“Andrew Dickson White was a professor of history in the second half of the 19th century. He also convinced Ezra Cornell to create the great university which bears his name. White became the first president of Cornell. The goal was to create “an asylum for science where truth shall be taught for truth’s sake”.
White’s relevance to today’s investors is his compilation of a lecture that looked at the French experience with fiat money during the French Revolution in the waning years of the 18th century. His work was published in book form under the title of “Fiat Money Inflation In France”.
There certainly have been countless other experiments with paper-based currencies, but this episode stands out from the many other such episodes in monetary history. One of the reasons is that the French had suffered through another hyperinflation just 70 years before….
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In a related video . . .
Max Keiser, of maxkeiser.com, James Turk, Director of The GoldMoney Foundation and Pierre Jovanovic, jovanovic.com, tell the story of the introduction of Fiat Money to France.
They discuss John Law and how his money printing fix was seen by the French Regent as a way out of the kingdom’s debt troubles — accumulated by past wars and royal extravegence — a way to avoid the harsh spending cuts that were unavoidable given the difference between income and spending.
Keiser, Turk and Jovanovic talk about the Mississippi Bubble and how speculation in stocks became rampant as banknotes were printed to drive up the value of paper assets, how the French public was caught up in the speculative mania with dreams of untold riches from Louisiana.
They explain how John Law’s success and the riches that he brought the crown ensured his promotion to Minister of Finance.
The trio also discuss how the bubble popped, how all manner of coercive and increasingly desperate steps were taken to prop up the value of shares in the Mississippi Company, including the printing of increasing amount of banknotes. When the banknotes themselves started to depreciate, gold and silver coin were outlawed in an attempt to force the French to use only paper money. The consequences were disastrous, with commerce paralysed and the economy brought to its knees.