The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.
—Alexis de Tocqueville
Chapter 4 reviewed money from the perspective of democracy with universal suffrage and the international monetary system. This chapter will try to bring the reader/investor to the realization, if he or she hasn’t come to this already, that domestic or international, the history of fiat paper money is one of a descent into worthlessness. This descent into worthlessness precedes the twentieth century phenomenon of universal suffrage and democracy itself. Even without universal suffrage and democracies, governments have succumbed to the temptation to debase their currencies.
Prior to twentieth-century financing, war was the main threat to paper currencies. Ignorance and corruption have also played a role. Serious scholars and economic historians over and over have documented the sad history of paper money. The mainstream of public and economists ignores this history. We will repeat this history in this chapter. Skip it at your peril.
Mankind has used money in one form or another for at least the last 4,500 years. Sumerian clay tablets as far back as 2,400 BC reveal standards for silver used as money. References to silver as money can be found in the Old Testament. Coins were the major form of money up until the nineteenth century. Paper money made its appearance about a thousand years ago. Paper ...