I don\’t think so really

Italian prosecutors were trying to establish yesterday whether US bonds with a face value of $134 billion seized from two alleged smugglers were real or counterfeit.

The bonds were found when the two men — said to be Japanese but as yet not identified — were arrested while attempting to cross into Switzerland from Italy by train at the frontier town of Chiasso this month. Prosecutors in Como said that the two men had hidden the bonds in the false bottom of a suitcase.

Police said that Chiasso was a notorious crossing point for currency and bond smugglers but the sums involved this time were “colossal”. The amount of $134 billion would place the two travellers as the fourth most important investors in US debt, well ahead of Britain ($128.2 billion) and just behind Russia ($138.4 billion).

Elsewhere I see that bonds are in fact bearer bonds. Which causes something of a problem.

Ok, who has $130 billion in bearer bonds?  Remember, bearer instruments haven\’t been issued by the Treasury since 1982, when they became illegal to issue, at least to US institutions and residents (there was an exception carved out for Treasury instruments issued to non-US residents in 1985 – a time of high deficits)  The answer to that question: it is rather unlikely that there remains $130 billion of legitimate US Bearer issuance outstanding anywhere – to anyone.

I think we can happily conclude that they\’re fake bonds. And bonds which have a face value of $500 million each? Yes, I think that people probably will check them against the register of extant bonds before they issue funds against them.

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