NJ Bridgewater
25 November 2018
The Golden Age of Sound
Money:
European Exploration, the
Victorian Era and the Gilded Age
Whenever sound money is
widely used, prosperity and economic growth must exist. This is due to the fact
that sound money allows people to save up capital, which can then be used to
create businesses, facilitate trade, and purchase real-world assets, such as
real-estate. It also constrains governments from over-spending, allowing for
state stability. Furthermore, it discourages frivolous spending, because money
has greater value when kept rather than spent; conversely, fiat currency has
high velocity and is like a hot potato—if you don’t spend it, it loses value. In
such circumstances, great artists, litterateurs, architects and musicians,
therefore, tend to arise, and are patronised by kings, nobles and merchants who
appreciate high art and low-time-preference entertainment. The opposite can be
seen where the currency is debased or inflated, as in the case of the later
Roman Empire, where bread and circuses abounded, as the borders of the empire
collapsed, the economy stagnated, and the people were robbed of their wealth
through requisitions and high taxation.
The term ‘Gilded Age’ was
coined by Mark Twain to refer to the late 19th century (i.e. 1870 –
1900). This was a particular age with particular characteristics, but it formed
part of a much wider time period embracing the Age of Discovery or ‘Age of Exploration’
(1418 – 1779), the Industrial Revolution (1760 – 1840), the Victorian Era (1837
– 1901), the Gilded Age (1870 – 1900), and La Belle Époque (i.e the ‘Beautiful
Era’) (1871 – 1914), ending with the outbreak of World War I and the
establishment of the Federal Reserve System in the United States in 1913 with
the Federal Reserve Act (December 22, 1913). This age could be said to have
begun with the reign of Prince Henry the Navigator (1394 – 1460), the fourth
child of King John I of Portugal. He made a number of important contributions,
including the capture of the Moorish port of Ceuta in northern Morocco, which
had long been a base for Barbary pirates who raided the coast, depopulating
entire villages and selling them in the African slave trade.[1]
This was followed by exploration of the coast of Africa, which was then unknown
to Europeans, aiming to find the source of the West African gold trade and
stopping pirate attacks on the Portuguese coast.[2]
Alternatively, the era could also be said to have begun with the end of the
Spanish Reconquista, which ended with the fall of the Nasrid kingdom of Granada
on January 2, 1492, followed by Columbus’s exploration of the Americas in the
same year.[3]
 |
| Silver peso of Philip V |
This era was characterised
not only by a huge expansion in knowledge, economic growth and the building of
new empires, colonies and technologies, but also by an important factor which
ran throughout, ending in 1914, the use of real, sound money. This era
coincided with the usage of the Spanish silver dollar (1598 – 1869), which was
used from the America in the West to China in the East, serving as one of the
first world currencies, ending with the United States Coinage Act of 1857, and
the adoption in Spain of the peseta (equal to 4.5 grams of silver or 0.290322
grams of gold) in 1869.[5]
The introduction of high-silver-content coins in Spain was inspired by the
introduction of the Guldengroschen, originally minted in Tirol, Austria, in
1486, with a level of purity (0.937%) not seen in centuries, followed by the
introduction of the half-guldengroschen, valued at 30 kreutzer (with each
kreutzer being worth about 4.2 Pfennig, i.e pennies, and, from 1559, with 60
kreutzer being worth 1 gulden or guilder).[6]
The word ‘dollar’ comes from the Thaler (with Thal meaning ‘valley’,
equivalent to the English word ‘dale’). The first Thalers were minted by Louis
II of Hungary (1506 – 1526) which was called the Joachimsthaler, weighing one
ounce in weight (27.2g).[7]
This was followed by the imperial Reichsthaler (1566 – 1750), which was defined
as containing 400.99 grains of silver (25.984g), becoming the standard coin of
account for the entire Holy Roman Empire until the middle of the 18th
century. Another currency which spanned this period was the Portuguese real
(plural réis or reais), which was first introduced by Dom
Ferdinand I (1345 – 1383), called “the Handsome”, King of Portugal, being
originally a silver coin valued at 120 dinheiros, 10 soldos, or ½ libra.[8]
One soldo (from the Latin solidus) was equivalent to 12 dinheiros, and
twenty soldos was equal to one libra.[9]
The Portuguese dinheiro
system was based on the only Roman system of the librae, solidi and denarii, reintroduced
to Europe by King Charlemagne in the 9th century AD.[10]
The Portuguese real weighed 3.5g of silver (about $50 USD), being almost the
same weight as the Venetian gold ducat.[11]
The Venetian gold ducat, introduced by the Great Council of Venice in 1284 AD,
contained 3.545 grams of 99.47% fine gold, which was the highest purity of gold
which could be produced at the time, until they were finally discontinued when
Napoleon ended the Venetian Republic in 1797 AD.[12]
In my short information guide, Gold: 10 Ways to Make Money Using Gold, I
give a brief summary of the history of gold coinage, including the Florentine
florin and the English guinea, which were both contemporaneous with the
Venetian gold ducat.[13]
I wrote: “In the Middle Ages, the Florentine florin, struck from 1252 to 1533
with no significant change, was a standard gold coin which was used across
Europe. Composed of 54 grains of ‘fine gold’ (3.5 grams), it was worth
approximately $140 U.S… Henry VIII’s monetary reform of 1526 resulted in the
creation of the crown, originally called ‘the crown of the double rose’, which
was valued at 5 shillings. These were minted of 22-karat ‘crown gold’, and it continued
to be produced until 1662. These were then replaced by the guinea, which was a
coin of approximately one quarter ounce of gold, minted in Great Britain
between 1663 and 1814 CE. The name
‘guinea’ derives from the Guinea region of West Africa, where much of the gold
used to produce the coins was sourced. The first English machine-struck gold
coin, it was originally worth one pound sterling (i.e. 20 shillings); however,
due to a rise in the price of gold relative to silver, it was at times worth 30
shillings. From 1717 to 1816, nevertheless, its value was officially fixed at
21 shillings. Guineas are currently not
recognized as legal tender. However, as they contain 22-karat gold and weigh
8.3g, or a quarter of an ounce of gold, one guinea is equivalent to about £246
GBP (in 2017).”[14]
 |
| Five Guinea coin (1688) |
The era which we are
outlining, in which gold and silver standards prevailed, and in which central
banks did not exist, spans from about 1418 or 1492 until 1914, when World War
One ended and the era of fiat currency, hyperinflation, Keynesian economics and
boom and bust began. We might well describe this whole period of time as one
Grand Gilded Age, or perhaps the Golden Age of Sound Money, during which the
birth of a new world—a new technological and advanced modern era took shape and
formed. It was characterised, moreover, by the birth and expansion of the
British Empire, which, by 1913, held sway over some 412 million people, which
was 23% of the world’s population and, at 13.7 million square miles (35.5
million square kilometres), covered about 24% of the Earth’s total land area.[16]
The British Empire began in 1533 with the Statute of Restraint of Appeals, which
declared “that this realm of England is an Empire”, and took shape with
Elizabeth I’s patent granted to Humphrey Gilbert for overseas exploration,
followed by the establishment of the East India Company, chartered under Queen
Elizabeth I on December 31, 1600, and the Virginia Company, chartered under
James I on April 10, 1606. The Empire grew and expanded, with some setbacks,
such as the American Revolutionary War (or ‘War of Independence’), until 1921,
when the Anglo-Irish War ended. This led to Irish independence, followed by the
1926 Imperial Conference, resulting in the Balfour Declaration, which declared
that all the autonomous communities within the Empire, e.g. the settler
colonies, were equal in status, leading to the creation of the British
Commonwealth. The British Empire formally ended when Zimbabwe was granted
independence on April 18, 1980. It is 1914, however, that brought the end of La
Belle Époque in Europe, marking the end of the era which we have described
above, coinciding with the Federal Reserve Act of December 23, 1913. This piece
of legislation, signed into law by President Woodrow Wilson, established the
Federal Reserve System, which was authorised to issue Federal Reserve Notes as
legal tender (commonly called United States Dollars).[17]
The Age of Fiat Currency
While the Romans introduced
massive currency debasement and inflation, it was the Chinese who pioneered
true fiat currency, which consisted of paper banknotes with no value other than
the value decreed by government fiat. Fiat currency is, by its nature, not money.
While it has some value, and it is portable and fungible, it is not scarce,
because it can constantly be printed/expanded, and it is not durable, since it
consists of either electronic digits in a bank ledger or notes of paper which
do not last. History bears this out. All fiat currencies have, throughout
history, gone to zero and no longer hold any nominal value. [18]
Those Chinese banknotes from the Yuan and Ming Dynasties? They are now worth
nothing at all and are only of interest to collectors or historians.
