Creature From Jekyll Island by G. Edward полностью

B.C. The Chinese used gold cubes as early as 2100 B.C. But it wasn't until the kings stepped into the picture that true coinage became a reality. It was only when the state certified the tiny discs that they became widely accepted, and it is to the Greeks more than anyone that we owe this development. Groseclose describes the result: THE BARBARIC METAL

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These light, shining discs, adorned with curious new emblems and a variety of vigorous, striking images, made a deep impression on both Greek and barbarian. And to the more practical minded, the abundance of uniform pieces of metal, each of a standard weight, certified by the authority of the state, meant a release from the cumbersomeness of barter and new and dazzling opportunities in every direction....

All classes of men succumbed to money, and those who had

formerly been content to produce only for their needs and the necessities of the household, found themselves going to the market place with their handicraft, or the fruits of their toil, to exchange them for the coins they might obtain.1

EXPANDING THE MONEY SUPPLY BY COIN CLIPPING

From the very beginning, the desire for a larger money supply led to practices which were destructive to the economy. Unscrupulous merchants began to shave off a tiny portion of each coin they handled—a process known as coin clipping—and then having the shavings melted down into new coins. Before long, the king's treasury began to do the same thing to the coins it received in taxes.

In this way, the money supply was increased, but the supply of gold was not. The result was exactly what we now know always happens when the money supply is artificially expanded. There was inflation. Whereas one coin previously would buy twelve sheep, now it would only be accepted for ten. The total amount of gold needed for twelve sheep never really changed. It's just that everyone knew that one coin no longer contained it.

As governments became more brazen in their debasement of

the currency, even to the extent of diluting the gold or silver content, the population adapted quite well by simply "discounting" the new coins. That is to say, they accepted them at a realistic value, which was lower than what the government had intended.

This was, as always, reflected in a general rise in prices quoted in terms of those coins. Real prices, in terms of labor or other goods or even of gold itself remained unchanged.

Governments do not like to be thwarted in their plans to exploit their subjects. So a way had to be found to force people to accept these slugs as real money. This led to the first legal-tender laws. By royal decree, the "coin of the realm," was declared legal for the 1 Groseclose, Money and Man, p. 13.

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THE CREATURE FROM JEKYLL ISLAND

settlement of all debts. Anyone who refused it at face value was subject to fine, imprisonment, or, in some cases, even death. The result was that the good coins disappeared from circulation and went into private hoards. After all, if the government forces you to accept junk at the same rate of exchange as gold, wouldn't you keep the gold and spend the junk? That is what happened in America in the '60s when the mint began to issue cheap metal tokens to replace the silver dimes, quarters, and half-dollars.

Within a few months, the silver coins were in dresser drawers and safe-deposit boxes. The same thing has happened repeatedly throughout antiquity. In economics, that is called Gresham's Law:

"Bad money drives out good."

The final move in this game of legal plunder was for the

government to fix prices so that, even if everyone is using only junk as money, they can no longer compensate for the continually expanding supply of it. Now the people were caught. They had no escape except to become criminals, which most of them, incidentally, chose to do. The history of artificially expanding money is the history of great dissatisfaction with government, much lawlessness, and a massive underground economy.

GOLD IS THE ENEMY OF THE WELFARE STATE

In more modern times, rulers of nations have become more

sophisticated in the methods by which they debase the currency.

Instead of clipping coins, it is done through the banking system.

The consequences of that process were summarized in 1966 by Alan Greenspan who, a few years later, would became Chairman of the Board of Governors of the Federal Reserve. Greenspan wrote: The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit....