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In late 2000, the producers and crew for action flick Rush Hour 2 gathered at the now-defunct Desert Inn in Las Vegas and prepared to blow up a casino. The scene, which pitted policemen and Secret Service agents against a counterfeiter attempting to launder $100 million in superdollars, was to culminate with hundreds of thousands of fake bills floating through the air.

After several days of filming, the sequence was a success. Then, something incredibly odd happened. The bills, which had been supplied by a major Hollywood prop house, were picked up by movie extras and passersby and were attempted to be passed off as legal tender in various stores along the strip. The authorities weren’t too thrilled. Secret Service agents glided in, swiftly detained somewhere north of $100 million worth of prop money, then accused the prop maker -- Independent Studio Services (ISS) -- of counterfeiting, and ordered a cease and desist on all of their faux cash.

For ISS (the company who produced the money), the premise of Rush Hour 2 had become a reality -- and they were penned as the bad guy. Sadly, their story is indicative of a constant dilemma faced by prop suppliers in Hollywood: the necessity to skirt the line between strict counterfeiting laws and producers’ demands for incredibly realistic money.

Thus, the study of the effects of aprice level increase is the same as studying the effects of inflation.Inflation can arise for several reasons that will be discussed laterin this chapter. Suppose the price levelincreases, ceteris paribus. This means that in the period of time during which the price levelincreases, inflation is occurring. Increase in money supply effect on real interest rates. For now we will imagine that the price level increasesfor some unspecified reason and consider the consequences.Suppose the money market is originally in equilibrium at point A in theadjoining diagram with real money supply M S/P $'and interest rate i $'. Again, the ceteris paribus assumption meansthat we assumeall other exogenous variables in the model remain fixed at their originallevels.

Money in the Movies: A Brief History

A counterfeit Mexican bill used in 1940s-era cinema

Today, “movie money” is ubiquitous and plays a multitude of roles in TV shows and films. It can be seen clutched in the hands of heisters and gangsters, tucked covertly into steel suitcases, and splayed across poker tables in smoky rooms. But as far back as the inception of film (anywhere from 1878 to 1895, depending on one’s definition of the medium), money has been represented on the big screen.

Fred Reed, author of Show Me the Money, a book compiling the history of currency in the movies (both real and fake), chronicles how the use of real money gradually transitioned into the use of fake money. Legal tender made its big-screen debut in Thomas Edison’s 1895 kinetoscope film of a cock fight, in which two men wager ferociously; a few years later, in 1903’s The Great Train Robbery, real money was prominently featured during a stick-up scene.

But just as film began to flourish in the early 1900s, counterfeiting crimes rose; as a precaution, Federal laws were enacted that barred the use of real currency in full-scale photography. Studios found a replacement in 1920: when the Mexican Revolution ended, vast quantities of Mexican currency, rendered worthless by the war, were acquired by Hollywood producers and used in lieu of U.S. tender. When the supply of these notes diminished a decade later, studios began replicating other Mexican currencies. By the 1960s, this crude prop money was in widespread use.

Gradually, prop houses in Hollywood began sensing producers’ demands for more believable U.S. currency, and a new era of movie money was born. Between 1970 to 2000, nearly 270 types and 2,000 sub-varieties of movie money were produced for Hollywood’s use. To win market share, prop masters increasingly competed in creating the most realistic fake cash available -- but it came at a very real cost.

Legal Counterfeiters

Modern-day movie prop bills

Gregg Bilson Jr. is the CEO of Independent Studio Services, a Sunland, California-based prop company his father started out of an abandoned Lockheed hangar nearly 40 years ago. Today, his company houses over one million props in seven locations around the United States and Europe. They’ve provided props for nearly every blockbuster movie and hit TV show in the last few decades, from 90210 to Indiana Jones. They also fatefully supplied the prop money for Rush Hour 2, a job that still haunts them 13 years later.

When Priceonomics called Bilson to discuss his business, he painstakingly recalled the repercussions of the 2000 incident. The Secret Service came knocking on his door -- first with a cease and desist ordering production of the fake currency be cut off, then again to confiscate all of his digital files and currency inventory as it returned from movie sets around the world. In all, they eradicated nearly $200 million in fake studio bills. At roughly an $8 real money cost per $10,000 stack of fake bills, the loss was steep for the company.

As it turns out, the Feds have strict laws about the production of fake currency. According to the Counterfeit Detection Act of 1992, a reproduced bill must be: a.) either less than 75% or more than 150% the size of a real bill, b.) one-sided, and c.) made with only one color (so as to discourage the reproduction of identifying factors). Over the phone, Bilson elaborates that his bills at the time fit most of the criteria:

“The bills looked pretty god awful…we had 28 factors that were different -- they said “In Dog We Trust,” for instance -- but the Secret Service is very clear on their definition of counterfeiting. Honestly, if you followed their instructions, you may as well use Monopoly money. Feature films demand a certain bar of quality, so everyone is asked to break law in a sense by making prop money.”

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The Secret Service begged to differ. 'They thought they'd followed the rules,' said Chuck Ortman, a special agent in Los Angeles, following the Rush Hour 2 incident. 'In reality, the product they were producing was just too close to genuine…son of a gun, if it's green and it says '20' on it, somebody will take it.'

A real $100 bill (top) vs. Bilson’s $100 bill (bottom)

Bilson was eventually forced to destroy his entire inventory of currency -- “somewhere in the billions” -- at considerable loss for ISS, which is one of only two firms in Los Angeles that produces fake currency for the movies. The other, Earl Hays Press, came under fire of its own in 2000. When a hard-core metal band rained its audience with the company’s fake bills at a music video shoot, unwitting participants attempted to spend the money; the stunt resulted in the confiscation of Hays’ entire inventory. Subsequently, some of the bills ended up at Ellis Props and Graphics (one of Hollywood’s oldest outfits), and the Secret Service ordered that they cease operation, costing them tens of thousands of dollars.

Ehrenfeld was right about one thing. Well, almost: with very few exceptions, these are the oldest examples of paper money known to have survived. Marco Polo, Wikipedia. The Chinese not only invented paper, they invented paper money during the reign of emperor Chen Tsung (998-1022 AD). Examples predating the Ming notes are rarely encount