Coined: The Rich Life of Money and How Its History Has Shaped Us

by Kabir Sehgal

  64. Edward E. Cohen, “The Elasticity of the Money-Supply at Athens,” in W. V. Harris, ed., The Monetary Systems of the Greeks and Romans (Oxford: Oxford University Press, 2008), pp. 66–83.

  65. C. J. Howgego, Ancient History from Coins (New York: Routledge, 1995), pp. 1–23.

  66. Jack Weatherford, The History of Money (New York: Three Rivers Press, 1997), pp. 34–35.

  67. Ibid.

  68. Ron Owens, Solon of Athens (Portland, OR: Sussex Academic Press, 2010), pp. 130–34.

  69. Léopold Migeotte, The Economy of the Greek Cities (Berkeley: University of California Press, 2009), pp. 173–79.

  70. Weatherford, The History of Money, pp. 41–42.

  71. Plato, The Laws, trans. T. J. Saunders (London: Penguin Books, 1970), p. 159.

  72. Davidson, “Monetary Policy in the Twenty-First Century in the Light of the Debate Between Chartalism and Monetarism.”

  73. Shahzavar Karimzadi, Money and Its Origins (New York: Routledge, 2013), pp. 139–50.

  74. Aristotle, The Politics and Economics of Aristotle, trans. E. Walford (London: George Bell, 1876), pp 21–22.

  75. Joseph A. Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1994), pp. 62–64.

  76. Barry J. Gordon, “Aristotle, Schumpeter, and the Metalist Tradition,” Quarterly Journal of Economics 75, no. 4 (1961): 608–14.

  77. Scott Meikle, “Aristotle on Money,” Phronesis 39, no. 1 (1994): 26–44.

  78. Ibid.

  79. Aristotle, The Politics and Economics of Aristotle, p. 25.

  80. Tenney Frank, An Economic History of Rome (New York: Cooper Square, 1962), pp. 69–89.

  81. “Gresham’s Law,” Encyclopaedia Britannica, retrieved August 6, 2013, from http://www.britannica.com/EBchecked/topic/245850/Greshams-law.

  82. Bernhard E. Woytek, “The Denarius Coinage of the Roman Republic,” in W. E. Metcalf, ed., The Oxford Handbook of Greek and Roman Coinage (New York: Oxford University Press, 2012), pp. 315–34.

  83. Andrew Meadows, “J. W. Moneta and the Monuments: Coinage and Politics in Republican Rome,” Journal of Roman Studies 91 (2001): 27–49.

  84. Eagleton, Money, pp. 39–61.

  85. Alfred Wassink, “Inflation and Financial Policy Under the Roman Empire to the Price Edict of 301 A.D.,” Historia: Zeitschrift für Alte Geschichte 40, no. 4 (1991): 465–93.

  86. Mary E. Thornton, “Nero’s New Deal,” Transactions and Proceedings of the American Philological Association 102 (1971): 621–29.

  87. Gary Richardson, Alejandro Komai, and Michael Gou, “Roosevelt’s Gold Program,” Federal Reserve History, retrieved April 22, 2014, from http://www.federalreservehistory.org/Events/DetailView/24.

  88. Wassink, “Inflation and Financial Policy Under the Roman Empire to the Price Edict of 301 A.D.”

  89. Thornton, “Nero’s New Deal.”

  90. Ulrich W. Hiesinger, “The Portraits of Nero,” American Journal of Archaeology 79, no. 2 (1975): 113–24.

  91. Weatherford, The History of Money, pp. 46–63.

  92. C. H. V. Sutherland, “Denarius and Sestertius in Diocletian’s Coinage Reform,” Journal of Roman Studies 51 (1961): 94–97.

  93. World Gold Council, “Demand and Supply,” retrieved July 29, 2013, from http://www.gold.org/about_gold/story_of_gold/demand_and_supply.

  94. World Steel Association, “World Crude Steel Output Increases by 1.2% in 2012,” January 22, 2013, retrieved July 29, 2013, from http://www.worldsteel.org/media-centre/press-releases/2012/12-2012-crude-steel.html.

