Fallout from aliens destabilizing economy by counterfeiting all global currencies?

Question

Let's say a species of naive, yet well-intentioned aliens came across the Earth.

They generally like humans and decide to try to increase their happiness by supplying the thing which they have deduced all people clearly most desire: Money.

As they are wonderfully advanced, generating and deploying huge quantities of these rectangular pieces of fabric/polymer is absolutely no biggy. In fact after collecting a few samples and observing the world's different communities, they can recreate all banknotes perfectly (structurally, chemically, atomically) and have also learned which tribal groups like which types.

And so they fly their majestic space ships over all significant population centers (all the while wondering why the bipeds have suddenly started running about) and gently release our "gift". We're talking trillions of dollars worth of notes spewed across the roofs and streets of almost all cities, towns and villages; totalling several quadrilions (1,000,000,000,000,000) worth in all.

Now these aliens are really nice, if a government decides to change the design of their money and abolish the old one, then the aliens will just assume they've met the demand and now the natives all want this new flavor of rectangle: which they'll again graciously supply enormous quantities of, of course.

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So here's the question: while these kindly aliens try to understand this new and very bizzare cultural phenomenon called an "€con@mee" (sounds so exotic doesn't it!), what concrete effects would this event have and what policies would the world's various administrations put in place?

I am also very open to answers only explaining what would happen in specific countries. The US, for example.

Note: Just to be clear, when I say "Totalling quadrillions", I mean the total worth of the money dropped. Not the number of individual bills. These aliens aren't just making it rain with $1 notes people!

Answer 1

what policies would the world's various administrations put in place?

1. Switch to digital currencies and eliminate paper money.
2. Explain to the nice aliens that we were just settling on paper money. What we really wanted were Star Trek replicators and non-polluting power sources that don't require fuel. Thanks!

...and some of us would like spaceships too. We appreciate your attention!

Answer 2

If the governments of the world are in any way intelligent (which is a stretch), they would quickly switch to using a combination of highly nutritious, pre packaged food bars, and fully charged high efficiency batteries as currency. Using the batteries and eating the food would remove some from circulation, helping them to retain their value. In the meantime, food and energy crises are taken care of.

Answer 3

• What effects would this massive increase of physical currency have on the modern world?

The "local" economy would be wrecked or on the road to become so unless policies are quickly put into place.

• What policies would the world's various administrations put in place?

Immediate lock on any non-electronic currency exchange, and that would be done by the banks refusing to accept (but very willing to disburse, I bet) paper they well know has become worthless, even before the government had time to intervene. Then, a sort of "looting" would follow in which people would try to exchange money into "real" goods. This would be no great mischief in the developed countries where most shops already accept plastic. Elsewhere, you'd need to institute quotas and probably face riots and return to barter economy on a local scale.

In the medium run, change the currency, but that isn't something you can do easily.

Also, compensation for people claiming to have had paper money before the Event and wanting it converted to spendable electronic credit would make for interesting times for lawyers and attorneys.

• How would people/governments react towards these aliens?

Try to contact them and explain, and be quite convinced in their heart of hearts that the aliens knew exactly what they're doing and did this on purpose.

Also, try and ask whether there's some way of telling their money from "real" money - for example from its isotopic spectrum, if it has been manufactured from raw materials coming from outside the Solar System; or they could supply the whole Earth with very efficient ¹⁴C detectors. I expect forgers to try smearing ancient graphite on alien money to make it seem older. Or they could supply very fast and memory-endowed OCRs loaded with a white/blacklist of serial numbers.

Also, they'd dearly love to get their hands on replicator technology. That would be probably asked as a stopgap measure to supply medicines and first-aid necessities to the worst struck countries.

• Would there be significant changes in the popular perception of wealth?

No. Wealth is not hard currency in most people's minds. The perception of physical currency might change, though.

• What would be the general cultural and social impact of this event?

The Currency Rain - promptly co-dubbed the Currency Ruin - would have a large effect, but nothing compared with the arrival of an alien culture.