Confederate banknotes? Worthless. Continental dollars? Useless. Bronze and
copper coins? Useless. None of these are of any interest, except to collectors.
If that is the case, why should any fiat currency have value now? The value of
existing fiat currencies is dependent on three main factors: belief in the
value of the currency, the authority of the government behind the currency, and
the rate of inflation. If people are told by the government that a piece of
paper has value, they believe that it has value. The government then backs up
this belief through force of arms. It punishes forgers, and it recognises the
currency as legal tender. It sends its money abroad and backs it up with
military force. People who steal it are punished, as are those who misuse the
currency. Authority backs up fiat. Third, the more currency that is printed and
enters circulation, and the higher the velocity of currency (i.e. how fast
currency circulates), the greater the rate of inflation. This type of inflation
results, according to Investopedia, from expansionary monetary policy, which
creates a surplus of liquidity, bringing down the value of money in relation to
the price of goods.[19]
How then did fiat currencies
become the norm across the globe? China’s various experiments with paper
currency led to hyperinflation and had to be replaced by a silver standard.
Paper did not originally exist in the West, which used sheepskin (vellum),
papyrus and other materials for books. The earliest examples of papermaking can
be traced to the 2nd century BCE in China, with its invention being
attributed to Cai Lun, an imperial eunuch official of the Han Dynasty.[20]
Paper was probably brought to Europe via al-Andalus, with the earliest example
of paper dating to the 11th century. Papermaking began in Europe in
Toledo, and it reached England by 1490.[21]
Europeans first learned of Chinese paper currency from early travellers, such
as the Venetian merchant and explorer, Marco Polo, and the Flemish missionary
and explorer, William of Rubruck. Marco Polo recorded his observations in a
chapter of his book of travels entitled "How the Great Kaan Causeth the
Bark of Trees, Made Into Something Like Paper, to Pass for Money All Over his
Country”.[22]
Insecurity in medieval Italy and Flanders led to the creation of promissory
notes, which were used to avoid transporting large sums of money over long
distances. These promissory notes may be regarded as early bills of exchange or
cheques. By the 14th century, these notes, called ‘banknotes’ or nota
di banco, with the Italian word banco meaning ‘bench, counter’, derived
from the desks or exchange counters used by Renaissance Jewish Florentine
bankers, who made transactions on desks with green tablecloths.[23]
International payments were made using a bill of exchange (Italian lettera
di cambio), which was a promissory note backed by a ‘virtual currency
account’, with physical currencies being related to the virtual currency.[24]
This avoided the actual movement of precious metals over long distances.
These early promissory notes
were not money or currency in themselves, but, rather, promises to pay a
certain amount of money. It was only in the mid-17th century that
banknotes became a means of payment in themselves. During that period,
goldsmith-bankers of London began to give out receipts payable to the bearer of
the document rather than the depositor of the gold, meaning that the notes
themselves were tradable and could be exchanged without referring to the original
deposit. These goldsmiths also introduced another innovation—fractional reserve
banking. They began to issue a greater number of banknotes than the total value
of their gold reserves, meaning that there was more currency in circulation
than there were reserves to pay for it.[25]
This has resulted in the absurd scenario where there could be a ‘run on the
banks’, i.e. where people rush to withdraw their precious metals or money and
find out that there isn’t enough money to go around. The first attempt by a
central bank to issue banknotes was in 1661, when Stockholms Banco, the
predecessor of the modern Sveriges Risksbank, issued banknotes which replaced
the copper-plates then used as a means of payment.[26]
Three years later, the bank went bankrupt due to over-printing of banknotes far
beyond the bank’s actual supply of precious metals. Its replacement was the
Riksens Ständers Bank, but the lesson had been learned and this new ‘central
bank’, established in 1668, did not issue any banknotes until the 19th
century.[27]
The first European attempt at central banking and government issued fiat
currency had failed, just as it had under Yuan and Ming-Dynasty China.
 |
| Promissory note (1774) |
The development of the first Europe-based fiat currencies and central banks brought with it an accompanying development in insidious economic ideas. The economist Nicholas Barbon, for example, quipped that money was “an imaginary value made by a law for the convenience of exchange.”[29] Barbon here ignores five thousand years of history and conflates money with currency. He would later go on to inspire John Maynard Keynes and other 20th-century economists, who have also regarded manipulation of the economy as a positive social good. Moreover, Barbon advocated the use of paper currency and credit money, and argued that a country’s wealth could be identified with its population, rather than with its stock of precious metals.[30] Adam Smith (1723 – 1790), in contrast, defined the wealth of a nation as its “annual produce” or “the necessaries or conveniences of life which it annually consumes”.[31] According to Blenman (2016), Adam Smith identified several key elements to increasing wealth and bringing about universal prosperity. These he summarises as: (1) enlightened self-interest, (2) limited government, and (3) solid currency tied to a free-market economy.[32] Currency, Smith argued, should be backed by hard metals, which would prevent it from being depreciated in order to pay for wars or other wasteful expenditures, and this would also result in lower taxes, the elimination of tariffs and international free trade.[33] By enlightened self-interest, he meant that it is in the interests of the vendor to ensure that his wares/goods are high-quality, so that he can make a profit, and this goes hand in hand with thrift and hard work. Thrift and saving, indeed, can only go hand in hand with hard money, e.g. gold or silver, and this would allow the individual to save up capital to invest, buy labour-saving machinery or other business-enhancing assets, and encourage innovation which would return invested capital and enhance one’s standard of living, as well as the standard of living for the whole society.[34] Adam Smith did not entirely oppose the use of paper currency, but he did state clearly that the total amount of paper currency circulating within a country should never exceed metallic money.[35]
“I
am fully persuaded that we shall never restore our currency to its equitable
state, but by this preliminary step, or by the total overthrow of our paper
credit.”[36]
-
David Ricardo, The High Price of Bullion
It was in England that
banknotes became a permanent phenomenon with the establishment of the Bank of
England in 1694, created to raise money for funding a war against France. The
bank began issuing notes in 1695 with a promise to pay the bearer the value of
the note on demand. These notes, originally handwritten to a precise amount,
were eventually replaced by fixed denomination notes, with notes ranging from
£20 GBP to £1000 being available by 1745.[37]
Fully-printed banknotes which did not name the payee and did not require a
cashier’s signature did not appear in the UK, however, until 1855.[38]
Nevertheless, all of these notes were actual promises to pay actual amounts of
money. The British pound (pound sterling), which traces its origins to the
Roman libra (approximately 328.9g), has varied in weight throughout time. In
757 AD, one pound consisted of a Tower pound of silver (approximately 350 g),
this being based on the silver penny used by King Offa. Silver pennies were
struck from Arabic dirhams, with one pound weighing 120 Arabic dirhams.[39]
One dirham during the Abbasid Caliphate weighed approximately 2.8 or 2.9 grams
of silver,[40]
while the gold dinar weighed 1 mithqal (4.25 grams) of gold.[41]
Under Henry VIII, the pound sterling was changed to the Troy pound, i.e. 12
troy ounces or 373.241 grams.[42]
In 1717, Sir Isaac Newton, who was then Master of the Mint, set the price of
gold at £4.25 GBP, essentially establishing a gold standard that was to last for
several centuries.[43]
In 1816, the gold standard was officially established, and, in 1817, the
sovereign was introduced—a gold coin valued at 20 shillings.[44]
Banknotes during this period, therefore, did not replace the gold standard, and
they served as promissory notes which could be redeemed for gold (or the
equivalent value in silver).
The Bank of England, which
is the 8th oldest bank in the world, became the template for future
central banks. What is a central bank? A central bank is an institution which
manages a nation’s currency, money supply and interest rates.[45]
This runs counter to the free market idea that the value of sound money should
be determined by the market, not by governments. Central banks, therefore, are
incapable of issuing or creating sound money, but they are able to determine
and issue legal tender, i.e. the nationally-authorised and recognised currency.