  95. Andrew Ross Sorkin, “Render Unto Caesar, but Who Backs Bitcoin?,” New York Times, November 25, 2013.

  96. James Grant, “All About Gold” (Charlie Rose, interviewer), December 5, 2010.

  97. Virginia Morell, “Feature Article: Bowerbirds,” National Geographic, July 2010.

  98. Paul T. Keyser, “Alchemy in the Ancient World: From Science to Magic,” Illinois Classical Studies 15, no. 2 (1990): 361.

  99. Ibid., 353–78.

  100. Lynn Thorndike, A History of Magic and Experimental Science (New York: Columbia University Press, 1923), p. 194.

  101. Keyser, “Alchemy in the Ancient World.”

  102. Lawrence Principe, The Secrets of Alchemy (Chicago: University of Chicago Press, 2013), pp. 13–18.

  103. Ibid., pp. 30–38.

  104. Ibid., pp. 65–70.

  105. Lawrence Principe, “Alchemy Restored,” Isis 102, no. 2 (2011): 305–12.

  106. Ibid., p. 307.

  107. Davies, A History of Money, pp. 29–30.

  Chapter 5. Some Like It Soft

  1. Marco Polo, The Travels. trans. Ronald Latham (London: Penguin Books, 1958), pp. 147–48.

  2. Lawrence Lande and Tim Congdon, “John Law and the Invention of Paper Money,” RSA Journal, 139, no. 5414 (January 1991): 916–28.

  3. Bill Gross, “Investment Outlook: The Scouting Party,” January 2002, http://www.pimco.com/EN/Insights/Pages/IO_01_2002.aspx.

  4. The story is inspired by a Wall Street currency trader whose name has been changed.

  5. Neil Irwin, “This One Number Explains How China Is Taking Over the World,” Washington Post, December 3, 2013, http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/03/this-one-number-explains-how-china-is-taking-over-the-world.

  6. Barry J. Eichengreen, Exorbitant Privilege, Kindle ed. (New York: Oxford University Press, 2011).

  7. Ibid.

  8. “All Signs Pointing to Gold,” U.S. Global Investors, September 17, 2012, http://www.usfunds.com/investor-resources/frank-talk/all-signs-pointing-to-gold/#.Uiky_Dash8E.

  9. Milton Friedman and Rose D. Friedman, Free to Choose (New York: Harcourt, 1980), p. 249.

  10. “Monetarists Anonymous,” Economist, 2012, http://www.economist.com/node/21563752.

  11. Gordon Tullock, “Paper Money—A Cycle in Cathay,” Economic History Review 9, no. 3 (1957): 393–407.

  12. Federal Reserve, “How Much U.S. Currency Is in Circulation?,” August 2, 2013, retrieved August 8, 2013, from http://www.federalreserve.gov/faqs/currency_12773.htm.

  13. The Federal Reserve tracks several measures of the money supply. Two of the standards are M1 and M2. Both include currency in circulation, but they do not include the bank reserves kept at the Fed. M1 is a measure of the most easily accessible types of money, and includes circulating currency, travelers’ checks, and demand deposits or accounts similar to “checking accounts.” M2 includes these categories plus some that are not quite as liquid since they are meant for household saving or investment, like savings and money market accounts, certificates of deposit worth less than $100,000 (CDs or “small time deposits”), and the funds parked in retail money market mutual funds. In June 2013, M1 totaled $2.5 trillion. M2 was over $10.5 trillion.

  14. Economist Irving Fisher’s work led to the first clear differentiation between nominal and real interest rates. In his description of the relationship, the nominal interest rate approximates the real interest rate plus the inflation rate, thus anticipated changes in the inflation rate will be reflected in the nominal interest rate. See “Irving Fisher,” Concise Encyclopedia of Economics, retrieved June 1, 2014, from http://www.econlib.org/library/Enc/bios/Fisher.html.

