The deceptive appearance of the state-decreed money

The history of human civilization is inextricably linked to the development of means of exchange, with state intervention in the monetary system always entailing profound social upheavals. When rulers gain sole control over the currency, they often use this power to secretly expropriate the population, which in the past regularlydramatic economic crises. This consideration classifies what is happening as a warning testimony of the dangers of unlimited financial power.

The horrors of sudden devaluation of money

Of all economic needs, no plagues seemed as uncanny to the inhabitants of historical realms as the sudden and complete loss of value of the currency. This creeping decay left deep discord in the families, nurtured the hatred between creditors and debtors, and plunged large parts of society into hunger and bitter poverty. Honorable citizens fell for the instinct of the gameand the alcohol, while well-behaved teachers and preachers lost their offices and once well-held families defeated in the end. Such conditions ultimately threatened the townspeople in densely populated regions with starvation and plunged the entire order into hopeless chaos.

The blind participants in daily trade

In local trade between town and country, however, the freshly coined money was initially accepted without hesitation and implemented with increased momentum. The masses did not realize that the various coins with which she paid daily had become worthless sheet metal. Only the smarter minds who suspected the true extent of fraud were often breastfedAccomplices at the dishonest usury of the powerful. This description of the dramatic currency decay occurred during great European wars in the distant past when resourceful traders systematically plundered the money system.

The difference between decentralized and state money

If you look at the theoretical basics, every decentralized means of universal exchange that has been created in a decentralized manner requires production costs in order to be able to show the exchange value at all. Any freely available good, like ordinary paper, would be completely unsuitable as a medium of exchange, since no one would do without other valuable goods to trade it in. However, this argument loses its validityAs soon as the ruler takes over the money being and circulates the currency at its discretion. The powerful Regent could theoretically introduce the currency, the production of which is not wasted any resources, but is completely free of charge.

The illusion of free money creation

He would only have to ensure that the right amount of payment methods always remain in circulation. The saved production costs for the non-cash money without internal benefit could then be used productively in other ways. From the viewpoint of the common population, however, massive costs arise, namely in the form of the coin gain that the ruler is skimming off, or through thecollection of taxes. Any well-meaning regent could use such general income by building roads, educational institutions and protective walls.

The productive use of resources

Such infrastructure projects would increase the wealth of cities and protect the inhabitants from enemy attackers. Instead of digging up and burying valuable precious metals pointlessly, the money’s expenses would be directed in the sensible and productive direction. In the case of benevolent rulers, this thought not only sounds convincing, but also proves to be in theoryas working. Natural exchanges would arise between the money and the real goods, which are based on the actual production costs.

The fatal reality of power-hungry regents

The money would remain valuable through the ruler’s moderate behavior, and even if he claimed the certain luxury for himself, this would still be beneficial for the community. However, the critical point of this theory lies in the compelling premise of the well-meaning prince, who actually has the well-being of all in mind. Real rulers usually do not correspond to thisIdeal even if you tell yourself something else. True rulers only demand a certain luxury and soon after incomparable splendor that finally empties the state treasurys.

the insatiable thirst for splendor and power

The magnificent summer residences will be built and soon after, gigantic palaces will devour the wealth of the people and bind the resources for years. In addition, conquest campaigns are launched, which only serve the personal glory of the ruler, while the subjects have to forego their standard of living and often sacrifice their lives for senseless warfare. To thisJustifying wasteful politics, expensive organizations are being built up to make the decisions of the powerful of the population palatable. If resistance is nevertheless stirred against the unjust distribution, the organized force will also be used mercilessly against the critics inland.

The limits of the ability to suffer

Such development is almost always the direct result of the unbridled accumulation of power that lacks any control from outside. Actually, such exploitation should be limited by the natural willingness of the residents to suffer, since there are fixed boundaries somewhere. If the people are piled up too much, the expensive policy can no longer be maintained in the long run, sinceThe funds for paying the mercenaries are simply missing. At some point, the starving population rebels and refuses to obey.

The dilemma of the unobservable money supply

The fundamental problem of unlimited ruling money is that the monetary policy actions of the powerful remain unobservable to the public. The users of the money therefore do not know how much new money the prince is currently circulating and what huge profits he thus skims off. If he spends unlimited paper money, he can print any numbers on it,without noticeable immediately. Such a situation turns into the ruler’s dilemma, in which the powerful can freely decide whether to collect numerous or few resources from his subjects.

