Posted on

Money & Government: Part 1

False Perceptions

By Steven Clyde

“Money, get away. Get a good job with more pay and you’re O.K.

Money, it’s a gas, grab that cash with both hands and make a stash. New car, caviar, four star daydream. Think I’ll buy me a football team.

Money, get back. I’m all right, Jack, keep your hands off of my stack.

Money, it’s a hit. Don’t give me that do goody good bullshit. I’m in the hi-fi fidelity first class traveling set. And I think I need a Lear jet.

Money, it’s a crime. Share it fairly but don’t take a slice of my pie.

Money, so they say, is the root of all evil today. But if you ask for a rise it’s no surprise that they’re giving none away.”[1]

Money is one of the most misunderstood facets of our personal lives, and we spend a large portion of our existence attempting to acquire more of it. Furthermore, the general public lacks a realistic sense of the world we live in based on media propaganda and misinformation spread through the lens of “conventional wisdom”; so it’s no mystery why there exists this gap of knowledge.

Still it must be true that at least some of us realize in some aspect that this same thing we use every day is exorbitantly complex in nature. Does the average citizen really know what the Federal Reserve is? What a reserve ratio is? What inflation is (beyond the thought of their price of living rising)? Should they be expected to?

To quote Murray Rothbard from a 1970 piece when he was attacking the Anarcho-Communist school of thought, which was heavily attracting Marxist-Stalinists at the time:

“It is no accident that it was precisely the economists in the Communist countries who led the rush away from communism, socialism, and central planning, and toward free markets. It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance. Yet this sort of aggressive ignorance is inherent in the creed of anarcho-communism.”[2]

Murray N. Rothbard

Yet, to this day most have not even the slightest interest in economics or history, yet take positions which would have to imply they are masters of both.

Before we examine money in full, a few examples of how our thinking is heavily influenced by information that is false will illustrate why it’s critical to dissect these assertions. There will never come a time when it won’t be important to stress the pontifications of the main stream media, and their half-truths.

Continue reading “Money & Government: Part 1”

Posted on

Money is the Root of All Good

You know what grinds my gears? People who don’t truly understand money and its purpose. I hate hearing someone say with contempt that “the world runs on money”. Or hearing other people talk about how money is somehow the root of all evil. Or that when you don’t do something for profit, it’s some form of nobility.

Money is nothing but a medium of exchange. The creation of money, in times of barter, allowed everyone to trade more of the goods they didn’t need and receive more of the goods they did need. Without money, arbitration, a time-consuming act in itself, would’ve been the go to. If arbitration could not work, fraud, theft, and possibly even wars would break out. Money prevents all this from happening.

Of course, these were simpler days, the final days of bartering without a common commodity and the first days with it. These were the days before the enormous amounts of wealth were created that the government would later endlessly try to siphon for themselves disguised as helping the greater good. Of course, money is responsible for all the wealth too.

Money, and later wealth, is created precisely by the producers of society. The Crusoe who decided to build a net to catch fish rather than hand-pick them. The farmer who invested his time into irrigating his crops. Aren’t these people the ones who are supposed to run the world, the ones who are the antithesis of evil?

The ones that add more to society than anyone else are incentivized by the desire to make a profit. Making a profit means that you are actively providing value to another’s life. You improve their standards of living by making a profit. How is that evil? Continue reading “Money is the Root of All Good”

Posted on

The History of the Dollar

By Freedom Juice

1500s: The “dollar” originates in Bohemia as a one-ounce silver coin known as the “Joachimsthaler.” The uniformity and fineness of these so-called “Thalers” earns them such popularity that similar coins are minted across Europe. The general term for large silver coins becomes “thalers,” which later transliterates into “dollars.”

1520 Joachimsthaler

1700s: The most widely circulated coin in Colonial America is the Spanish “Piece of Eight” or “Spanish Milled Dollar.” By the War of Independence, it is adopted as the de facto monetary unit of the American people.

1768 Spanish Milled Dollar

1775-1779: The Continental Congress emits bills of credit ostensibly redeemable in Spanish Milled Dollars, but far more promises to pay are issued than can be honored. The bills rapidly depreciate and become worthless by 1781. Hence the phrase, “Not worth a Continental.”

1776 Continental Currency

1792: The U.S. “dollar” is officially created by the Coinage Act of 1792 and defined as a fixed weight of silver equal to that of a current Spanish Milled Dollar: 371.25 Troy grains. The Act also creates a fixed legal exchange ratio between silver and gold of 15 to 1 by defining 24.75 grains of pure gold (the market equivalent of one Spanish Milled Dollar) as being equivalent to one dollar.
Continue reading “The History of the Dollar”

Posted on

First Paper Money in the West

Playing card money was the first paper money introduced in Western civilization. Issued in 1685 by Jacques de Meulles, the intendant of New France, the cards were an emergency measure to pay colonial officials and troops after the annual appropriations failed to arrive from France. At first, the issue of card money was not inflationary: the cards were backed by funds that were supposed to arrive from France, and were fully redeemed when those funds arrived.

1685 Playing Card Money

As might be expected, however, the issue of card money became a regular practice. Confidence in the new money grew, and the population began to save some of the cards instead of redeeming their entire holdings every year. But instead of keeping currency reserves to cover the card money still in circulation, colonial authorities increased their spending. They also started to issue card money in excess of the French government’s annual appropriation. The cards remained useful, but prices started increasing as people realized there were more and more of them in circulation.

In the early 1700s, the War of the Spanish Succession extended to the French and English colonies in North America. Military spending rose continuously and the growth in the supply of card money far outstripped that of the colonial budget. In 1705, the French Crown refused to redeem all of the card money presented to it, which amounted to a devaluation. The colonial authorities responded by creating more, and inflation ran rampant. In 1714, with the colonial economy in disarray, the Crown decided to get rid of the system and buy back the cards at half their face value.

Sources:

“A History of Money and Banking in the United States” by Murray Rothbard.

Posted on

Early History of Paper Money

Jiaozi, or “exchange bills,” generally considered the world’s earliest paper money, originated in Sichuan, China in the mid-990s. Initially issued privately by merchants in exchange for deposits of cash, gold, silver, or silk, jiaozi were subjected to government regulation in 1005 by Zhang Yong, the prefect of Chengdu. The right to issue the notes was restricted to sixteen merchant houses deemed to have sufficient financial resources, and the government imposed no limits on the amount of jiaozi they could issue. The merchant houses invested their cash deposits in real estate, arable lands, and luxury commodities, leaving many of them without the liquidity to redeem the notes they issued. By 1019, jiaozi were being discounted by 20-30 percent and the issue of new bills was halted.
960 Song Dynasty Jiaozi

In 1023, a central Currency Bureau was established with exclusive authority to issue jiaozi. In order to control the amount of paper money in circulation, as well as discourage counterfeiting, the government required that notes be redeemed for new ones every 2 years (at the cost of a 3 percent commission fee), during which time a fixed amount of jiaozi was issued. The currency became highly popular and often traded at a premium over its nominal value.

Following the outbreak of war in the 1040s, however, the government increased the amount of jiaozi it issued to cover military expenditures. By the early 1100s, with defense costs spiraling out of control, the government drastically raised the emission of currency by 20-fold. This increase in the supply of paper money, combined with a growing problem with counterfeiting, incited a steep depreciation of jiaozi, which by 1107 sank to less than 10 percent of their face value.

Continue reading “Early History of Paper Money”