The world is now repeating the same process, despite the knowledge of so many failed and tragic dalliances with currency depreciation in the past

We Are Speeding Towards Economic & Social Devastation

“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.

9 comments on “The world is now repeating the same process, despite the knowledge of so many failed and tragic dalliances with currency depreciation in the past
  1. O says:

    this is pretty difficult for you max.
    Just join us and then you will make unbelievable advances in your intelligence.
    Mises institute.
    Stop fighting and accept what you are
    Anarkist
    Max

  2. O says:

    You are one of us Max
    You know it.
    We know it.
    Mises Institute
    Anarkists
    Max

  3. ronron says:

    is this old home week? :-)

  4. MirrorMirror says:

    @RR .. Max pulling out the “old”ies ;-)

    Still …. nice interview .. again.

  5. Bruce says:

    Vintage 2011!
    Jovanovic and “Teddy Bear” Turk are always a good listen, regardless.

  6. R. Freiherr v. Wackendonk says:

    The epilogue is sad: “Learn from history”. Yeah, well, every government on earth learned from France’s history, all right. They learned how to legally rob the citizenry of all their wealth through fiat emissions. Every great empire did it to its own people. Try using a 50p from 1981 in any shop in London: you’ll be laughed into the street! The only country to NOT suffer an inflationary blowout or currency revaluation on planet Earth is the United States: a greenback from 1861 is still “worth” its face value. But our time is coming, isn’t it? “Not worth a Continental” is so outdated. Soon we shall say, “Not worth a Fed Note”.

  7. PhilJoMar says:

    It may be that the John Law scheme went belly-up but a few decades on many French commentators of the time began to see things differently. Voltaire actually saw a lot of merit in the scheme saying in 1738 that if the system had succeeded “the state had certainly been the most vigorous and powerful in the whole world”, and, despite its failure, that all the more recent signs of French commercial prosperity were a product of the system. “Though we owe them all to him”, Voltaire commented, “we are exceedingly ungrateful to the memory of our benefactor”. This quoted from “Before the Deluge” by Michael Sonenscher.
    It’s pretty poor history to link events of the 1710s to those of the late 1780s. Food prices rose during the 1788-9 winter because of a terrible harvest and an incredibly cold winter. The later paper money the ‘assignats’ were related to the confiscation of church property and so were initially backed by something and WERE internationally accepted at first, the later ‘mandats’ were backed again by land but by this time France was at war with Britain and so these failed pretty quickly. I hope people aren’t forgetting that the British Bank of England in Feb 1797 restricted the convertibility of cash into gold, so something of a complicating factor going on here, rather than the simple tale told above.
    If you actually read Law’s scheme as proposed at the time it was pretty clever and if France had pulled it off, history would have been very different. I know matters today are very different and the whole system deserves to fail but I think Max and Turk should beware of what they wish for…Remember they’ve got their properties, their gold and silver investments, all the time they’re talking them up. I am dirt poor, a carer for someone with Autism, and I am NOT looking forward to a huge creative destruction crash. If you have no assets and no land..neither should you.

  8. trooper dave says:

    The world is repeating the same mistakes. It seems that no one learns from history.
    currencies rise and fall
    politicians come and go
    enemies are created and destroyed
    people are born and people are killed

    But through out history there have been people that sat in the directors chairs calling the shots, giving the cues for the next action or direction. These people have never put themselves in any danger and have used the people of the world to better their own lives no matter what affect on the people. And those affects range: disease, starvation, mental destruction, loss of sight or limbs, pain and torture, and death in the millions.
    Yet even with the glaring grotesqueness of filmed war like Vietnam, and the idiocy of the script for this war given to the people by the leaders which, now in hindsight shows that soldiers and civilians brutally lost their lives on the backs of falsehoods and money making schemes of corporate men who never came within a thousand miles of the danger the puppets sent them to: still people do not apply critical thinking and knowledge from the past to the present and future. They blindly walk into the slave cages, match off to war to kill and be killed, all at the behest and benefit of hidden shadow men who think they are gods and people are theirs to do with as they see fit.

  9. “THE FREE LUNCH”
    (1)Create money out of thin air! … (air is free! )
    (2) Loan that money at interest,
    (3) Buy your “Free Lunch”, with the “Free Money”.

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