As already mentioned, in North America in the 18th century, the
Spanish dollar, a fine silver coin, was widespread, and formed the basis for
later ‘dollars’. Following the existing practise of using promissory notes,
paper currency was widespread in the early British colonies, and this was
regulated by the British Parliament through the Currency Acts of 1751, 1764 and
1773.[46]
During the American Revolution, however, the thirteen colonies became
independent states and could issue paper currency to fund their military
expenditures. The Continental Congress, also, which was formed from representatives
from each colony/state, began to issue paper currency called Continental
dollars. Due to overprinting, however, the currency depreciated rapidly, and,
by the end of the war, it was practically worthless, just like every other fiat
currency experiment in the centuries which preceded it. In addition to paper
currency, there was also commodity money, e.g. tobacco, beaver skins, and
wampum, and specie (coins) (such as the Spanish dollar). Paper currency was
divided into promissory notes and bills of exchange—the latter being fiat
currency which could not be exchanged for gold or silver.[47]
The Continental Congress issued some $241,552,780, which quickly fell to almost
zero value (being worth 1/40th of their face value by 1780), giving
rise to the phrase “not worth a continental.”[48]
 |
| One-third of a Continental dollar |
After the ratification of
the United States Constitution, the Federal Government decreed that Continental
dollars could be exchanged for treasury bonds at 1% of their face value.[50]
That’s a 99% decrease in value, indicating, yet again, that all fiat currencies
eventually go to zero.[51]
Nowadays, a Continental dollar has nothing but collector’s value. The United
States Constitution also sought to do away with the concept of fiat currency
altogether, decreeing that Congress had the power “to borrow money on the
credit of the United States” and “to coin Money, regulate the Value thereof,
and of foreign Coin, and fix the Standard of Weights and Measures”, but it did
not give Congress the power to create fiat currency or bills of exchange.[52]
Rather, Congress had the power to coin money from precious metals. This is
reinforced by Article I, Section X, which states that “No State shall… coin
Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender
in Payment of Debts.”[53]
This blocked states both from coining their own money and from creating fiat
bills of credit, as well as from paying debts in anything but gold and silver
coinage. Despite this fact, fiat currency is now widely used by state
governments within the United States, and this article of the Constitution is
widely ignored. The framers of the Constitution were determined to avoid the
hyperinflation which had beset the Continental dollar and other state
currencies during the Revolutionary War, but their wise determinations have now
fallen on deaf ears. In the 1790s, Alexander Hamilton, Secretary of the
Treasury, argued for the creation of a national bank, which was opposed by the
Jeffersonian Republicans. This led to the creation of the First Bank of the
United States, based in Philadelphia, Pennsylania, which was dissolved in 1811
when its charter expired.[54]
It was succeeded by the Second Bank of the United States in 1816, also based in
Philadelphia, which had a 20-year charter, expiring in 1836, after which it
became a private corporation, before being liquidated in 1841.[55]
Following this, there was no central bank in the United States until the
Federal Reserve System was established in 1913.
The American Civil War,
which lasted from 1861 to 1865, split the United States into two rival
nation-states, each of which issued paper currency. The Legal Tender Act of
1862 allowed the issuance of $150 million in national notes called ‘greenbacks’
due to their colour, which were issued without backing by gold and silver, only
the credibility of the United States government.[56]
Additional legal tender acts allowed Congress to issue more and more currency
so that, by the end of the war, more than $447 million USD was in circulation.
Meanwhile, the Confederate States of America, based on the South, issued their
own currency, called the ‘greyback’ to distinguish it from the ‘greenback’.[57]
As in the Revolutionary War, these greybacks were bills of credit and were not
backed by precious metals, leading to eventual hyperinflation. By the time the
war ended, Confederate dollars were not worth the paper they were printed on. Of
course, in the 21st century, greenbacks are also worthless, as
government-backed paper currency has to be continually updated and exchanged
for newer notes. A Spanish dollar from the 19th century, however,
could be exchanged for its value in gold or its collector’s value, and would now
have a significant value. In 1878, the Brand-Allison Act required the
government to purchase $2 - $4 million USD of silver per month at market prices
and coin it into silver dollars. Silver and gold coinage both already existed
within the United States at the time, with the Coinage Act of 1792, which
pegged the value of the United States dollar to the Spanish silver dollar. The
U.S. Mint originally issued gold, silver and copper coins. The U.S. dollar was
a silver coin weighing 24.1 g of pure silver, half dollars weighing 12g of pure
silver, and quarter dollars weighing 6.01 g of pure silver. There were also
three gold coins: Eagles, which were valued at $10.00 and contained 16.04 g of
pure gold, half eagles, valued at $5.00 and containing 8.02 grams of pure gold,
and quarter eagles, valued at $2.50 and containing 4.01 grams of pure gold.
This thus created a bimetallic gold-silver standard.[58]
.jpg)
In 1875, Congress passed the
Specie Payment Resumption Act, which required the Treasury to allow U.S.
banknotes to be redeemed for gold after January 1, 1879, and the bimetallic
standard was abandoned in 1900 with the Gold Standard Act, which defined the
U.S. dollar as 23.22 grains (1.505 g) of gold.[60]
One troy ounce of gold was thus fixed at a value of $20.67. This established a
gold standard within the United States. Nevertheless, silver coins continued to
circulate until 1964, when silver was removed from dimes and quarters and the
half-dollar was debased to contain only 40% silver, the latter of which was
last issued in 1970.[61]
The gold standard faced several setbacks, however, due to the World Wars One
and Two. Executive Order 6102 (1933) under President Franklin D. Roosevelt
ordered that gold coins were to be confiscated, and the price of gold was set
at $35 per troy ounce; this was eventually reduced to $42.22 per troy ounce
before President Nixon abandoned the gold standard on August 15, 1971, allowing
the dollar to become a fully-fiat currency.[62]
This is known as the ‘Nixon shock’, as it ended the Bretton Woods system of
international financial exchange. The Bretton Woods system was established in
1944 with the Bretton Woods Agreement between 44 Allied nations, which fixed
exchange rates between major currencies and pegged them to the United States
dollar and gold.[63]
This resulted in the United States hoarding two-thirds of the world’s gold.
With the Nixon shock, however, most nations also ended their currencies’ peg to
the dollar, leading to widespread inflation and economic aftershocks. 1971
marks the beginning of the current Age of Fiat.
“Paper
is being reduced to its intrinsic value.”[64]
-
Voltaire
Since ending the gold
standard, the unemployment rate in the United States has averaged over 6%,
averaging 8.5% in 1975 and almost 10% in 1982, compared with an average of 5%
during the post-WWII gold standard era, with economic growth averaging 2.9%
compared to 4% under the gold standard.[65]
Kadlec (2011) argues that the U.S. economy today is about $8 trillion USD
smaller than it would have been under a gold standard, and the median family
income is 50% lower than it should have been.[66]
Like Diocletian before him, Nixon combined this currency devaluation with price
controls, freezing wages and prices for 90 days and establishing a 10% tariff
on imports.[67]
The effect on the U.S. dollar was devastating. It plunged by a third in value
during the 1970s, with currency volatility threatening several national economies
since, including Asian and Latin American countries in 1997.[68]
Price controls under Nixon had to be extended until 1974, when Nixon resigned.
They were ineffective, however, in reducing inflation, which had topped 11%.[69]
Not quite as bad as Diocletian, but Rome’s price controls were more rigorous.
Nixon’s economic policies coincided with the Great Inflation, which lasted from
1965 to 1982.[70]
The Great Inflation began in the 1960s, as U.S. dollars were increasingly being
converted into gold—in other words, countries were sending dollars in return
for gold, causing the value of the dollar to slip. When Nixon ended the gold
standard, there was nothing to tether the dollar’s value, so it fluctuated
wildly, further exacerbating inflation. To give some perspective on how much
the dollar has declined in value since being taken off the gold standard, $1.00
in 1971 in now worth about $6.19 in 2018 dollars, with annual inflation during
the period from 1971 to present of over 3.96%.[71]
If you had saved money in the 1970s until now, your currency would have lost more
than 5/6th its value.
Savers, investment guru
Robert Kiyosaki likes to inform us, are losers.[72]
When you save money in your bank account, it loses value because it isn’t
pegged to anything. If one dollar in 1971 is worth $6.19 today, what will your
dollar saved today be worth in 10 years’ time? Not much, likely. One dollar in
1914, when the Federal Reserve was established, is now worth $24.65—that’s with
an average annual inflation from 1914 – 2018 of 3.13%.[73]
It has thus lost 24.65 times its value over that period. If we take 1792 as the
beginning of the United States dollar, with the Coinage Act of 1792, what would
the value of a 1792 dollar be today? The answer: $25.53 in 2017 dollars, and
that is with an inflation rate of only 1.45% over the time period 1792 – 2017.[74]
The difference between 1 dollar in 1792 and 1914 is very small, as the dollar
was originally based on precious metals. However, the difference from 1914 to
2018 is huge. Up until 1914, savers were definitely not losers. However, from
1914 to present, and especially from 1971 to present, savers have most
certainly been losers, as the value of the United States dollar—and all fiat
currencies—is in continual decline, just as the value of Roman currency was in
decline at the very end of the Roman Empire in the third and fourth centuries, before
Rome was finally sacked and the last Emperor deposed. We are living in very
similar times. With the end of the gold standard, and the great prosperity that
that standard had brought to mankind, and the reign of central banks and the
Federal Reserve System, what can be done to bring humanity back to sound money
and a solid money system? Moreover, what is the next step in the evolution of
money, and how can people weather the storm of the inevitable fall of empires
certain to come when the current system collapses?
