How can U.S. prevent counterfeit if the U.S. dollar bills have no expiry date?

Question

Counterfeit bills are a big problem for governments, so they periodically update their bills to add several security features aimed at preventing counterfeit bills.

But I imagine that for this to work, the old bills need to be removed from circulation, for example by setting an expiry date after which they can't be converted to newer bills and lose validity.

How do countries whose bills don't have an expiry date handle counterfeit? What prevents an expert counterfeit from printing money from the 1950's (which the government themselves believe to be insecure now) and making a profit? I believe that this is the case of the U.S., since the U.S. dollar bills do not have an expiry date.

Edit

Just to clarify, I am not talking about the viability of counterfeit in general. Since governments have deemed necessary updating bills with new security features, you should work with the assumption that counterfeit without those new security features is (or will become in about 10 years) feasible and profitable. So any explanation that applies to counterfeit in general (like matching serial bills, say) is automatically invalid.

Answer 1

Interesting thought. I think (at least) two things would help to foil a counterfeiters. 1. He'd have to not only duplicate the bills, but then make them look old. So there's an extra challenge. If you tried to give someone a bill dated 1950 and it looked new, that would be likely to arouse some suspicion. And 2. If someone went to the bank or wherever with a stack of bills all dated 100 years ago, that would surely attract attention.

In general I think the goal of counterfeiters is to pass their bills unnoticed. If you can hand someone your fake bill and they don't think about it but just accept it, you win. If they get suspicious or cautious for any reason and start looking carefully, they're liable to see the flaws.

And of course the flip side is that if bills did have an expiration, what happens to someone who tries to tuck some money away for emergencies? He may find that that money he stuffed in the shoe box 20 years ago has now expired. Someone who wasn't aware of the law or didn't think about it could accidentally lose a fortune overnight. Even if the expiration period is long, it's not like everyone who handles the bill has that amount of time. Suppose the expiration was 20 years, like in Switzerland (sort of). For the first person to get the bill, fine, he has 20 years to spend it. But what happens to the poor guy who gets the bill when it's 19 1/2 years old? If he doesn't notice and let's it sit in his wallet or whatever for six months, suddenly he's out the money. Indeed, depending on how the system worked, it might mean that every time you received cash, you would have to go through every bill and check that it wasn't expired, or about to expire very soon. You couldn't just stuff change in your pocket: you'd have to carefully check each bill. Plus you'd have to have a mechanism for people to trade in old bills and get them replaced with new bills, which would surely be at least a nuisance.

So it seems to me that the question is whether the risk of counterfeits outweighs the unfairness of destroying the value of people's cash, or at the very least imposing inconvenience on handling money. I suppose if a country had major problems with counterfeiters, they might be forced to do this.

Answer 2

If you deposit money in a bank, the bank teller (the person who processes the deposit) takes the cash and puts it in a cash counting machine. The machine is entirely capable of doing any number of checks on the money. In particular, it can check that the paper is the type of paper on which money is printed (as opposed to, say, copier paper). And yes, the machine can systematically aggregate information with other machines.

One of the big problems with counterfeiting money is getting good paper. One solution to that was to take $1 bills, bleach them, and print higher denominations on them. With the new money, the $1 bills have unbleachable marks in them. So the bill may look like a $20 bill to the eye but actually recognized by the machine as a $1 bill masquerading as a $20.

Yes, the criminals could continue using old $1 bills printed to look like old $20 bills. But the $1 bills are increasingly scarce. Because any bill older than about three years gets sent back to the Treasury department to be replaced. So they don't have an inexpensive source for old $1 bills.

A bank would almost certainly catch a counterfeit bill at the time of deposit because the equipment is designed for that. The greater problem is that someone may pass counterfeits somewhere other than a bank. The typical Wal-Mart does not have the same kind of counting equipment. But it's harder to pass large numbers of bills at a Wal-Mart. They only take moderate amounts at a time, say $500 for a really large order.

The initial purchase will almost certainly be successful. But after the initial purchase, surveillance video will show who made the $500 purchase with cash. They'll be on the lookout for more counterfeits.

So for $500 in merchandise, the counterfeiter paid $25 or more to get the $1 bills. Had to find the old $1 bills, when most are newer than that. Paid more money to do the counterfeiting. And can't sell the $500 merchandise for $500 but probably more like $250 after costs. And can't scale things up because a repeat visit is much more likely to be caught. A $200 profit on a counterfeiting event is not that much. They really need more money for it to be profitable compared to other illegal things that they might do.

Answer 3

In addition to Jay's excellent answer...

the old bills need to be removed from circulation, for example by setting an expiry date How do countries whose bills don't have an expiry date handle counterfeit?

Paper money wears out, and old bills get pulled out of by banks, then sent to the Fed for shredding/burning.

More importantly, a 1957 US $1 bill would have been:

1. a Silver Certificate, which would mightily confuse retailers and bank tellers, and
2. only made in $1, $5 and $10 denominations, so trying to pass them off as $20 or $50 or $100 bills would be known as fakes with a little research.

https://en.wikipedia.org/wiki/Silver_certificate_(United_States)

The small-size silver certificate (1928–1964) was only regularly issued in denominations of $1, $5, and $10.