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Scenario

The world would be split in three camps overnight.

Really backward countries where barter economy is still thriving, and which would be split between cities (where this wouldn't work) and the country (where it would work). These countries would likely suffer from internecine warfare, with people from the cities trying to force agricultural producers to give them food, and the latter unwilling to do so in exchange for paper which might or might not be worth something.

Advanced countries where most business already uses plastic and you can already live without hard currency. These would be inconvenienced, but on the whole would emerge unscathed. Emergency shipments of POS readers could take care of most crises.

Banks tend to not keep paper money (actually, lots of people wanting paper money all of a sudden would be a catastrophe because the banks do not have it as they already loaned it). They would simply refuse to accept paper money, and be left with just the currency in their vaults that would have become worthless. And even so, if that paper had been kept sealed and untouched inside since the day of the Money Rain, and it could be proved - given a bank's pull, their say-so would likely suffice - then they might argue that that money is still worth its face value; it's just people outside's that isn't. So, no great bank crash -- not there and then, at least.

And finally middling countries where the economy, at the citizen level, is almost completely currency based and plastic money is next to unheard of. Those would descend into chaos, as no shop would accept money and, if it did, would quickly find itself crammed with worthless paper; in effect, every seller would have the choice between giving away its merchandise or hoard it and revert to barter for personal and familiar survival. I expect most would do the latter, which leaves a large part of the population with no real, legal way of procuring food and necessities.

Civil war would almost immediately break out. Shortly after that, it would be waves upon waves of refugees... and that's where bordering advanced countries would find themselves not so unaffected after all, and likely quickly become unwilling to shoulder the burden of their neighbours' welfare.

Answer 4

You needn't look any further than many failed states. When a country can't pay its debts, the typical response of the government is to just print money. This causes Hyperinflation and causes everyone to try to divest themselves of the useless currency. In other words, the currency itself becomes worthless.

Assets still have the value they always had, such as food, clothing, and fuel. Some items that have real value but are also durable and portable may actually rise in value because they can be used as a new form of money. Historically this has been gold, but it could be anything. Cigarettes are a form of currency in prisons. Batteries, non-perishable food, and medicine seem like great candidates.

A lot of people's investments aren't actually money, but stocks. If you own a stock, you own a portion of a company, which is really an asset. Assuming that company can figure out how to stay in business and produce their product for some kind of profit, then that stock still has value. If nothing else, that stock may entitle you to a share of their assets if they liquidate (but it depends on the type of share).

There are other alternatives to cash though. Let's say as soon as the aliens started dropping money, the government declared that all cash was worthless, but all deposits were still valid. A bank, for instance, only keeps 5% of the on-deposit money as cash. When you deposit \$100 in your account, the bank loans out \$95 of that, and that person typically deposits it in their bank account (or spends it meaning the seller deposits the money) and then the bank loans out 95% of that \$95, and so on. The net result is called the "money multiplier" and it ultimately means that the amount of money in circulation is only 5% cash. It's hard for me to understand what this would mean, if suddenly only that 5% became worthless. Could we just switch to a cashless society? How does the government continue to manage the money supply?

One option would be something like Bitcoin. One could imagine a crypto-currency where only the government had the keys necessary to authenticate a transaction. This would be some kind of centralized electronic currency (instead of the distributed nature of Bitcoin).

Countries have gone through periods of Hyperinflation and then stabilized by issuing a new currency. If you immediately say "cash" is worthless but money on deposit has value, and you immediately start issuing a new digitally-authenticated currency where the value was one-to-one the same as your existing denominations, and you offered some kind of replacement plan for the banks that hold most of the cash currency (the amount they have on hand at the moment the aliens started dropping cash could probably be authenticated by an audit) then it just might work, and the world could avoid big financial system problems.

Answer 5

Since we need oxygen, why wouldn't they replace all of the nitrogen in our atmosphere with oxygen? Since we need (and "everybody" likes) water, why wouldn't they just increase sea level by oh, say 20 km? Your premise assumes they're idiots, or in a comic book way, villains (the road to Hell is paved with good intentions).

