19 highlights from The History of Money by Jack Weatherford: “The great struggle of history has been for the control over money”

I’ve always enjoyed Jack Weatherford’s books, beginning with “Genghis Khan and the Making of the Modern World” [Amazon].

Below is a collection of highlights from “The History of Money” [Amazon], a relatively fast read with a self explanatory title.

Highlights

…the Aztec Empire was like virtually all other empires in the era before the spread of money. Ancient Egypt, Peru, Persia, and China all functioned as tributary systems rather than market systems.

The modern English word salary and the Italian, Spanish, and Portuguese word salario are derived from the Latin word sal, meaning “salt” or, more precisely, from salrius, meaning “of salt.”

Gold has relatively few practical uses outside of decoration and some sophisticated modern technological applications; yet people throughout the world have been attracted to it. Even if it lacks utility, empirical evidence shows that humans everywhere have wanted to touch it, wear it, play with it, and possess it. Unlike copper, which turns green; iron, which rusts; and silver, which tarnishes, pure gold remains pure and unchanged.

As money became the standard value for work, it was also becoming the standard of value for time itself.

Greece was the first civilization to be transformed by money, but in a relatively short time, all cultures followed the Greeks down the same road and underwent the same metamorphosis.

Money represents an infinitely expandable way of structuring value and social relationships—personal, political, and religious as well as commercial and economic.

The Roman desire for Asian luxury goods created the first great trade imbalance on a global scale.

Founded in Jerusalem around 1118 by Crusaders, the Military Order of the Knights of the Temple of Solomon dedicated their lives to serving the church and, specifically, to the task of liberating the Holy Land from the Infidels. The Templars later became businessmen who ran the world’s greatest international banking corporation, which they operated for nearly two hundred years.

The trouble with paper money is that it rewards the minority that can manipulate money and makes fools of the generation that has worked and saved. — ADAM SMITH

Even though banking emerged during the Italian Renaissance, it acquired little respect. Their work as money changers and as barely disguised moneylenders placed bankers only marginally above pimps, gamblers, and other criminals.

…the introduction of Arabic numerals “had almost the same effect on arithmetic as the discovery of the alphabet on writing.”

John Kenneth Galbraith observed that “if the history of commercial banking belongs to the Italians and of central banking to the British, that of paper money issued by a government belongs indubitably to the Americans.”

When asked “Why gold?” one monetary expert reportedly answered, “because you can’t trust governments, least of all democratic governments.”

Those people who voluntarily surrendered their gold to the Department of the Treasury within nine months of Roosevelt’s order received compensation of $ 20.67 per ounce in paper notes. One year after confiscating the privately owned gold, on January 31, 1934, the federal government devalued the paper money from $ 20.67 to $ 35 for each ounce of gold. Thus, everyone who had complied with the law and exchanged gold for paper lost 41 percent of the gold’s value.

Governments have three primary ways of financing their expenditures: taxing, borrowing, and printing more money.

In a democratic society, politicians are often unwilling to raise taxes because of the expected voter anger. For them, inflation and the devaluation of the currency serve much better because they constitute a hidden tax.

The great struggle of history has been for the control over money. It is almost tautological to affirm that to control the production and distribution of money is to control the wealth, resources, and people of the world. Over time, competitors have aligned themselves into various factions, institutions, governments, banks, guilds, corporations, religious orders, and great families; but from the minting of the first coin until today, the struggle has never abated for more than a brief respite of a century or two.

French president Jacques Chirac expressed a general mistrust of the currency markets when he labeled currency speculation “the AIDS of our economies.”

Money, like the calendar and the system of measurements, is a cultural construct that may have arbitrary aspects, but to function properly it needs stability and predictability.

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