The parallels and analogies:
1. Starts small, advances in tentative steps. Then, an exponential growth in the supply of paper money. As more and more is issued, and it becomes obvious that it is creating serious problems, the demand for it paradosically increases. Sound familiar?
2. Financial and political corruption of even the most honest. Speculation and dishonest 'stock jobbing' [bubbles] abound.
3. Initially, a period growth which is unsustainable.
4. Creates a taste for high-living and luxury.
5. Results in hoarding of all commodities, esp. specie.
6. Stagnation and, of course, hyperinflation.
The livre was backed by the seized lands of the Church and, later, of the aristocrats who had fled. Our currency is backed, at the end of the day, by the full faith and credit of the US as well as by 262 million ounces of gold whose existence has not been audited since the 1950s. This gold is valued at $42 an oz. for reasons I do not comprehend. We also hold a number of other assets, mostly the paper currencies of other countries, as part of our resrves.
The value of our reserves is pitiably small in relation to the 'value' of the currency in circulation. I believe this is the case for most countries.
treas.gov |
