Sound Money

Only the government could take perfectly good paper, run it through a printing press, and make it worthless.  In this lens you can learn the history and future of money, banking, and the financial system.

When man moved from hunter-gatherer to shepherd/farmer, he began to trade with other men for the food and tools he needed.  Bartering allowed him to focus on raising sheep while his neighbor produced axes or wheat.  As he could only use so many eggs or so much milk at at a time, it didn't take long for a system of credit to evolve based only on the good name of the people with whom he traded.

Always looking for efficiencies, man soon began trading intrinsically worthless commodities (feathers, beads, shells, and bricks) distinctly marked as a commonly-accepted unit.   In this way, he could trade a whole lamb for 15 beads, and trade those individual beads for eggs, wheat, milk, tools, or whatever else he wished without depending on another person's reputation for his bartering power.  "Money" was born.

Money was so efficient at fostering trade between individuals that trade groups grew quickly and became a target of a particular brand of thief: the counterfeiter.  Like a moth to flame, the counterfeiter was drawn to the promise of wealth without work.

To combat the counterfeiters, man turned from money with no intrinsic value to money which was both scarce and had an intrinsic value - metals.  Iron, copper, bronze, silver, and gold were transformed by smiths into bars and coins that bore the seal of the man who guaranteed their purity and weight.

As the world's first insurance agents, these men made their money by standing by their word and their seal.  They developed internal controls and anti-counterfeiting measures to protect their coinage.  Traders exchanged the different currencies in proportion to the trust they placed in the seals embossed on them.

Trading groups continued to grow and tribunal law gave way to formal governments.  As the main preoccupation of the governed, governments inevitably embroiled themselves in commerce.

Private minters of currency posed two threats to nobility.  They both
regulated the value of currency and limited the power of the nobility by the amount of money that it could exact from its subjects.  Predictably, governments were not happy with this sort of arrangement.

Governments nationalized their currencies and took control of the monetary system.  This is where we pick up the story...