  15. The example works out to $97.09.

  16. The example works out to $27.683 million.

  17. Hunter Lewis, How Much Money Does an Economy Need? (Mount Jackson, VA: Axios Press, 2007), pp. 6–7.

  18. Marc Shell, “Money and the Mind: The Economics of Translation in Goethe’s Faust,” MLN 95, no. 3 (April 1980): 516–62.

  19. Jack Weatherford, The History of Money (New York: Three Rivers Press, 1997), pp. 137–40.

  20. Mark Levine, “Can a Papermaker Help to Save Civilization?,” New York Times Magazine, February 17, 2012, http://www.nytimes.com/2012/02/19/magazine/timothy-barrett-papermaker.html?pagewanted=all.

  21. Tsuen-Hsuin Tsien, “Raw Materials for Old Papermaking in China,” Journal of the American Orient
al Society 93, no. 4 (1973): 510–19.

  22. Thomas F. Carter, The Invention of Printing in China and Its Spread Westward (New York: Ronald Press, 1955).

  23. Metropolitan Museum of Art, “Tang Dynasty (618–906),” retrieved April 10, 2014, from http://www.metmuseum.org/toah/hd/tang/hd_tang.htm.

  24. Tullock, “Paper Money—A Cycle in Cathay.”

  25. Liansheng Yang, Money and Credit in China: A Short History (Cambridge, MA: Harvard University Press, 1952), pp. 51–52.

  26. Nirat Lertchitvikul calls the notes from this era “warlord paper money,” since they depended heavily on the appointed governor and local warlords.

  27. Yang, Money and Credit in China, pp. 51–52.

  28. Kojiro Tomita, Andrew McFarland Davis, and Ch‘üan Pu Tung Chih, “Ancient Chinese Paper Money as Described in a Chinese Work on Numismatics,” Proceedings of the American Academy of Arts and Sciences 53, no. 7 (June 1918): 467–647.

  29. Yang, Money and Credit in China, pp. 5–6.

  30. Ibid., p. 52.

  31. Richard Von Glahn, “Monies of Account and Monetary Transition in China, Twelfth to Fourteenth Centuries,” Journal of the Economic and Social History of the Orient (2010): 463–505.

  32. Richard Von Glahn, “Cycles of Silver in Chinese Monetary History, in Billy K. L. So, ed., The Economy of Lower Yangzi Delta in Late Imperial China: Connecting Money, Markets, and Institutions (New York: Routledge, 2013), pp. 17–71.

  33. Von Glahn, “Monies of Account and Monetary Transition in China, Twelfth to Fourteenth Centuries.”

  34. Tsien, “Raw Materials for Old Papermaking in China.”

  35. Yang, Money and Credit in China, p. 53.

  36. Tullock, “Paper Money—A Cycle in Cathay.”

  37. Von Glahn, “Cycles of Silver in Chinese Monetary History.”

  38. Richard Von Glahn, “Silver and the Transition to a Paper Money Standard,” Von Gremp Workshop in Economic and Entrepreneurial History, 2010, University of California, Los Angeles, pp. 1–31, http://www.econ.ucla.edu/workshops/papers/History/Von%20Glahn.pdf.

  39. Von Glahn, “Cycles of Silver in Chinese Monetary History.”

  40. Yang, Money and Credit in China, p. 55.

  41. Von Glahn, “Monies of Account and Monetary Transition in China, Twelfth to Fourteenth Centuries.”

  42. Ibid.

  43. Ibid.

  44. Richard Von Glahn, “The Origins of Paper Money in China,” in William N. Goetzmann and K. Geert Rouwenhorst, eds., The Origins of Value: The Financial Innovations That Created Modern Capital Markets (New York: Oxford University Press, 2005), pp. 65–91.

  45. John W. Dardess, “From Mongol Empire to Yüan Dynasty: Changing Forms of Imperial Rule in Mongolia and Central Asia,” Monumenta Serica (1972–73): 117–65.

  46. Von Glahn, “Monies of Account and Monetary Transition in China, Twelfth to Fourteenth Centuries.”

  47. “Kublai Khan,” Encyclopaedia Britannica, http://www.britannica.com/EBchecked/topic/324254/Kublai-Khan/3994/Social-and-administrative-policy.