Digital Money and
Computer Banking
We live in an increasingly
digital age, when digital assets are starting to take the place of physical
assets. Since the invention of the computer, starting with Charles Babbage’s
Analytical Engine invented and improved between 1833 and 1871, followed by the
Z1 programmable computer of Konrad Zuse (invented 1936 – 1938), and the
Colossus (December 1943),[75]
up until modern personal computer, laptops, tablets, smartphones and smart
watches, we have become increasingly dependent on machines for business, trade,
banking and payment systems. Computers were originally of interest to
governments, the military and scientists, who used them to crack codes and
perform high-speed calculations. By 1954, however, the banking industry got in
on the new technology. A partnership between Bank of America and the Stanford
Research Institute resulted, in 1954, in the creation of the Remington Rand UNIVAC-1,
the world’s first computer designed for business use, which was a massive
computer utilising vacuum tubes and magnetic tapes to operate, processing
12,000 numbers or letters per second.[76]
This was followed, in September 1955, by the creation of ERMA—the Electronic
Recording Method of Accounting, which could process 33,000 accounts in the time
it would take a bookkeeper to do 245, posting accounts, identifying stop
payments and holds, flagging overdrafts, storing account information, printing
daily and monthly bank statements, and sorting 600 cheques per minute—a
reduction in time of 80%.[77]
From that time forward, banking and money would no longer be a paper affair—we
had entered a new, digital age of banking—an age of digital ledgers and
computer-based transactions. This was a departure as radical as the Chinese
invention of paper currency.
 |
| Colossus codebreaker |
What most people do not
realise is that our currency has become almost completely digital. When people
think of U.S. dollars, Euros, Great British pounds, etc. they think of printed
notes and coins. Somewhere in our imagination, there is a huge vault at the
back of our local bank, where all of our money is stored in neat piles of cash.
If the bank isn’t careful, an old robber, like Jesse James, might swing buy,
hold everyone hostage and loot the bank, taking our money with him. This, of
course, is not the case. There is no vault at the back of the bank with all
your money in it, because your cash doesn’t really exist at all. It’s all just
1s and 0s in and computer ledger. The New Yorker estimates that there is about
$1.4 trillion U.S. dollars in circulation, with the amount tripling over the
last two decades (2001 – 2016)—that’s an immense amount of cash.[79]
They estimate that the average American carries about $30 dollars, with 1/20th
having a stash of about $1200 at home, and everyone else averaging about $74.[80]
Of the $1.5 trillion U.S. dollars in circulation, 80% of this is comprised of
11.5 billion $100 notes, with, each year, 70% of new bills being used to replaced
older notes which are going out of circulation.[81]
The total money supply (called M2) in the United States, however, is much, much
bigger than this—in fact, it amounts to around $14 trillion USD, with physical
currency making up only 11% of the total value. That means that digital cash
makes up 89% of the U.S. money supply.[82]
We do not have to imagine a world where digital currency is the norm, because
it already exists. We already live in a world where the vast majority of our
currency is digital, and physical notes and coins are only a tiny fraction of
that total amount. Worldwide, in fact, only 8% of the world’s currency exists
as physical cash, with 92% consisting of digital money![83]
Even if everyone wanted to convert their digital cash into physical notes and
coins, they would be unable to do so, as such an amount of physical currency
simply does not exist! What does that mean for us today? It means, essentially,
that all the dollars, euros, pounds and other currency that you have in your
bank account, exists as nothing more than digital ones and zeros in a digital
ledger which exists within a computer database. If that ledger, or that
computer database, were destroyed, your “money” would cease to exist. It also
means that your “money” can be hacked, stolen or confiscated via computers or
the internet.
This is a shocking
revelation to most people, who like to believe that governments “print” or
“coin” money. That used to be the case, but no longer. Physical cash still
exists, but more as a mask or illusion to make us feel like fiat currencies
have real value. The value of a fiat currency, in fact, is only what we believe
it to have. As with the 17th century economist, Nicholas Barbon, the
modern banking system is based on the idea that money is “an imaginary value
made by a law for the convenience of exchange.”[84]
This is wrong, of course, as fiat currency is not, strictly speaking, money but
currency, but the point still applies—U.S. dollars, euros, British pound
sterling, Chinese renminbi, etc. all exist as mere abstractions. The entire
banking system is a mere façade which hides the reality that currency is merely
a collection of numbers stored and moved from one computer to another on a
network, with the total amount of these numbers constantly being increased—indeed,
on a massive scale—by governments, who use this increase to reduce the
purchasing power of citizens, while allowing themselves to create more debt,
pay off existing debts, and fund ever-expansive spending programmes, including
“quantitative easing”, military spending and entitlements. This digital age of
currency was further supported by the creation of non-physical methods of
payment, including the credit card, which was invented by Frank McNamara in
1950, when the Diners Club card was released.[85]
This was followed by American Express and Visa (originally BankAmerica) in
1958, and eventually by MasterCard, Discover Card and JCB.[86]
.jpg)
With the dawn of the credit
card, and later debit card, people no longer needed to rely on physical cash
for payments. Banknotes and coins have, throughout the late 20th and
early 21st centuries, been rendered almost entirely obsolete. Credit
cards, have, in addition, not only facilitated payments, but also allowed
Americans and people from all over the world, to amass staggering amounts of
personal debt, as people often end up spending more money than they actually
have. Other methods of digital payment have also arisen, including PayPal,
which was launched in 1999, allowing for easy digital transactions between
individuals across the planet. PayPal, however, still relied on existing
banking systems and fiat currency. Most people, during the late 20th
century, accepted that this would always be the case—that we would always be
reliant on the banking system and government-created currency. To say otherwise
would be anarchist, antinomian or utopian. Indeed, while communists and
Marxists dreamed of a world where money no longer needed to exist—on the one
hand, libertarians dreamed of a world in which everyone could make their own
currency, while gold-bugs and silver-bugs hoped for an eventual reinstatement
of the gold standard, or a bimetallic standard. All of these ideas remained
within the realm of speculation and fantasy, however, until two new
developments began to take shape: developments in digital cryptography, and a
wide expansion in the number of people using personal computers and the
internet. The World Wide Web, invented by English scientist Sir Tim Berners-Lee
(b. 1955), was launched in 1989, and the idea of creating a new, encrypted digital
currency began to take shape. My next article/chapter, will outline the rise of
Bitcoin, the world’s newest form of sound money, which is that new digital
currency, and which has now come to be regarded as a secure store of value and a
medium of exchange.
©️NJ Bridgewater 2018
SOURCES:
Authorised Version of the
Bible (King James Bible / KJV) (1611) The Holy Bible, Conteyning the
Old Testament, and the New: Newly Translated out of the Originall tongue Newly
Translated out of the Originall tongues: & with the former Translations
diligently compared and reuised (London: Robert Barker). Available
online at: http://biblehub.com/kjv/ ; https://www.biblegateway.com/keyword/ ;
https://quod.lib.umich.edu/k/kjv/simple.html ;
https://archive.org/details/1611TheAuthorizedKingJamesBible ;
http://www.sacred-texts.com/bib/kjv/index.htm ; https://www.gutenberg.org/ebooks/10
(accessed 18/07/2018)
ADANA (Anadolu Agency)
(2014) Money used by Sumerians in Mesopotamia, says expert, Hurriyet Daily
News, January 13, 2014 00:01:00. URL:
http://www.hurriyetdailynews.com/money-used-by-sumerians-in-mesopotamia-says-expert-60909
(accessed 12/11/2018)
Bank of America
Corporation (2018) Bank of America revolutionizes banking industry, Bank of
America Corporation. URL: https://about.bankofamerica.com/en-us/our-story/bank-of-america-revolutionizes-industry.html#fbid=k9IDxSLJ4_R
(accessed 21/11/2018)
Nicholas Barbon, Discourse
On Trade, 1690. p.37. URL:
https://archive.org/details/nicholasbarbonon00barb (accessed 21/10/2018)
Bruce Bartlett (1994)
How Excessive Government Killed Ancient Rome, Cato Journal, Vol. 14, No.
