[Buddhist]

Well, for dark/low fantasy story that I am writing, there are 2 nations engaged in a cold war of sorts. One nation has a greater economic, political, and social understanding of the world by means of which I will not articulate right now. That nation attempts to undermine the opposing nation by trying to destroy their economy and try to subtley undermine their culture and infiltrate elements of the other nation's culture. My question is primarily about the economic portion.

Would counterfeiting another nations currency on a massive scale and secretly putting it in circulation inflate their economy, if done enough?

I mostly got the idea of post- Treaty of Versailles Germany, in which they printed billions of their currency in order to pay off their enormous debt. It would be something like that, except weaponized.

This post has been edited by Caligrus Morn: 12 August 2009 - 11:41 PM

[eragon nerd]

Well, it depends on what technological setting you have this in. If your talking about a fantasy set in an industrial or post-industrial society, then yes, causing hyper inflation can undermine the other's economy. But you have a huge problem with how to inject the cash. I just can't seem to think of a way to inject the cash on a large scale and "secretly" doing it seems like a tall order, if not impossible.

If your set in a pre-industrial society, cash was largely irrelevant and almost everything was on the barter system.

The problem just is deployment. Keep in mind Germany had to pay those debts. It had no other way and it just hoped the inflation wouldn't be so bad.

This post has been edited by eragon nerd: 12 August 2009 - 11:52 PM

[Buddhist]

Well, it depends on what technological setting you have this in. If your talking about a fantasy set in an industrial or post-industrial society, then yes causing hyper inflation can undermine the other's economy. But you have a huge problem with how to inject the cash. I just can't seem to think of a way to inject the cash on a large scale and "secretly" doing it seems like a tall order, if not impossible.

If your set in a pre-industrial society, cash was largely irrelevant and almost everything was on the barter system.

It is possible that they could have infiltrated members of their own nation into the opposing nation with large sums of money, and figure out a way to disperse it or something.

EDIT:
Dammit, the nazis steal all of my plans. Someone on another forum just posted this: http://en.wikipedia....ration_Bernhard

This post has been edited by Caligrus Morn: 12 August 2009 - 11:59 PM

[Charles]

Would counterfeiting another nations currency on a massive scale and secretly putting it in circulation inflate their economy, if done enough?

Eventually. Here's the thing about inflation. Inflation is when a sort of random group of products (called the product basket) increase in price. So say you have an extra billion dollars put into an economy running a trillion in circulated cash (1% increase.) Say you give that cash to a bunch of people. Distribute through a laundering process of some kind. What's the natural occurrence? People buy more stuff. So these companies take in extra money. The company now says...hey, we're selling more of this stuff now, we have to increase the quantity of this item. Because of this extra money, they put more into making this item.

So you now have extra money in the system, resulting in a much easier credit system due to the fractional reserve system of banking. The effects of this can be seen today. Too much credit results in people making a lot of riskier investments than they should. This sets off a recession when the apparent well runs dry.

Also, a lot of money being dumped into the system makes it very difficult to plot correct quantity demanded for products causing price points to rise. This can also lead to a recession/depression on a large scale.

You'd see a lot more unemployment, a credit crunch, and a lot of product hoarding.

[Buddhist]

Would counterfeiting another nations currency on a massive scale and secretly putting it in circulation inflate their economy, if done enough?

Eventually. Here's the thing about inflation. Inflation is when a sort of random group of products (called the product basket) increase in price. So say you have an extra billion dollars put into an economy running a trillion in circulated cash (1% increase.) Say you give that cash to a bunch of people. Distribute through a laundering process of some kind. What's the natural occurrence? People buy more stuff. So these companies take in extra money. The company now says...hey, we're selling more of this stuff now, we have to increase the quantity of this item. Because of this extra money, they put more into making this item.

So you now have extra money in the system, resulting in a much easier credit system due to the fractional reserve system of banking. The effects of this can be seen today. Too much credit results in people making a lot of riskier investments than they should. This sets off a recession when the apparent well runs dry.

Also, a lot of money being dumped into the system makes it very difficult to plot correct quantity demanded for products causing price points to rise. This can also lead to a recession/depression on a large scale.

You'd see a lot more unemployment, a credit crunch, and a lot of product hoarding.

So it would work, even in a society similar to the first Roman Empire (or republic or whatever it was called... Basically before the Empire was split to become the Eastern and Western Roman Empires)?