Below is a quotation from the Sovereign Investor free newsletter.
New Year's Message from Chairman John Pugsley
If We Forget Our Mistakes of the Past, We are Doomed to Repeat The...
We can look to history. For thousands of years the consequences of money creation have been the same whether money was gold, silver, paper, or ciphers
on a computer hard drive. There have been no exceptions.
Three hundred years before the birth of Christ, Roman emperors
experimented with QE by continually reducing the gold, silver, and copper content of the coinage. From the point the denarius coin was introduced in
211 BC, the silver content was persistently reduced until the amount of silver in the original denarius eventually produced 150 denarii. As the coin
supply increased, the price of goods did so as well, in direct proportion—the quantity of wheat that had sold for one denarius in the second century
increased to 200 denarii a century later.
As prices rose, Roman emperors blamed price inflation on public greed, and attempted to stop it by making rising prices illegal. In 301 A.D., with the
survival of the state at risk, Emperor Diocletian issued an edict that set price ceilings on over 1,000 products and set death as the penalty for
profiteers and speculators who tried to evade the controls.
In 1775, with the American colonies rebelling against the British Crown, the Continental Congress needed money to pay the army. It printed
“continental dollars” promises to pay silver out of "future tax revenues." The result was the hemisphere’s first hyperinflation. As George
Washington noted toward the end, "A wag of currency will hardly purchase a wag of provisions."
Following Diocletian’s model, the Massachusetts Provisional Council declared that anyone who refused to accept these notes was an "enemy of the
country." The states enacted price controls, and made it a crime to refuse paper money, demand a premium in paper, or charge lower prices for payments
In the aftermath of the French Revolution, the French National Assembly authorized the printing of assignats, paper notes backed by the lands
confiscated from the church. The intermittent burst of printing (read quantitative easing) led to hyperinflation which, as always, the authorities
blamed on greed. Wage and price controls were imposed along with increasingly draconian penalties, ultimately including death by the guillotine for
And thus it has gone from ancient Rome to modern day. Colonial America, Revolutionary France, post-war Germany, Argentina, Hungary, Brazil, and China,
and a hundred other countries repeated the process of money creation leading to price inflation leading to laws against individual choice. Like me,
you may remember the 1970s during which, after decades of continuous monetary expansion, pent-up inflation struck and the political answer was, once
again, wage and price controls.
No Matter How It’s Done, It’s Theft…
Money creation, whether under the cover of stimulus or quantitative easing, is pure theft carried out through sapping the purchasing power of money.
The first consequences of quantitative easing must be price inflation. You can be certain that as soon as it rears its head in earnest, the attack on
individual liberty will escalate.
* End Quotation *
A GREAT video on currency theory is: The Money Masters. It explains the battle of currency control in Europe and the USA over the last ~500
This is Part 1 of 22.
edit on 2-1-2011 by wolfgang1812 because: Clarity