2, 1994, p. 299. URL:
https://object.cato.org/sites/cato.org/files/serials/files/cato-journal/1994/11/cj14n2-7.pdf
(accessed 15/11/2018 11:35 AST)
Joy Blenman (2016) Adam
Smith and "The Wealth Of Nations". Investopedia, September 7,
2016 4:53 PM EDT. URL: https://www.investopedia.com/updates/adam-smith-wealth-of-nations/
(accessed 19/11/2018)
Andrew Boyd (2018) Who
invented credit cards, Credit Card Compare, July 4, 2018. URL:
https://www.creditcardcompare.com.au/blog/who-invented-credit-cards/ (accessed
21/11/2018)
NJ Bridgewater (2017) Gold:
10 Ways to Make Money Using Gold (Abergavenny: Jaha Publishing)
NJ Bridgewater (2017)
What is Bitcoin? Crossing the Bridge, 7 December 2017. URL: https://nicholasjames19.blogspot.com/2017/12/what-is-bitcoin.html
(accessed 23/11/2018)
NJ Bridgewater (2018)
The Origins of Wealth (Part 1 of 4), Crossing the Bridge, Thursday, 5,
July 2018. URL: https://nicholasjames19.blogspot.com/2018/07/the-origins-of-wealth-part-1-of-4.html
(accessed 02/11/2018)
Brilliant Maps (2015)
Roman Empire GDP Per Capita Map Shows That Romans Were Poorer Than Any Country
in 2015, BrilliantMaps.com, May 4, 2015. URL: https://brilliantmaps.com/roman-empire-gdp/
(accessed 14/11/2018)
Michael Bryan (2013)
The Great Inflation, Federal Reserve History, November 22, 2013. URL:
https://www.federalreservehistory.org/essays/great_inflation (accessed
20/11/2018)
Edwin Cannan (1922) Wealth:
A Brief Explanation of the Causes of Economic Wealth (London: P.S. King and
Son, 1922). URL: https://oll.libertyfund.org/titles/2063 (accessed 19/11/2018
13:49 AST)
Computer Hope (2018)
When was the first computer invented? Computer Hope, 11/13/2018. URL:
https://www.computerhope.com/issues/ch000984.htm (accessed 21/11/2018)
CPI Inflation
Calculator (2018) $1 in 1792 → 2017 | Inflation Calculator.” U.S. Official
Inflation Data, Alioth Finance, 20 Nov. 2018. URL: https://www.officialdata.org/1792-dollars-in-2017?amount=1 (accessed 20/11/2018)
Jason Daley (2018)
People Lived in This Cave for 78,000 Years, Smithsonian.com, May 11,
2018. URL:
https://www.smithsonianmag.com/smart-news/people-lived-cave-78000-years-180969051/
(accessed 22/11/2018)
Jeff Desjardins (2018)
Here's how much US currency there is in circulation, Business Insider,
19.04.2018, 01:30. URL: https://www.businessinsider.de/heres-how-much-us-currency-there-is-in-circulation-2018-4?r=US&IR=T
(accessed 21/11/2018)
Tyler Durden (2018)
Fiat Currency Always Ends In Collapse, ZeroHedge, Mon, 06/18/2018 –
20:55. URL: https://www.zerohedge.com/news/2018-06-18/fiat-currency-always-ends-collapse
(accessed 21/11/2018)
The Economist (2010)
Tricky Dick and the dollar, The Economist, Mar 25th 2010.
URL:
https://www.economist.com/finance-and-economics/2010/03/25/tricky-dick-and-the-dollar
(accessed 20/11/2018)
Peter Foldvari &
Bas van Leeuwen (2010) Comparing per capita income in the Hellenistic world:
the case of Mesopotamia, 5 July 2010. URL:
http://www.basvanleeuwen.net/bestanden/Mesopotamia%20GDP%201Julyl2010.pdf
(accessed 14/11/2018)
Dominic Frisby (2017)
What wages in ancient Athens can tell us about the silver price today, MoneyWeek,
02/03/2017. URL: https://moneyweek.com/462534/what-wages-in-ancient-athens-can-tell-us-about-the-silver-price-today/
(accessed 12/11/2018)
Mark Gimein (2016) Why
Digital Money Hasn’t Killed Cash, The New Yorker, April 28, 2016. URL:
https://www.newyorker.com/business/currency/why-digital-money-hasnt-killed-cash
(accessed 21/11/2018)
Global Security
(2000-2018) How Much is That in Real Money? GlobalSecurity.org. URL:
https://www.globalsecurity.org/military/world/spqr/money-1.htm (accessed
12/11/2018)
Zachary A. Goldfarb
(2014) Who was the richest man in all of history? The Washington Post,
April 1, 2014. URL:
https://www.washingtonpost.com/news/wonk/wp/2014/02/19/who-was-the-richest-man-in-all-of-history/?noredirect=on&utm_term=.b706e1e51b0d
(accessed 13/11/2018)
Ed Grabianowski (2018)
How Currency Works, HowStuffWorks.com. URL:
https://money.howstuffworks.com/currency6.htm (accessed 21/11/2018)
H Brothers Inc
(2007-2018) Calculate the value of $1.00 in 1971, DollarTimes,
20/11/2018. URL: https://www.dollartimes.com/inflation/inflation.php?amount=1&year=1971
(accessed 20/11/2018)
Tim Harford (2017) How
the world's first accountants counted on cuneiform, BBC News, 12 June
2017. URL: https://www.bbc.co.uk/news/business-39870485 (accessed 12/11/2018)
Henry Hazlitt (1971)
Poor Relief in Ancient Rome, Foundation for Economic Education (FEE),
originally published Thursday, April 01, 1971. URL:
https://fee.org/articles/poor-relief-in-ancient-rome/ (accessed 14/11/2018)
Stefan Heidemann
(2011) The early Islamic Empire and its religion on coin imagery. In Albrecht
Fuess, Jan-Peter Hartung (editors) (2011) Court Cultures in the Muslim
World: Seventh to nineteenth centuries (London; New York: Routledge). URL:
https://www.aai.uni-hamburg.de/voror/personen/heidemann/medien/2011-heidemann-courtcultures2011-representation.pdf
(accessed 19/11/2018)
Jacob H. Hollander
(1911) The Development of the Theory of Money from Adam Smith to David Ricardo,
The Quarterly Journal of Economics, Vol. 25, No. 3 (May, 1911), pp.
429-470 (42 pages). URL: https://www.jstor.org/stable/1883613 (accessed
19/11/2018)
Investopedia (2018)
What causes inflation, and does anyone gain from it? Investopedia, LLC,
updated January 22, 2018 1:05 PM EST. URL:
https://www.investopedia.com/ask/answers/111314/what-causes-inflation-and-does-anyone-gain-it.asp
(accessed 19/11/2018)
JM Bullion (2015) How
Much Fine Silver Bullion is in the World? JM Bullion. URL:
https://www.jmbullion.com/investing-guide/types-physical-metals/how-much-fine-silver-bullion-in-world/
(accessed 11/12/2018)
Charles Kadlec (2011)
Nixon's Colossal Monetary Error: The Verdict 40 Years Later, Forbes, Aug
15, 2011, 10:00am. URL: https://www.forbes.com/sites/charleskadlec/2011/08/15/nixons-colossal-monetary-error-the-verdict-40-years-later/#558a84ff69f7
(accessed 20/11/2018)
Robert Kiyosaki (2005)
Why Savers are Losers, RichDad.com, Monday, October 17, 2005. URL:
http://www.richdad.com/Resources/Articles/why-savers-are-losers.aspx (accessed
21/11/2018)
Julia Limitone (2017)
Bitcoin is more powerful than physical money: Overstock CEO, Fox Business,
published November 20, 2017. URL:
https://www.foxbusiness.com/features/bitcoin-is-more-powerful-than-physical-money-overstock-ceo
(accessed 21/11/2018)
Mike Maloney (2015) Guide
to Investing in Gold & Silver: Protect Your Financial Future (Scottsdale,
Arizona: RDA Press LLC), p. 217. Download the free PDF from: https://goldsilver.com/promo/freebook/
(accessed 25/11/2018)
Mark (2012) Tales From
Herodotus XIV. Two Stories of the Alcmaeonid Family (translation), posted on
August 17, 2012. URL:
https://metaphrastes.wordpress.com/2012/08/17/tales-from-herodotus-xiv-two-stories-of-the-alcmaeonid-family/
(accessed 13/11/2018)
Mary Ames Mitchell
(2015) Fifteenth Century Portuguese Dinheiro [Money], Crossing the Ocean Sea.