  48. Weatherford, The History of Money, pp. 125–28.

  49. Yang, Money and Credit in China, pp. 64–66.

  50. Von Glahn, “Monies of Account and Monetary Transition in China, Twelfth to Fourteenth Centuries.”

  51. Yang, Money and Credit in China, pp. 64–66.

  52. Tullock, “Paper Money—A Cycle in Cathay.”

  53. Von Glahn, “Monies of Account and Monetary Transition in China, Twelfth to Fourteenth Centuries.”

  54. Lande, “John Law and the Invention of Paper Money.”

  55. Antoin E. Murphy, John Law: Economic Theorist (Oxford: Oxford University Press, 1997), pp. 31–40.

  56. Niall Ferguson, The Ascent of Money (New York: Penguin Group, 2008), p. 132.

  57. Stephen Quinn and William Roberds, “How Amsterdam Got Fiat Money,” Federal Reserve Bank of Atlanta, December 2010, https://www.frbatlanta.org/documents/pubs/wp/wp1017.pdf.

  58. Earl J. Hamilton, “John Law of Lauriston: Banker, Gamester, Merchant, Chief?,” American Economic Review 57, no. 2 (1967): 273–82.

  59. H. Montgomery Hyde, John Law: The History of an Honest Adventurer (London: Home & Van Thal, 1969), p. 83.

  60. Antoin E. Murphy, “John Law,” in William N. Goetzmann and K. Geert Rouwenhorst, eds., The Origins of Value: The Financial Innovations That Created Modern Capital Markets (New York: Oxford University Press, 2005), pp. 225–38.

  61. Ibid.

  62. Earl J. Hamilton, “Prices and Wages at Paris under John Law’s System,” Quarterly Journal of Economics, 51, no. 1 (November 1936): 42–70.

  63. Ibid.

  64. Ferguson, The Ascent of Money, pp. 138–49.

  65. Lande, “John Law and the Invention of Paper Money.”

  66. Ferguson, The Ascent of Money, pp. 140–45.

  67. Murphy, “John Law.”

  68. Ferguson, The Ascent of Money, pp. 138–49.

  69. Lande, “John Law and the Invention of Paper Money.”

  70. Ferguson, The Ascent of Money, pp. 138–49.

  71. Lande, “John Law and the Invention of Paper Money.”

  72. Murphy, “John Law.”

  73. Lande, “John Law and the Invention of Paper Money.”

  74. Ferguson, The Ascent of Money, pp. 138–57.

  75. Eichengreen, Exorbitant Privilege, pp. 10–11.

  76. Farley Grubb, “Benjamin Franklin and the Birth of Paper Money,” Federal Reserve Bank of Philadelphia, March 3, 2006, https://www.philadelphiafed.org/publications/economic-education/ben-franklin-and-paper-money-economy.pdf.

  77. Ibid.

  78. Charles W. Calomiris, “Institutional Failure, Monetary Scarcity, and the Depreciation of the Continental,” Journal of Economic History 48, no. 1 (1988): 47–69.

  79. Benjamin Franklin, “A Modest Enquiry into the Nature and Necessity of a Paper-Currency,” in Colonial Currency Reprints (Boston: John Wilson, 1911), pp. 335–57.

  80. Grubb, “Benjamin Franklin and the Birth of Paper Money.”

  81. Robert Garson, “The US Dollar and American Nationhood, 1781–1820,” Journal of American Studies 35, no. 1 (2001): 21–46.

  82. Farley Grubb, email correspondence, May 27, 2014 (K. Sehgal, interviewer). Grubb points out that this was because of time discounting; colonial paper money was structured in a way similar to US savings bonds.

  83. Ibid.

  84. Calomiris, “Institutional Failure, Monetary Scarcity, and the Depreciation of the Continental.”

  85. Declaration of Independence, July 4, 1776, http://www.archives.gov/exhibits/charters/declaration_transcript.html.

  86. Grubb, email correspondence, May 27, 2014.

  87. Robert Shaw, “History of the Dollar,” Analysts Journal 14, no. 2 (1958): 77–79.

  88. Farley Grubb, “The Continental Dollar: How Much Was Really Issued?,” Journal of Economic History 68, no. 1 (March 2008): 283–91.

