Thoughts on South African and international politics and culture

Monday, July 24, 2006

North Korea printing dollars?
US experts are currently tracking some of the most sophisticated US dollar bills ever to be counterfeited, and indications suggest that north Korea is the culprit. It's important to note that these notes are printed at an even higher quality than the United States Bureau of Engraving and Printing! The New York Times carries an exhaustive review of the cases here.
Counterfeits of this superior sort - known as supernotes - had been detected by law-enforcement officials before, elsewhere in the world, but the Newark shipment marked their first known appearance in the United States, at least in such large quantities. Federal agents soon seized more shipments. Three million dollarsÂ? worth arrived on another ship in Newark two months later; and supernotes began showing up on the West Coast too, starting with a shipment of $700,000 that arrived by boat in Long Beach, Calif., in May 2005, sealed in plastic packages and wrapped mummy-style in bolts of cloth.

In the weeks and months that followed, federal investigators rounded up a handful of counterfeiting suspects in a series of operations code-named Royal Charm and Smoking Dragon. This past August, in the wake of the arrests, Justice Department officials unsealed indictments in New Jersey and California that revealed that the counterfeits were purchased and then seized as part of an operation that ensnared several individuals accused of being smugglers and arms traffickers, some of whom were suspected of having connections to international crime rings based in Southeast Asia.

The arrests also prompted a more momentous accusation. After the indictments were released, U.S. government and law-enforcement officials began to say in public something that they had long said in private: the counterfeits were being manufactured not by small-time crooks or even sophisticated criminal cartels but by the government of North Korea. Â?The North Koreans have denied that they are engaged in the distribution and manufacture of counterfeits, but the evidence is overwhelming that they are,Â? Daniel Glaser, deputy assistant secretary for terrorist financing and financial crimes in the Treasury Department, told me recently. "?There'?s no question of North Korea's involvement."?

What would North Korea have to gain, should this be proved true? Well, with international sanctions being imposed and the freezing of North Korean assets, printing dollars large amounts of mostly indetectable dollars will assist North Korea in meeting import obligations from allies. Also, should you be somewhat of a conspiracy theorist, it may be part of a larger (highly improbable) theory of affecting US inflation data by flooding the US with large increases in in money supply.

Whatever the case, it forces some dangerous questions for the US...