Countries Printing money, Whose counting?

[ThePost]

I've always wondered how control of countries currencies and mints work. Since so many nations do not trust one another (evidence: spying, war, etc.), How do we know country X didn't just print a billion dollars in secret?
I'm sure the World Bank has some sort of job in this, but I would imagine some countries could do this pretty easily.

My assumption that this secret currency printing would be effectively stealing by the nation as a particular countries currencies value is somewhat based on how much of that currency is out in the public domain.

Would the real problem simply be moving the money after it is printed? Do countries get audited by the World Bank to prevent this kind of activity? Would it be that hard to explain where a billion dollars came from? What would happen if a country did get caught "counterfeiting" it's own currency? Has this ever happened before?

I know, So many questions. Anyone have any info or links to info for me?

Thanks!

[econophile]

as degen points out, printing money causes inflation. so the cost of printing money is bourne by all holders of that currency, whose real purchasing power decreases.

[r3vbr]

http://en.wikipedia.org/wiki/Image:Inflation-1923.jpg

[ThePost]

How does it bring the buying power of the currency down if no body knows about it? If everyone thinks that there are X amount of dollars for a country out there and that is associated with a price, wouldn't X + secret Y still be the same price?

I understand if everyone knows about the total amount of currency then the value of the currency goes down with every addition to the pile.

[econophile]

you are right that the value of currency would not change if no one knew more was being printed, but for this to happen the government would just have to keep the extra money in a vault somewhere and not spend it.

as soon as the government spends their printed money, the supply of money in circulation increases which drives prices up. it doesn't really matter if the extra money comes from counterfeiters or the government, it will have the same effect either way.

also, it is not necessary for everyone (or anyone) to know the size of the money supply for extra currency to cause inflation. more money chasing the same amount of goods and services will cause the prices to adjust upwards through the decisions of individual buyers and sellers. the sellers will notice more demand for their products in terms of dollars, but they won't necessarily know if this is because there are more dollars in circulation or people just like their product more than they used to.

[Redd]

This is not directly related to the OP, but something I've wondered in the past: how is freshly printed money introduced into circulation? Directly from government spending in the local economy?

[The4Aces]

banks

[ThePost]

I guess I was thinking about it more in the terms of how currencies are traded like stocks and if there is no one regulating new currency printing then it'd be possible for a country to secretly print off money and convert it to another currency and make a profit. Now this seems far fetched and probably not worth trying, but if the country wanted to be a 2 bit crook I guess they could make a quick score haha.

When you think about it with the overall economics and all then it makes sense why this isn't really a concern. Thanks for the extra insight.

[The4Aces]

the price of the money will go down also if too much is on the currency market also.