Precious and beautiful is the sight of pure gold, but barbaric are the actions of those who want to maintain control!
The history and evolution of money; and the emergence of gold as the universal money supply; is the history of governments clipping or debasing gold coins to cheat their subjects; it is based on the false reality that any any quality of gold will suffice for a monetary system and that “more money” does not require more gold. – Ch.7 The Creature from Jekyll Island by G. Edward Griffin
What is money? Is it the metal coins and the paper currency we have in out pocket, is it the numbers in our checking account or electric impulses in a computer? Does it include the balance in a savings account or available credit on a charge card? Does it include the value of stocks and bonds, houses, land or personal possessions? Or is it nothing more than purchasing power?
In the simplest terms money is anything which is acceptable as a medium of exchange and is classified in the following forms:
- Commodity money
- Receipt money
- Fiat money
- Fractional money
The concept of intrinsic value is the key to understanding the various forms of money. During early times the usual item was some form of food , either produce or livestock. Pecuniary which means pertaining to money is derived from the word pecunia which is the Latin word for cow.
During the Bronze Age iron, cooper, tin, and bronze were traded between craftsmen and merchants along trade routes and major sea ports. The value of metal ingots was determined by its weigh. They were non perishable and they could be melted and reformed so they could be divided into smaller units to purchase minor items. The most important attribute was, they could be precisely measured; an ingot of metal is either 99% pure or it isn’t, it weighs 100 ounces or it doesn’t. One’s personal opinion has little to do with it.
Gold was selected over the years because it seemed to be just the right amount in nature to keep its value for coinage. It is less plentiful than silver, and more abundant than platinum. In addition there is demand for it in industry, art and fashion. In addition, its purity and weight can be precisely measured.
The misleading theory that gold is too limited in supply to meet the needs of modern commerce is false. In reality 45% of all gold mined in the world is in government or banking stockpiles. There is about 30% of gold in private stockpiles. The amount of gold in the world does not affect its ability to serve as money. It only affects the quantity that will be used to measure any given transaction. If a one ounce coin would be too valuable for a transaction then a person would simply use a half-ounce or a tenth- ounce coin amount instead. A gram or a tenth of a gram would be even more effective.
Most of the gold reserves are weighs in the tons. National debt and budgets are in the billion and trillion dollar range. So government try to stretch their power to pay their bills. When governments became more brazen in their debasement of the currency to the extent of diluting the gold and silver content, the population just tucks away the ‘good solid coins’ that were not diluted and used the other coins for their purchases.
The Byzantine Empire seemed to have the best record of sticking to the real currency. The emperor Constantine ordered the creation of a new gold piece called the solidus and a silver piece called miliarense. The gold weigh of the solidus became fixed at 65 grains and was minted at that standard for eight-hundred years. Is was so dependable that it was freely accepted from China to Brittany and from the Baltic Sea to Ethiopia.
The money laws were so strict back then that if some was caught clipping away from the coin, they would get their hand cut off. Now its a slap on the wrist, In fact, many financial crooks barely do any time in jail today.
In the beginning of the modern society when men accumulated more coins than he required for his daily purchases he needed a safe place to store his coins. The goldsmith, who handled large amounts of precious metals in their trade had already built sturdy vaults to protect their own inventory, so it was an easy for them to charge a fee to store valuables for others. When the coins were stored, the precious metal warehouse man would give the owners a written receipt which entitled them to withdraw at any time their valuables. At one time the receipts had printed on the top ‘Pay to the bearer on demand’.
The paper receipt represented a certain value back by solid gold. When the receipt was honored the economy moved forward but when it was uses as a gimmick for the artificial expansion of the money supply the economy stagnated. As the government printed more and more money the value of the money in our pockets decreased.
Paper money (fiat) loses its buying power with increasing inflation. Maybe now is a good time to look at the “Golden Triangle” that being built around the world. From Stuttgart Germany to Madagascar off the coast of Mozambique to the Miami Florida. Many have discovered another method of savings.