URL: http://www.crossingtheoceansea.com/OceanSeaPages/OS-46-Dinheiro.html
(accessed 16/11/2018)
John Morley (1872), In
The Quarterly Review, Vol. 135, July & October, 1873 (London: John
Murray)
Robert Nedelkoff
(2011) Forty Years After The “Nixon Shock”, The Nixon Foundation, August
5, 2011. URL:
https://www.nixonfoundation.org/2011/08/forty-years-after-the-nixon-shock/
(accessed 20/11/2018)
Chris Parker (2016) A
short history of the British pound, World Economic Forum, 27 Jun 2016.
URL:
https://www.weforum.org/agenda/2016/06/a-short-history-of-the-british-pound/
(accessed 19/11/2018)
Joseph R. Peden (2017)
Inflation and the Fall of the Roman Empire, Mises Daily Articles,
10/19/2017. URL: https://mises.org/library/inflation-and-fall-roman-empire
(accessed 14/11/2018)
Lawrence W. Reed
(1979) The Fall of Rome and Modern Parallels, Foundation for Economic
Education (FEE), originally published Thursday, April 21, 1979. URL:
https://fee.org/articles/poor-relief-in-ancient-rome/ (accessed 14/11/2018)
David Ricardo (1810) The
High Price of Bullion: A Proof of the Depreciation of Bank Notes (London:
John Murray), p. 44. URL: https://archive.org/details/highpriceofbulli10rica/page/n5
(accessed 21/11/2018)
Walter Scheidel (2009)
Rome and China: Comparative Perspectives on Ancient World Empires
(Oxford: Oxford University Press)
Silver Prices Today,
Live Spot Prices & Historical Charts, Money Metals Exchange. URL:
https://www.moneymetals.com/precious-metals-charts/silver-price (accessed
12/11/2018 07:59 AST)
Thomas Sowell (2004) A
taxing experience, Townhall.com, Nov 25, 2004 12:00 AM. URL:
https://townhall.com/columnists/thomassowell/2004/11/25/a-taxing-experience-n935368
(accessed 14/11/2018)
Thomas Sowell (2010) The
Thomas Sowell Reader (New York, NY: Basic Books)
Spiros (2012) How much
expensive was life in ancient Greece, Hellenic History Subjects,
Saturday, April 7, 2012. URL: https://akrokorinthos.blogspot.com/2012/04/how-much-expensive-was-life-in-ancient.html
(accessed 11/12/2018)
Blair Sullivan,
Geoffrey Symcox (2005) Christopher Columbus and the Enterprise of the
Indies: A Brief History with Documents (Boston, Mass. : Bedford/ St
Martin's)
Nick Szabo (2002)
Shelling Out: The Origins of Money, Satoshi Nakamoto Institute. URL:
https://nakamotoinstitute.org/shelling-out/ (accessed 02/11/2018)
U.S. Constitution, Article I, Section VIII. URL:
https://www.usconstitution.net/xconst_A1Sec8.html (accessed 20/11/2018)
Richard Henry
Timberlake, Kevin Dowd (2017) Money and
the Nation State: The Financial Revolution, Government and the World Monetary
System (London: Taylor and Francis)
Christopher Weber
(2018) A Short History of International Currencies, Weber Global Opportunities p. 3. URL:
http://www.weberglobal.net/Historyofmoneycompleter.pdf (accessed 20/11/2018)
Louis C. West (1916)
The Cost of Living in Roman Egypt, Classical Philology, Vol. 11, No. 3
(Jul., 1916), pp. 293-314 (22 pages). URL: https://www.jstor.org/stable/261854
(accessed 11/12/2018)
World Gold Council
(WGC) (2017) How much gold has been mined? World Gold Council. URL:
https://www.gold.org/about-gold/gold-supply/gold-mining/how-much-gold (accessed
12/11/2018)
Zheng Xueyi, Yaguang
Zhang, John Whalley (2010) Monetary Theory from a Chinese Historical
Perspective, National Bureau of Economic Research, Working Paper 16092,
June 2010. URL: https://www.nber.org/papers/w16092.pdf (accessed 15/11/2018)
Jay Zawatsky (2012)
The Collapse of the Fiat System, The National Interest, March 15, 2012.
URL: https://nationalinterest.org/commentary/the-collapse-the-fiat-system-6639
(accessed 21/11/2018)
Wikipedia Articles
Achaemenid coinage (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Achaemenid_coinage (accessed
12/11/2018 11:33 AST)
Achaemenid Empire (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Achaemenid_Empire (accessed
12/11/2018 12:24 PM AST)
Ancient Chinese
coinage (Wikipedia article). URL: https://en.wikipedia.org/wiki/Achaemenid_coinage
(accessed 12/11/2018 11:40 AST)
Ancient Greek Coinage
(Wikipedia article). URL: https://en.wikipedia.org/wiki/Coin (accessed
12/11/2018 07:59 AST)
Bank (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Bank (accessed 19/11/2018 12:10 PM AST)
Banknote (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Banknote (accessed 19/11/2018)
Bretton Woods system (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Bretton_Woods_system (accessed
20/11/2018 09:58 AST)
British Empire (Wikipedia
article). URL: https://en.wikipedia.org/wiki/British_Empire (accessed
19/11/2018 16:48 AST)
Bullion (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Bullion (accessed 12/11/2018 07:45
AST)
Byzantine Empire (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Byzantine_Empire (accessed
15/11/2018 11:35 AST)
Central bank (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Central_bank (accessed 20/11/2018
06:59 AST)
Chao (currency) (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Chao_(currency) (accessed
15/11/2018 12:24 PM AST)
Code of Ur-Nammu (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Code_of_Ur-Nammu (accessed
12/11/2018 08:05 AST)
Coin (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Coin (accessed 12/11/2018 07:49 AST)
Coinage Act of 1792 (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Coinage_Act_of_1792 (accessed
20/11/2018 09:44 AST)
Confederate States
dollar (Wikipedia article). URL: https://en.wikipedia.org/wiki/Confederate_States_dollar
(accessed 20/11/2018 07:34 AST)
Croesus (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Croesus (accessed 12/11/2018 08:12 AST)
Denarius (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Denarius (accessed 12/11/2018
12:03 PM)
Diocletian (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Diocletian (accessed 14/11/2018
12:22 PM AST)
Dirham (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Dirham (accessed 19/11/2018 14:40 AST)
Ducat (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Ducat (accessed 16/11/2018 16:33 AST)
Early American
Currency (Wikipedia article). URL:
https://en.wikipedia.org/wiki/Early_American_currency (accessed 20/11/2018
07:03 AST)
Edict on Maximum
Prices (Wikipedia article). URL:
https://en.wikipedia.org/wiki/Edict_on_Maximum_Prices (accessed 14/11/2018
12:08 PM AST)
End of Roman rule in
Britain (Wikipedia article). URL:
https://en.wikipedia.org/wiki/End_of_Roman_rule_in_Britain (accessed 15/11/2018
12:00 PM AST)
Federal Reserve Act (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Federal_Reserve_Act (accessed
19/11/2018 17:02 AST)
First Bank of the
United States (Wikipedia article). URL:
https://en.wikipedia.org/wiki/First_Bank_of_the_United_States (accessed 20/11/2018
07:26 AST)
Gold dinar (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Gold_dinar (accessed
19/11/2018 14:43 AST)
Gold reserve
(Wikipedia article). URL: https://en.wikipedia.org/wiki/Gold_reserve (accessed
12/11/2018 11:43 AST)
Guilder (Wikipedia article);
also see: Spanish peseta (Wikipedia article). URL:
https://en.wikipedia.org/wiki/Guilder (accessed 16/11/2018 15:49 PM AST)
Guldengroschen (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Guldengroschen (accessed
16/11/2018 15:50 AST)
Han dynasty (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Han_dynasty (accessed
12/11/2018 12:27 PM AST)
Hard currency (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Hard_currency (accessed 02/11/2018
12:02 PM)
History of Chinese currency
(Wikipedia article). URL:
https://en.wikipedia.org/wiki/History_of_Chinese_currency (accessed 15/11/2018
12:25 PM AST)
History of paper (Wikipedia
article). URL: https://en.wikipedia.org/wiki/History_of_paper (accessed
19/11/2018 12:02 PM AST)
Kreuzer (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Kreuzer (accessed 16/11/2018 15:50 AST)
List of largest
empires (Wikipedia article). URL:
https://en.wikipedia.org/wiki/List_of_largest_empires (accessed 12/11/2018
12:22 PM AST)
Ming Dynasty (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Ming_dynasty (accessed
16/11/2018 14:48 PM AST)
National Bank Act (Wikipedia
article). URL: https://en.wikipedia.org/wiki/National_Bank_Act (accessed
20/11/2018 07:32 AST)
Nicholas Barbon (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Nicholas_Barbon (accessed
19/11/2018 13:49 AST)
Odoacer (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Odoacer (accessed 15/11/2018 12:08
PM AST)
Portuguese dinheiro (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Portuguese_dinheiro (accessed
16/11/2018 16:20 AST)
Portuguese real (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Portuguese_real (accessed
16/11/2018 15:59 AST)
Pound (mass) (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Pound_(mass) (accessed
19/11/2018 14:46 AST)
Pound sterling (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Pound_sterling (accessed
19/11/2016 14:57 AST)
Prince Henry the
Navigator (Wikipedia article). URL: https://en.wikipedia.org/wiki/Prince_Henry_the_Navigator
(accessed 16/11/2018 15:31 PM AST)
Qin (state) (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Qin_(state) (accessed
12/11/2018 11:45 AST)
Reconquista (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Reconquista (accessed
16/11/2018 15:35 PM AST)
Renminbi (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Renminbi (accessed 19/11/2018
11:06 AST)
Roman currency (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Roman_currency (accessed
14/11/2018 11:39 AST)
Roman Empire (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Roman_Empire (accessed
14/11/2018 07:32 AST)
Second Bank of the
United States (Wikipedia article). URL:
https://en.wikipedia.org/wiki/Second_Bank_of_the_United_States (accessed 20/11/2018
07:27 AST)
Senate of the Roman
Empire (Wikipedia article). URL:
https://en.wikipedia.org/wiki/Senate_of_the_Roman_Empire (accessed 14/11/2018
07:32 AST)
Silver standard (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Silver_standard#China
(accessed 19/11/2018 11:03 AST)
Spanish dollar (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Spanish_dollar (accessed
16/11/2018 15:06 PM AST)
Spanish peseta (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Spanish_peseta (accessed 16/11/2018
15:43 PM AST)
Tael (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Tael (accessed 19/11/2018 10:56 AST)
Thaler (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Thaler (accessed 16/11/2018 15:56 AST)
United States dollar (Wikipedia
article). URL: https://en.wikipedia.org/wiki/United_States_dollar (accessed
20/11/2018 09:49 AST)
Wu Zhu (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Qin_(state) (accessed 12/11/2018 12:01 PM
AST)
[1] See: Prince Henry the Navigator (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Prince_Henry_the_Navigator
(accessed 16/11/2018 15:31 PM AST).