The temptation for secret expropriation

However, the subjects quickly see through such a game and know that the prince can change the money as he pleases. You realize that he will divert more and more real values for himself on the unobserved path of money printing. Therefore, reasonable subjects consider coins made of worthless sheet metal exactly as they are: useless metal. Exactly for this reason he would beThought of pure paper money about most of human history was completely absurd.

The rejection of the worthless paper

Early experiments with such money in distant eastern realms always ended in the dramatic currency decay, which travelers with great astonishment captured in their reports. In reality, however, economic actors do not behave completely sensibly, but often act very short-sightedly. The information about newly created money does not spread in leaps and bounds,but in the slow process of gradual knowledge. Unlike in static textbooks, behavior does not immediately jump into the new balance, but people only learn sensible action through increasing experience with the respective crisis.

The creeping start of the currency devaluation

If you start the description of such dynamics in the largely static economy, stable prices and the constant money supply have established themselves. The ruler has previously used the profits from money creation for useful infrastructure and only for little luxury of his own. If the prince now has a special emergency, in which the prince has the increased need for real goods, this changesbehavior abruptly. The classic example of such increased demand is the outbreak of war, which devours enormous amounts of material.

Resources for war

Resources normally available for civilian consumption are forced to be redirected to the army’s maintenance. Consequently, reduced labor and reduced materials are available for the civilian economy, which diminishes the prosperity of the citizens. The ruler could make such a shortage visible by increasing the population’s duties,Which would be extremely unpopular, however. In addition, such a measure would betray information on the enemy powers about actual economic performance and thus military strength.

Escape to secret money creation

Therefore, the prince has the strong incentive to obtain the additional resources as unnoticed as possible. Since the money he spent is not directly observable by the other economic operators and by the military enemies, he can secretly and steadily increase it. Such a situation is called the hidden misconduct, which is based on the unequal distribution of knowledgebased. The ruler can take the unobservable action that makes him better himself, but usually at the expense of the unsuspecting other players.

The hidden misconduct of the powerful

If such unequal distribution of knowledge is general knowledge, the poorly informed citizens must assume that the powerful chooses the beneficial option for them. In the case of short-sighted expectations, this initially leads to the slow increase in price levels, which, however, soon solidifies as a fixed expectation. In order to be able to acquire real goods through money creation,the prince would have to increase the nominal money supply even faster. The new money supply must rise faster than the expectations of the population, because with the expected increase, the providers immediately charge the higher prices.

The rapid acceleration of currency decay

Folglich steigt nicht nur die Geldmenge selbst, sondern auch die Geschwindigkeit, mit der solche Geldmenge ausgeweitet wird. In der Realität kennt man diesen nach einiger Zeit auftretenden Effekt der immer schneller ansteigenden Teuerung als den ultimativen Währungszerfall. Solcher Zustand ist letztlich dadurch gekennzeichnet, dass es keine externe Begrenzung der Geldmenge mehr gibt und alleTeilnehmer weitgehend vernünftige Erwartungen entwickelt haben. Jeder Geldnutzer weiß, dass die neu emittierte nominale Geldmenge nicht direkt beobachtbar ist, und da der Fürst dies weiß, erhöht er sie bis ins Unermessliche.

Der finale Kollaps der Tauschverhältnisse

Das wiederum erwarten die anderen und handeln sofort danach, was die Währung endgültig ruiniert. Als direkte Folge lässt der Fürst die Geldmenge gegen den absoluten Tiefpunkt wachsen, während der Tauschwert bezüglich realer Güter gegen den absoluten Tiefpunkt sinkt. Häufig wird solcher dramatische Zustand als geschwundenes Vertrauen beschrieben, obwohl geänderte Erwartungen die weitaustreffendere Bezeichnung für das Phänomen wären. Die Menschen haben lediglich die Realität erkannt und ihr Handeln konsequent an die unausweichliche Entwertung angepasst.

Die ewige Lehre aus der Geschichte des Geldes

Die Betrachtung dieser historischen und theoretischen Zusammenhänge offenbart die zeitlose Gefahr, die von der Monopolisierung des Geldwesens ausgeht. Solange die Schöpfung von Zahlungsmitteln in den Händen weniger Mächtiger liegt, bleibt die Versuchung zur geheimen Enteignung der Bevölkerung allgegenwärtig. Wahre Stabilität kann nur dort entstehen, wo die Geldmenge transparent und für allenachvollziehbar geregelt ist, damit sich solche verheerenden Zyklen der Gier und der Enttäuschung nicht ewig wiederholen. Das Volk muss stets wachsam bleiben, um die eigene wirtschaftliche Freiheit vor den Übergriffen des Staates zu bewahren.