  89. Massachusetts Historical Society, “United States Continental Paper Currency,” http://www.masshist.org/findingaids/doc.cfm?fa=fao0005.

  90. Grubb, email correspondence, May 27, 2014.

  91. Alexander Hamilton, The Works of Alexander Hamilton, vol. 2, ed. John C. Hamilton (New York: J. F. Trow, 1850), p. 271.

  92. Garson, “The US Dollar and American Nationhood, 1781–1820.”

  93. Eichengreen, Exorbitant Privilege, pp. 10–14.

  94. Grubb, email correspondence, May 27, 2014.

  95. Constitution of the United States of America, http://www.archives.gov/exhibits/charters/constitution_transcript.html.

  96. Weatherford, The History of Money, pp. 136–40.

  97. Ronald W. Michener and Robert E. Wright, “State ‘Currencies’ and the Transition to the U.S. Dollar: Clarifying Some Confusions,” American Economic Review 95, no. 3 (June 2005): 682–703.

  98. Abraham Lincoln, Abraham Lincoln: Speeches and Writings, 1859–1865 (New York: Library of America, 1989), p. 397.

  99. Heather Cox Ric
hardson, The Greatest Nation on Earth (Cambridge, MA: Harvard University Press, 1997), pp. 1–7.

  100. Marc Egnal, “The Greenback Is Born,” New York Times, February 27, 2012, http://opinionator.blogs.nytimes.com/2012/02/27/the-greenback-is-born/?_php=true&_type=blogs&_r=0.

  101. Ibid.

  102. Grubb, email correspondence, May 27, 2014.

  103. University of Groningen, “American History: From Revolution to Reconstruction and Beyond,” retrieved May 31, 2014, from http://www.let.rug.nl/usa/essays/general/a-brief-history-of-central-banking/national-banking-acts-of-1863-and-1864.php.

  104. “Resumption Act of 1875,” Encylopaedia Britannica, retrieved September 8, 2013, from http://www.britannica.com/EBchecked/topic/499805/Resumption-Act-of-1875.

  105. Murray N. Rothbard, “What Has Government Done to Our Money?,” Ludwig von Mises Institute, https://mises.org/money/4s1.asp.

  106. Nathan Lewis, “The 1870–1914 Gold Standard: The Most Perfect One Ever Created,” Forbes, January 3, 2013, http://www.forbes.com/sites/nathanlewis/2013/01/03/the-1870-1914-gold-standard-the-most-perfect-one-ever-created.

  107. Michael David Bordo, “The Classical Gold Standard: Some Lessons For Today,” Federal Reserve Bank of St. Louis, May 1981, http://research.stlouisfed.org/publications/review/81/05/Classical_May1981.pdf.

  108. Barry Eichengreen and Peter Temin, “The Gold Standard and the Great Depression,” June 1997, NBER Working Paper Series, http://www.nber.org/papers/w6060.pdf?new_window=1.

  109. Murray N. Rothbard, “The Monetary Breakdown of the West,” Ludwig von Mises Institute, http://mises.org/money/4s3.asp.

  110. Ibid.

  111. James Rickards, Currency Wars (New York: Penguin, 2011), p. 66.

  112. Eichengreen, “The Gold Standard and the Great Depression.”

  113. Benn Steil, The Battle of Bretton Woods (Princeton, NJ: Princeton University Press, 2013), p. 24.

  114. Eichengreen, “The Gold Standard and the Great Depression.”

  115. Steil, The Battle of Bretton Woods, p. 25.

  116. Jacob Goldstein and David Kestenbaum, “Why We Left the Gold Standard,” NPR, April 21, 2011, http://www.npr.org/blogs/money/2011/04/27/135604828/why-we-left-the-gold-standard.

  117. Steil, The Battle of Bretton Woods, p. 27.