>>All it took was convertability, and the guarantee that debts would be paid in gold upon demand.<<
If you leave out the "in gold" that's the definition of any money. I've just started reading about banking, and am reasonably satisfied that it's actually bankers who create money by monetizing assets. Governments get involved in banking because that's where the money is, as the bank robber said.
>>There's a flaw inherent in land-backed money, as Law's investors discovered.<<
Louisiana - at the time that portion of the North American continent which is west of the Mississippi, south of Canada and north of Mexico - was worth every penny that Law's investors paid for it and more - but the gold was in California, the silver was in Nevada, and there were no pearls of any significance.
Louisiana, my Louisiana, was the richest state in the Union right before the Civil War - the wealth came from cotton and sugar - and slaves - from land.
Land, like gold, has intrinsic value. But unlike gold, you can't pay it out during a bank run. |