[2] See: Prince Henry the Navigator (Wikipedia
article).
[3] See: Reconquista (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Reconquista (accessed 16/11/2018 15:35 PM AST).
[4] Image source: Silver peso of Philip
V. (a.k.a. Spanish dollar). Mexico mint. Dated 1739 Mº (Mexico monogram).
Public domain. URL:
https://upload.wikimedia.org/wikipedia/commons/c/c1/Philip_V_Coin_silver%2C_8_Reales_Mexico.jpg
(accessed 22/11/2018).
[5] See: Spanish dollar (Wikipedia article);
also see: Spanish peseta (Wikipedia article). URL:
https://en.wikipedia.org/wiki/Spanish_peseta (accessed 16/11/2018 15:43 PM
AST).
[6] The Dutch guilder weighed 10.61g and
was a .910 silver coin. See: Guilder (Wikipedia article); also see:
Spanish peseta (Wikipedia article). URL:
https://en.wikipedia.org/wiki/Guilder (accessed 16/11/2018 15:49 PM AST). See
also: Guldengroschen (Wikipedia article). URL:
https://en.wikipedia.org/wiki/Guldengroschen (accessed 16/11/2018 15:50 AST);
Kreuzer (Wikipedia article). URL: https://en.wikipedia.org/wiki/Kreuzer
(accessed 16/11/2018 15:50 AST).
[7] See: Thaler (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Thaler (accessed 16/11/2018 15:56 AST).
[8] See: Portuguese real (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Portuguese_real (accessed 16/11/2018 15:59
AST).
[9] See: Portuguese dinheiro (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Portuguese_dinheiro (accessed
16/11/2018 16:20 AST).
[10] See: Mary Ames Mitchell (2015)
Fifteenth Century Portuguese Dinheiro [Money], Crossing the Ocean Sea.
URL: http://www.crossingtheoceansea.com/OceanSeaPages/OS-46-Dinheiro.html
(accessed 16/11/2018).
[11] See: Blair Sullivan, Geoffrey Symcox
(2005) Christopher Columbus and the Enterprise of the Indies: A Brief
History with Documents (Boston, Mass. : Bedford/ St Martin's), p. 45.
[12] See: Ducat (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Ducat (accessed 16/11/2018 16:33 AST).
[13] See: NJ Bridgewater (2017) Gold:
10 Ways to Make Money Using Gold (Abergavenny: Jaha Publishing), pp. 15 –
17.
[14] NJ Bridgewater (2017) Gold: 10
Ways to Make Money Using Gold, pp. 15 – 16.
[15] Image source: Five Guinea coin,
James II, Great Britain, 1688. Public domain. URL: https://upload.wikimedia.org/wikipedia/commons/d/d9/5_Guineas%2C_James_II%2C_Great_Britain%2C_1688_-_Bode-Museum_-_DSC02761.JPG
(accessed 22/11/2018).
[16] See: British Empire (Wikipedia article).
URL: https://en.wikipedia.org/wiki/British_Empire (accessed 19/11/2018 16:48
AST).
[17] See: Federal Reserve Act (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Federal_Reserve_Act (accessed
19/11/2018 17:02 AST).
[18] See: Mike Maloney (2015) Guide to
Investing in Gold & Silver: Protect Your Financial Future (Scottsdale,
Arizona: RDA Press LLC), p. 217. Download the free PDF from: https://goldsilver.com/promo/freebook/
(accessed 25/11/2018).
[19] See: Investopedia (2018) What causes
inflation, and does anyone gain from it? Investopedia, LLC, updated
January 22, 2018 1:05 PM EST. URL: https://www.investopedia.com/ask/answers/111314/what-causes-inflation-and-does-anyone-gain-it.asp
(accessed 19/11/2018).
[20] See: History of paper (Wikipedia article).
URL: https://en.wikipedia.org/wiki/History_of_paper (accessed 19/11/2018 12:02
PM AST).
[21] See: History of paper (Wikipedia article).
[22] See: Banknote (Wikipedia article).
[23] See: Bank (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Bank (accessed 19/11/2018 12:10 PM AST).
[24] See: Banknote (Wikipedia article).
[25] See: Banknote (Wikipedia article).
[26] See: Banknote (Wikipedia article).
[27] See: Banknote (Wikipedia article).
[28] Image source: Promissory note, 1774
(MS 376/3). Public domain. URL:
https://www.nottingham.ac.uk/manuscriptsandspecialcollections/images-multimedia/researchguidance/accounting/promissory-07-4285m.jpg
(accessed 22/11/2018).
[29] Nicholas Barbon, Discourse On
Trade, 1690. p.37.
[30] See: Nicholas Barbon (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Nicholas_Barbon (accessed 19/11/2018 13:49
AST).
[31] See: Edwin Cannan (1922) Wealth:
A Brief Explanation of the Causes of Economic Wealth (London: P.S. King and
Son, 1922). URL: https://oll.libertyfund.org/titles/2063 (accessed 19/11/2018
13:49 AST).
[32] See: Joy Blenman (2016) Adam Smith
and "The Wealth Of Nations". Investopedia, September 7, 2016
4:53 PM EDT. URL:
https://www.investopedia.com/updates/adam-smith-wealth-of-nations/ (accessed
19/11/2018).
[33] See: Blenman (2016).
[34] See: Blenman (2016).
[35] See: Jacob H. Hollander (1911) The
Development of the Theory of Money from Adam Smith to David Ricardo, The
Quarterly Journal of Economics, Vol. 25, No. 3 (May, 1911), pp. 429-470 (42
pages). URL: https://www.jstor.org/stable/1883613 (accessed 19/11/2018).
[36] David Ricardo (1810) The High
Price of Bullion: A Proof of the Depreciation of Bank Notes (London: John
Murray), p. 44. URL: https://archive.org/details/highpriceofbulli10rica/page/n5
(accessed 21/11/2018).
[37] See: Banknote (Wikipedia article).
[38] See: Banknote (Wikipedia article).
[39] See: Dirham (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Dirham (accessed 19/11/2018 14:40 AST).
[40] See: Stefan Heidemann (2011) The
early Islamic Empire and its religion on coin imagery. In Albrecht Fuess,
Jan-Peter Hartung (editors) (2011) Court Cultures in the Muslim World:
Seventh to nineteenth centuries (London; New York: Routledge). URL:
https://www.aai.uni-hamburg.de/voror/personen/heidemann/medien/2011-heidemann-courtcultures2011-representation.pdf
(accessed 19/11/2018), p. 47.
