YPERINFLATION and fiat nonsense. Government began getting involved with money first out of just standardizing the weight to facilitate trade as pictured above. That was it.
Government then began to stamp the image or badge of the city to impress people.However, the first city to “coin” money was also the first to discover “fiat” meaning the value is simply dictated by government (which we do not have today because paper money floats without a fixed value). All money is fiat whenever government is involved if you define that terms as meaning intangible money.
The stater was first issued from electrum a natural alloy or gold and silver with a weight of 14.2 grams. Then King Croisos (KROISOS) separated the gold from the silver creating the first bimetallic monetary system and the gold stater now was standardized in weight at 10.9 grams. When war began with Persia, the weight was reduced to 8.71 grams and the value was raised. Government discovered the power of “fiat” arbitrarily establishing the value of money to make a profit.
Here is a coin from Lydia 7th century BC with 9 moneychanger marks (foreign exchange brokers) verifying they tested the metal. This demonstrated that CONFIDENCE was not present simply because government weighed and valued its coinage by decree. If people trusted government, why test each coin?
Sweden 1666 Note
The whole reason people began to use banks was because the “money” could not be verified. Just because the coins were silver or gold did not mean anything. They could be debased, shaved, or forged. You deposited money in a bank and the bank CERTIFIED you were paying in “good” money. People did not want coins, they wanted the bank paper receipts. Like the moneychanger, the bank was certifying the transaction was taking place with proper value in “money”. Thus, paper money began in middle ages as receipts certifying deposits.
Even the first Bank of England notes were not a fixed denomination but were receipts for deposits. This note in 1694 states a promise to pay with the denomination written in. Notes eventually became standardized denominations enabling them to circulate freely.
Ancient Egypt always had “fiat” money receipts for grain in public warehouses trading as money. They did not have any coinage until Alexander the Great conquered them in 334BC. Virginia also had the same system of tobacco receipts that circulated as money in colonial times.
China and Japan were the same. They never had circulating gold or silver coinage. This nonsense that money has to be tangible is NOT supported by the facts. Money has always been based solely upon what someone else is will to accept. Go to a WaWa or Starbucks and try to buy with a gold coin. They will not accept it. Hell, some places will not even take a $100 bill anymore and want plastic. If they do not BELIEVE gold is acceptable for payment or you hand them $1 in 1964 silver quarters to by a $5 coffee, you are out of luck. They will see it as $1 not worth $5. This is the real economy. MONEY is only valuable based upon what the OTHER person believes – not you!
It is NOT the fiat. It is simply CONFIDENCE. Bank and warehouse paper receipts have circulated as money for thousands of years. Even dollars under Bretton Woods gold standard were simply receipts redeemable in gold in international transactions. It was NOT gold that actually circulated. When people as a whole distrust government, then barter replaces official “money” and that can be a lot of things and the worse it gets the more likely it boils down to food. We have run every possible correlation and have the database to do so. It is just hype! Just as the stock market has never peaked with the same level of interest rates, you cannot find any such evidence that if money is “fiat” then it collapses and going into HYPERINFLATION. Good sales pitch – but’s it.
When Genghis Khan invaded China, which was using paper money, he too accepted it and did not devalue the paper money that was in circulation. He too accepted the paper money from the previous emperors. These stories of fiat are totally uns