A Story That Would Have Been Immediately Dismissed a Year Ago
A recent tiny item on the Internet and the back pages of newspapers had potentially earth-shaking financial implications. It was also something no one would have believed possible — until about a year ago.
Two men, allegedly Japanese, were “detained” in Italy as they attempted to cross the border by train into Switzerland. Inside their suitcase — outfitted with a false bottom – was $134.5 billion in U.S. Treasury bills.
That is more than the GDP of Hungary, Chile, Pakistan or New Zealand. The find reportedly consisted of 249 T-bills worth $500 million each plus 10 $1 billion Kennedy bonds.
Headlines suggested potentially dire implications. "Suitcase With $134 Billion Puts Dollar on Edge,” noted a Bloomberg column on June 17, which went on to suggest that "the U.S. risks losing control over its monetary supply on a massive scale.” Another report noted the two mysterious men together might make up the fourth-largest U.S. creditor.
It turns out the bonds were fake,and the authorities suggested the Italian Mafia was involved. (Italian police had broken up a ring of criminals posing as financiers peddling $1 billion in fake bonds just a month earlier.)
Still, it took days to unravel the mystery and in the interim some of the mainstream media – not to mention countless blogs — and many other observers were prepared to believe the $134.5 billion swindle was real. And why not? What would have seemed immediately preposterous before last September is, in this case, a small multiple greater than the Ponzi scheme that Bernie Madoff had been running.
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