[41] See: Gold dinar (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Gold_dinar (accessed 19/11/2018 14:43 AST).
[42] See: Pound (mass) (Wikipedia article).
URL: https://en.wikipedia.org/wiki/Pound_(mass) (accessed 19/11/2018 14:46
AST).
[43] See: Chris Parker (2016) A short
history of the British pound, World Economic Forum, 27 Jun 2016. URL:
https://www.weforum.org/agenda/2016/06/a-short-history-of-the-british-pound/
(accessed 19/11/2018).
[44] See: Pound sterling (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Pound_sterling (accessed
19/11/2016 14:57 AST).
[45] See: Central bank (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Central_bank (accessed 20/11/2018
06:59 AST).
[46] See: Early American Currency (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Early_American_currency (accessed
20/11/2018 07:03 AST).
[47] See: Early American Currency (Wikipedia
article).
[48] See: Early American Currency (Wikipedia
article).
[49] Image source: Continental One Third
Dollar Note (obverse). Public domain. URL:
https://upload.wikimedia.org/wikipedia/commons/f/ff/Continental_Currency_One-Third-Dollar_17-Feb-76_obv.jpg
(accessed 22/11/2018).
[50] See: Early American Currency (Wikipedia
article).
[51] See: Jay Zawatsky (2012) The
Collapse of the Fiat System, The National Interest, March 15, 2012. URL:
https://nationalinterest.org/commentary/the-collapse-the-fiat-system-6639
(accessed 21/11/2018); Julia Limitone (2017) Bitcoin is more powerful than
physical money: Overstock CEO, Fox Business, published November 20,
2017. URL:
https://www.foxbusiness.com/features/bitcoin-is-more-powerful-than-physical-money-overstock-ceo
(accessed 21/11/2018); John Morley (1872), In The Quarterly Review, Vol.
135, July & October, 1873 (London: John Murray), p. 336. See also: Tyler
Durden (2018) Fiat Currency Always Ends In Collapse, ZeroHedge, Mon,
06/18/2018 – 20:55. URL: https://www.zerohedge.com/news/2018-06-18/fiat-currency-always-ends-collapse
(accessed 21/11/2018).
[52] See: U.S. Constitution,
Article I, Section VIII. URL: https://www.usconstitution.net/xconst_A1Sec8.html
(accessed 20/11/2018).
[53] See: U.S. Constitution,
Article I, Section X. URL: https://www.usconstitution.net/xconst_A1Sec10.html
(accessed 20/11/2018).
[54] See: First Bank of the United States
(Wikipedia article). URL:
https://en.wikipedia.org/wiki/First_Bank_of_the_United_States (accessed
20/11/2018 07:26 AST).
[55] See: Second Bank of the United States
(Wikipedia article). URL:
https://en.wikipedia.org/wiki/Second_Bank_of_the_United_States (accessed
20/11/2018 07:27 AST).
[56] See: National Bank Act (Wikipedia
article). URL: https://en.wikipedia.org/wiki/National_Bank_Act (accessed
20/11/2018 07:32 AST).
[57] See: Confederate States dollar (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Confederate_States_dollar
(accessed 20/11/2018 07:34 AST).
[58] See: Coinage Act of 1792 (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Coinage_Act_of_1792 (accessed
20/11/2018 09:44 AST).
[59] Image source: United States gold
dollar. U.S. Mint (coin); Heritage Auctions (image) - Heritage Auctions Lot
6787, 9 January 2015. Public domain. URL: https://upload.wikimedia.org/wikipedia/commons/b/b6/1849_G%241_Open_Wreath_%28rev%29.jpg
(accessed 22/11/2018).
[60] See: United States dollar (Wikipedia
article). URL: https://en.wikipedia.org/wiki/United_States_dollar (accessed
20/11/2018 09:49 AST).
[61] See: United States dollar (Wikipedia
article).
[62] See: United States dollar (Wikipedia
article).
[63] See: Bretton Woods system (Wikipedia
article). URL: https://en.wikipedia.org/wiki/Bretton_Woods_system (accessed
20/11/2018 09:58 AST).
[64] See: John Morley (1872), In The
Quarterly Review, Vol. 135, July & October, 1873 (London: John Murray),
p. 336.
[65] See: Charles Kadlec (2011) Nixon's
Colossal Monetary Error: The Verdict 40 Years Later, Forbes, Aug 15,
2011, 10:00am. URL: https://www.forbes.com/sites/charleskadlec/2011/08/15/nixons-colossal-monetary-error-the-verdict-40-years-later/#558a84ff69f7
(accessed 20/11/2018).
[66] See: Kadlec (2011).
[67] See: The Economist (2010) Tricky
Dick and the dollar, The Economist, Mar 25th 2010. URL: https://www.economist.com/finance-and-economics/2010/03/25/tricky-dick-and-the-dollar
(accessed 20/11/2018).
[68] See: Robert Nedelkoff (2011) Forty
Years After The “Nixon Shock”, The Nixon Foundation, August 5, 2011.
URL: https://www.nixonfoundation.org/2011/08/forty-years-after-the-nixon-shock/
(accessed 20/11/2018).
[69] See: Nedelkoff (2011).
[70] See: Michael Bryan (2013) The Great
Inflation, Federal Reserve History, November 22, 2013. URL:
https://www.federalreservehistory.org/essays/great_inflation (accessed 20/11/2018).
[71] See: H Brothers Inc (2007-2018)
Calculate the value of $1.00 in 1971, DollarTimes, 20/11/2018. URL:
https://www.dollartimes.com/inflation/inflation.php?amount=1&year=1971
(accessed 20/11/2018).
[72] See: Robert Kiyosaki (2005) Why
Savers are Losers, RichDad.com, Monday, October 17, 2005. URL:
http://www.richdad.com/Resources/Articles/why-savers-are-losers.aspx (accessed
21/11/2018).
[73] See: H Brothers Inc (2007-2018).
[74] See: CPI Inflation Calculator (2018)
$1 in 1792 → 2017 | Inflation Calculator.” U.S.
Official Inflation Data, Alioth Finance, 20 Nov. 2018. URL:
https://www.officialdata.org/1792-dollars-in-2017?amount=1 (accessed 20/11/2018).
[75] See: Computer Hope (2018) When was
the first computer invented? Computer Hope, 11/13/2018. URL:
https://www.computerhope.com/issues/ch000984.htm (accessed 21/11/2018).
[76] See: Bank of America Corporation
(2018) Bank of America revolutionizes banking industry, Bank of America
Corporation. URL: https://about.bankofamerica.com/en-us/our-story/bank-of-america-revolutionizes-industry.html#fbid=k9IDxSLJ4_R
(accessed 21/11/2018).
[77] See: Bank of America Corporation
(2018).
[78] Image source: Colossus codebreaking
computer in operation. Public Domain. URL: https://upload.wikimedia.org/wikipedia/commons/4/4b/Colossus.jpg
(accessed 21/11/2018).
[79] See: Mark Gimein (2016) Why Digital
Money Hasn’t Killed Cash, The New Yorker, April 28, 2016. URL:
https://www.newyorker.com/business/currency/why-digital-money-hasnt-killed-cash
(accessed 21/11/2018).
[80] See: Mark Gimein (2016).
[81] See: Jeff Desjardins (2018) Here's
how much US currency there is in circulation, Business Insider,
19.04.2018, 01:30. URL:
https://www.businessinsider.de/heres-how-much-us-currency-there-is-in-circulation-2018-4?r=US&IR=T
(accessed 21/11/2018).
[82] See: Jeff Desjardins (2018).
[83] See: Ed Grabianowski (2018) How
Currency Works, HowStuffWorks.com. URL:
https://money.howstuffworks.com/currency6.htm (accessed 21/11/2018).
[84] Nicholas Barbon, Discourse On
Trade, 1690. p.37. URL: https://archive.org/details/nicholasbarbonon00barb
(accessed 21/10/2018).
[85] See: Andrew Boyd (2018) Who invented
credit cards, Credit Card Compare, July 4, 2018. URL:
https://www.creditcardcompare.com.au/blog/who-invented-credit-cards/ (accessed
21/11/2018).
[86] See: Andrew Boyd (2018).
[87] Image source: Visa, MasterCard,
American Express (CC BY-SA 4.0), uploaded by MB-one (own work). URL: https://upload.wikimedia.org/wikipedia/commons/c/cc/Credit_card_logos_%282015-12-1816-27-350044%29.jpg
(accessed 22/11/2018). For more information on the license, see:
https://creativecommons.org/licenses/by-sa/4.0/ (accessed 22/11/2018).