There was an old old TV show "WKRP in Cincinnati" (iirc) a comedy which had what I consider one of the funniest sketches on TV. It's Thanksgiving (US Autumn holiday feast day). They're having a free Turkey give-away (traditional main course) but the birds are live. The reporter/news anchor giving them away in some parking lot is arriving by helicopter with the birds. He decides it would be more 'festive' (suspend disbelief here) to let the birds fly down and land in the parking lot, so he releases them at several thousand feet altitude. One problem is, turkeys don't fly. Of course, a 10 or 20 pound object can cause quite a bit of damage on impact from a height (although to be honest, I'd guess that terminal velocity for a bird, even a turkey, is not extreme).

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So, first question is what do you mean 'replicate'? As you probably know, each note has a unique serial number. I assume there's some magical process which allows the aliens to not only exactly duplicate freshly printed notes, but notes which have been in use and are worn and torn, and marked-up and creased. Magic, indeed.

In the USA, there are about 40 billion notes in circulation with a value of about $1.5 trillion. If we assume the rest of the world has a proportionate amount of paper currency, then since the US is 4% of the world population, we're talking about 1 trillion notes or a value of 37 trillion USD. But you're talking quadrillions. So we need to multiply that by a factor of what? 100? 500? Say 100. So they dump 100 trillion notes, and assuming each note weighs 1 gram, that's 100 billion grams or 100 million kilograms. That is about 20 years worth of space dust accumulation, which could have a small effect on our orbit and possibly our spin (not my area of expertise).

Its fall would probably also lead to a bump up in temperature (potential energy converted to kinetic), but I'd guess not enough to be easily measured. A lot of it would blow into bodies of water, causing massive pollution, reduced light transmission, and various ecological effects as well as clogging drainage systems leading to flooding, disease and death. Accumulations of it would cause fires and power line shorts and more people would die.

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But I agree that the economic effects would be the most significant. Paper money would become worthless. This would be equivalent to a kind of hyperinflation. People would lose their jobs, their businesses, their health insurance. People would die.

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To answer some of your questions:

Physical effects are (somewhat) predictable. Banks would refuse to accept banknotes, coins would become more valuable. Only businesses accepting electronic payments would survive. Small operators - a lot of them -would fail. With the demise of paper money, some economies would go to cards or electronics others to metal coinage. Would purses become universal? IDK. I think the effect would be larger than the 9/11 attacks were on the US mood/world view, but over the entire globe. Rural populations - those who missed the mana, would probably suffer even more, but that's another area outside my expertise. There'd be a period of adjustment, and things would go back pretty much to (a new) normal. Mugging would decrease, identity theft and online hacking explode. There would be all sorts of reactions and side-effects. It's impossible to predict accurately, imho. So much of the initial reaction would be ill advised. More centralized governments? probably. National ID cards? Maybe. Bitcoin? A big winner.

Perception of aliens? Generally hostile, I expect.

Effect on society? Well, I don't believe technology changes human nature. So we'd still be the apes in suits we've always been. Lying, cheating, stealing, giving, caring, loving, and hating.

Answer 6

I think this would totally devastate the financial systems of the world until the governments learned how to communicate with the aliens or how to adapt to this.

I think you would see a shift back to commodities like gold and silver. Not necessarily coins, but bars. If the aliens started producing those too, I think the world would put two and two together and they could get the aliens to produce literally any element they needed by making their currency out of rare materials. Naturally, this would be a very positive outcome in the long run. If the aliens could replicate any currency you would see money become useless and we would go back to the old days of barter, land ownership and power being the way the economy works.

I think administrations would start restricting things related to currency in the beginning, and you would see them start to horde things of value, like equipment. I would not be surprised if some governments reacted with hostility, shortly before the aliens started dropping notes.

I think the aliens would be seen differently depending on how they reacted to hostility, if the governments could contact them, and what kinds of "currency" they could replicate.

