“The Buck Stops Here”: Voluntaryism and Counterfeit Money

by Carl Watner

Twice in my life I have been stuck with counterfeit paper money. As I have written before, all US government money is really counterfeit, but the kind of counterfeit I am discussing in this article is paper money produced by non-government agents and passed into circulation under the pretense that it really is government-produced money. [1]

My first encounter with a fake was when a customer gave me a $100 bill, which I innocently took to the bank to get changed into twenties. The teller took it, went into a huddle with the other tellers, and came back and told me, “Counterfeit.” The bill was actually a $5 note that had been bleached and turned into a fake $100. A counterfeit pen would not have detected it because it was on “authentic” paper. You could hold it up to the light and see a magnetic strip in it, but the strip read “five” instead of “100.” Also the hidden picture of the president was Lincoln, not Franklin.  The bank confiscated the fake and I was out $100. However, I knew the person who gave it to me, whom I called. He apologized and promptly brought me five twenties. [2]

The second time, I was given a $20 which I put into a deposit that went to the bank. Same routine. Only this time the note was in a bunch of twenties that the teller ran through her automatic counter. The machine stopped when it got to the fake. There was no magnetic strip in the paper, and when put on top of a real twenty dollar bill you could see that it was trimmed somewhat smaller than the real thing. [3] Still, it looked authentic. The bank confiscated this piece of paper, and I was out twenty dollars. In all probability, the person who passed it to me hadn’t known that it was counterfeit either.

What is interesting to note about these episodes, particularly if you are a voluntaryist?

First. According to the government, counterfeit paper money does not belong to you. The United States Secret Service website, “Know Your Money,” instructs that if you receive a counterfeit you should not return it to the person who gave it to you. It is against federal and most state laws to possess fakes. You are to surrender the note to the police, bank personnel, or Secret Service agents.

Second. There is such a thing as private crime protection insurance that a business may purchase. It may include coverage for forged checks and money orders, and counterfeit currency fraud, as well as employee theft and computer fraud.

Third. You may go on the offensive, and protect yourself by screening all paper money. Look for the watermark. Read the magnetic strip. Test with a counterfeit detection pen.

Fourth. What should be done if you are presented with a counterfeit note, which you detect before you accept it? The right thing to do would be to refuse it and tell the person who presented it to you that you must have another legitimate bill. It is not your responsibility or obligation to seize their paper money, even if it is counterfeit, any more than it is your obligation to seize their untaxed distilled spirits or illegal drugs.

Fifth. What should be done if you detect a fake note after you have accepted it and put it in your pocket? If you know its source, you might try to have them reimburse you. Not knowing its source, you are faced with two alternatives: knowingly pass it along to some other dupe who presumably would not realize it is fake; OR suffer the loss and continue on your way. The voluntaryist would choose the latter alternative. He or she would “turn the other cheek” and vow to improve his or her defenses against accepting counterfeits. Use a counterfeit detection pen regularly and check each and every bill more carefully. Take care of the means, and hopefully you’ll be as counterfeit free as possible. What the voluntaryist would not do is knowingly pass on a fake. That would be fraudulent. Being a person of integrity and responsibility, the voluntaryist knows that “the buck stops here,” and that he or she should have been more careful to protect against becoming a victim of fakers.


[1] See the interesting article by James E. McAdoo, “A Perfect Counterfeit,” THE FREEMAN, December 1975, pp. 722-726, in which he discusses the similarity between the effects of fractional reserve banking and undetected counterfeiting. Also see the Chart on page 8 of THE VOLUNTARYIST, Whole No. 115 (4th Quarter 2002) comparing “Real Money, Counterfeit Notes, and Federal Reserve Notes.”

[2] Though the note was forfeited to the government, who was entitled to the real five dollar bill on which the fake was printed?

[3] In “Technical Topics,” THE MATCH, Issue 112 (Fall 2013), p. 70,  Fred Woodworth observes that photocopiers automatically shrink or enlarge “images by about half of one percent” in order to “prevent people from making really accurate sized copies of cash … .” The copiers are programmed this way and “one cannot get around it by juggling the enlarge/reduce capability” feature.


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