Counterfeiting money is punished for good reason.  It’s a grave problem that the so-called protectors of private property begin counterfeiting.  It’s certainly a problem when small counterfeiters engage in illegal activity.  It’s much more severe when done on a large scale.  Small counterfeiting is less severe than large scale.  However, it’s still severe.  The difference is in degree, not in kind.

Central banks around the world counterfeit on a large scale.  This is done nonstop.  Less paper money is in existence than what is owed.  The debt is impossible to pay off under current conditions.  Counterfeiting must be constant, or the public might discover it’s a house of cards.  Repudiation is the answer.  The bond holders will lose money, but not all investments are good investments.  Also, these bonds are to be paid off by future aggression.

Money must be in savings to be lent out under 100 percent reserves.  However, we don’t have 100 percent reserves.  They are only required to have a fraction to lend money.  That fraction keeps getting smaller and smaller to the point where no money is required to be in savings to make a loan.  They can print the money.  It’s more likely that they’ll add it digitally.  It’s much easier to expand credit, freeze assets, and much more.  Bankrupt banks can remain solvent.

This is counterfeiting if done privately.  The state has a legal monopoly, and ensures it’s only legal for them to counterfeit.  This is an easy source of revenue, and what appears to be growth.  The masses appear to get more for less.  The economy appears to be doing well.  They are in good position to win the upcoming popularity contest.  Fractional reserve banking wouldn’t exist if private property were respected and protected.

Legal counterfeiting is the most insidious of all.  Almost everything is funded by this.  You can’t claim to be for freedom while supporting this.  Counterfeiting benefits the early receivers at the expense of the late receivers.  More goods don’t come into existence.  You aren’t the early receiver.  It’s nearly inevitable for prices to rise.  You are paying the new prices with the old money.  You are harmed.  This includes your rainy-day fund.

Reference

Murray Rothbard; The Case Against The Fed