion) in the country.

See how, in using one method, many damages are done. i.e. hit 3 in one bullet.

This is not a new technique.

During World War II, Japan also did the same thing.
It printed huge amount of fake ten rupee notes and smuggled them into India via. Burma.
It was used by those who opposed British.
The quality of those notes were so good that till 1970s, people used to say that this is Japan note and it is of good qulaity.

Hope this will do for the time being.

.

Answer 2

Currency get it's value from the equivalent amount of gold deposit ensured as security by the Reserve Bank. That means Govt will not print currencies without an underlying asset.Whereas in fake notes it is only a 'look alike' printed paper.The effect of this is that more money (cash) will be made available in the country than actually supposed to be.Net result is inflation as well as a parallel economy.

The supply and demand of money get imbalanced and economy get ruined. In other words when an enemy country opt for such an unethical act it becomes an undeclared economic war.

Answer 3

The fake currencies may flood the country with paper money not intended by Govt of India. When there will be lots of money without enough goods to match it, price will rise. Another problem is that people will lose confidence in the currencies and then the economy. RBI will have to adopt the fake notes for fear of loss of confidence of public in the currencies it prints. A very dangerous situation.

Answer 4

People lose confidence in the currency so stop spending money in that economy, ie they don't want to get stuck with the fake bills that are worth nothing so they hold onto their good money that is actually work its face value. Either that or they will spend in somewhere else where they have more faith that they are not putting themselves at risk.

Answer 5

This is the weakness of our secular commitments by our politicians. Lack of national strong commitments certainly allows such ways and means to sneak into our economic zone. Fake currency certainly causes to genuine damage to the economy, by increasing inflation, overflow/extra pumping money into wrong areas. All political parties irrespective their casteist politics affiliations, should exhibit very strong determination to face this menace. Otherwise this will add fuel to aids. People like me only pray GOD for eradication of all these damaging factors at once. Only time will solve the problem.

Answer 6

ISI will collect and hide true currency and RBI will forfeit those fake currencies. Indians will be cheated and economy will be jeopardised.

Answer 7

yes the money value is more than real indian product or
property value