Posted Dec 2, 2013 by Martin Armstrong
The Gold Promoters have so poisoned the well with nonsense that has been tried countless times before and failed, that their insistence upon tangible money is seriously disrupting the ultimate resolution of our critical economic illness. I have explained that even making money gold coins will not prevent it from being a fiat currency. Coinage began as a convenience. The first step during the 7th Century was simply to standardize a weight system rather than having lumps of electrum trade by weight (natural alloy of gold and silver).
Government got involved by guaranteeing the weight of the coinage and then impressed the seal of the city to confirm this was a standard coin. This tradition of applying the seal to the coin was the very same as having a seal in your ring that was used to sign documents and letters. Here is an engraved Obsidian Scaraboid inset into a Ring attributed to the Greek Artist Epimenes circa 500 BC from Cyclades, Greece. The image was incuse so when stamped in wax it would be raised just as a coin. This is the origin of coins. It was the seal of the king certifying the object.
The coinage was simply electrum meaning a natural alloy. Therefore, some pieces would have 10% gold while others 60%. Clearly, people must have begun to attribute a higher value the more yellow the coin. It was about 555BC that we find the first refinement of the coinage and the birth of a bimetalic monetary system with the silver/gold ratio at that time based upon the local supply of each metal being 12.5 to 1: Illustrated here is an electrum coin with nine counterstamps applied. These were foreign exchange brokers who would test the coin for weight and metal content. Each broker would then apply his own tiny counterstamp to mark that he had tested the coin.
Lydia is also the example of the first Fiat Currency that was in fact gold. As the Persians were threatening war, and eventually did conquer Lydia, we can see the record of how the government that invented (1) standardization of weight, (2) the stamping of an image to certify the coinage, (3) the first bimetalic monetary system, then also created (4) the first fiat monetary system. They reduced the weight of the coinage during the next Monetary Reform whereby Gold staters dropped from 10.89 grams to 8.17 grams.
So there you have it. Lydia reduced the weight of the coinage and raised the value to cover their expenses in war – fiat. So this idea that simply because coins were gold and silver that somehow this makes them “tangible” and not fiat is absurd. Anything can be fiat when government declares its value that is in excess of its commodity value.
Therefore, the future is moving toward a digital currency and this nonsense about a gold standard will somehow save the day is one of the most unsupported theories to emerge from history. The Egyptians never had coinage until Alexander the Great conquered them in 334BC. The people would deposit grain in the state warehouses and were given a receipt that then circulated as money. If you define fiat as merely a money that has no tangible value because it is paper, well under that definition Egypt had the first paper monetary system using warehouse receipts. In colonial Virginia, the same system emerged using tobacco receipts.
The monetary system that will work is digital and a two-tier system. Each country would then retain its own currency and there would be a world currency used as the reserve to which each nation would exchange to pay another. This will allow each country to remain sovereign and prevent a contagion as we see in Europe spreading from Greece and infecting all of Europe. This is the ONLY way the future can be stabilized. The value of a currency will rise and fall based upon CONFIDENCE in that government and it will be up to the people to be the real check and balance against fiscal mismanagement. End career politicians and require all spending to be approved by the people who can vote at home on a computer or go to the town hall, and we are getting closer to taking the best of all the monetary systems that have risen and fallen throughout time and circumstance,