Answer 7

The clever country immediately changes their currency to something actually useful.

An alloy of useful metals, for example. Gems. CPUs. 3d printers. Atomic clocks. 3d printing raw material spools. Cutlery. Whatever.

Then the aliens rain down this new "currency", which they put to use. The country then rotates to a new "currency".

Manufacture a few 1000s of something, get millions or billions or more of it.

Design an electronic currency to handle the rest of the economy. Maybe require that trading the currency along with a set of physical tokens (cash) to emulate the old way of trading, thus encouraging more "mana from heaven".

Answer 8

It would be incredibly annoying and throw the world into panic mode for a bit, but then everyone will just switch to completely digital currencies like 92% of world currencies are.

That panic mode would go something like...
- "oh I got this large amount of money. let me put it in the bank/spend it"
- if they spend it then yay they get a bunch of free stuff which no one really notices is free other than all the computers say "more than what we expected was bought here so produce/send more here" which wastes resources when noone buys it the next cycle which inflates the currency by some ammount. And that small inflation is done millions of times across all systems.
Or because so many people all of a sudden get money all at once it also can create a run on products through someone buying too much or too many people wanting it at the same time which raises the price which causes inflation too.
- If on the other hand people instead deposit this money then the computers will go "ding this person suddenly has more than 10,000 they are putting in the bank, where is it coming from?" which will then be investigated and someone will know what happened and as a result all these large transactions that are out of place will be rolled back.

There is also the possibility, though very unlikely that it could lead to a good stimulis by way of the rich realizing what is happening and just deciding to take the lose and simply work with the government and bank to figure out how much currency was "added" and simply remove that as a type of tax on the company to balance the books. The reason this would be good is that most of the problem as it stands is that the economic system of the world has a blockage in the arteries which is keeping all the capital in the hands of a few, whether they want it or not. A sudden influx of capital to the poor and the rich just taking this hit would be like creating a temporary new artery around the blockage, but considering they wouldn't do this it doesn't really matter.

Another possibility is that some people realize that depositing 10k+ probably isn't a wise idea, especially not soon after event and they'd hold onto the currency and deposit it in smaller amounts. Not enough people would do this to make a difference, but if you were to do this you'd have to do it within about a year or two window, before everyone goes to all digital and will no longer accept physical currency...

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Also, this is less of a problem than you might think because all physical currency has marking of some sort that set each piece apart from any other piece. Much of the "money" would be useless because these markings wouldn't mean anything to them and reproducing it would result in random symbols that would be unusable or would be duplicates of bills that already exist and you could just invalidate all bills which are known to be duplicates. The Legitimate holders would be unhappy, but more than likely the legitimate holders would be the aliens if they don't try to duplicate the security marking patterns so it would just take a short period to realize then issue a statement that those aren't legitimate.

Answer 9

Other answers are only addressing the economic ramifications of these helpful aliens. However there are other impacts to our planet as well:

Earth has roughly 150,000,000 sq km of land mass and 95% of humans inhabit 10% of that, which means 95% of your currency will be rained down on a 15,000,000 sq km area. So 950,000,000,000,000 bills divided by a 15,000,000 sq km area gives you 63,333,333 per sq km or 63.33 per sq meter. A US dollar bill is approx 15 cm X 6.5 cm. Assuming all bills are the same size, evenly distribution in the populated areas, and I did my math correctly then that means it will be covering 61.7% of the surface of populated areas.

This is very bad.

61.7% of road ways are going to be covered with money, this is going to cause all kinds of accidents all over the planet. People will be slamming on their breaks to collect the money, paper bills will help blind drivers and cause them to hit the cars that decided it was a good idea to stop on an interstate.

People will have trouble collecting all the money that was printed and so the money not collected will cause environmental damage (essentially it will be litter at this point since its value will be gone). Paper money is also a fire hazard and if the money catches on fire it can help fuel a fire storm causing property damage.

Answer 10

Worldwide littering? As if the normal sort wasn't bad enough. To say nothing of the fire hazard, what will happen when all that paper starts to rot? I suspect you'd have more immediate problems than runaway inflation.

Let's say your average note is ~20 by 10 cm, on 100 gsm paper or lighter polymer. That's $0.02 \times 100 = 2$ grams.

$10^{13}$ notes is therefore $2 \times10^7$ tonnes of paper and polymer (assuming same weight).

At least half the world's cities will burn down overnight. The rest will declare a state of emergency and call out the military. Think of a major natural disaster like Katrina, but worldwide, only this time the stuff left behind catches fire. Major oil refineries and stores will have to shut down, as will any gas fields near population centres. Internal combustion vehicles and thermal power plants will need to be regulated.

Since transport into population centres is being regulated, within a day, you'll start having shortages, as the limited electricity means stored food will start to spoil. Riots and fights over resources will start breaking out, since they can't use cash for exchange, and electricity is being rationed to avoid starting fires (no electronic payments).

As I said, this is just Day 1. Day 2 will double the disaster,even if the aliens don't start litter bombing again. Several areas will start spraying down the streets and buildings to avoid fires starting. Several tonnes of soggy paper and polymer will block the sewage system, then start to rot (the paper, at least; the polymer will simply block the pipes), producing methane, while the sewage already present will start to overflow. Waterborne diseases will become epidemic, moreso since the last couple of generations haven't developed immunity thanks to water purification. Soon though, the methane itself will start becoming a problem in the lower areas of the cities--even if it doesn't explode, it's still poisonous.

Forget the economy, every major population centre will become uninhabitable, forcing people into the country, where presumably the aliens will target the next largest population concentrations.

...Are you sure they aren't invaders?

EDIT: Changed $10^{15}$ to $10^{13}$ and consequently $10^9$ to $10^7$ in response to comments below

Answer 11

I am assuming that alien can somehow produce fake credit card that always get accepted by a POS.

Short term a bit of chaos. One thing the government could do to govern the situation is to create a board devoted to estimating and making public the amount of money put in circulation by the alien. If their estimates are good enough they can then, at least as a temporary measure, dictate prices for all goods and peg them at the inflow of alien money. It's a bit of an hassle but can keep things reasonable for a while.

People would of course attempt to kill each other as they try to skew the uniform distribution of money from aliens toward themselves. The government might want to say something on this kind of behavior, assuming (unlikely) the various minister are not too busy collecting the money from the ground.

Answer 12

20 years ago this question might have been interesting but it's 2017 so ask yourself this - How many people do you know who depend on bank notes for their survival?

Sure you might depend on physical cash if you're a fruit picker, prostitute, drug dealer or selling beans on the side of the road but for most of us "money" means a plastic card with numbers on it and a bank account tied to numbers in a computer.

What would actually happen is that the wealthy elite, with their money in bank accounts, trusts, shares, bonds and property would simply use the event as an excuse to stomp down harder on those who do rely on physical bills (ie, the poor and fringes of society).

Banks and governments would simply declare cash worthless and move on with their lives.

Answer 13

Actually, it would have very little impact. In the western world, actually cash money is no longer used for anything other than quite trivial transaction between individuals. By trivial, I mean to the economy, not to the individuals involved. For example, the foreign exchange markets trade over five trillion dollars a day, but the total cash in circulation on the planet is only about four trillion dollars. Major currency upsets are quite common, for example, India took the most common cash notes out of circulation all together and with very little notice and while it caused problems for some, the country are still fine.

If the aliens actually wanted to disrupt the world economy through 'kindness', they would have much better results by giving away free power sources. Drop a few clean fusion reactors into some developing countries and watch the world turn upside down.

Answer 14

Money with unique ID on banknotes is not falsifiable in that each banknote is unique and can be disabled if detected duplicate (banknote usage at two distant spaces in a small amount of time), and exact duplication (atom-wise) of a banknote is not a technology that can destabilize this system. Also, IDs need not be printed or be numbers, see the systems that analyze the paper fibers arrangement, that are somewhat random, and extract unique IDs from these.