321gold.com – ACAMAR JOURNAL – Aug 30, 2011
The Song dynasty first came up with widely circulated paper money in the 9th century as silver was in short supply. When Kublai Khan conquered China, his Yuan dynasty adopted the concept of printing money ceaselessly.
As Marco Polo put it: ““You might say that [Kublai] has the secret of alchemy in perfection…the Khan causes every year to be made such a vast quantity of this money, which costs him nothing, that it must equal in amount all the treasure of the world.”
At first things went well. The money was convertible into gold or silver and widely circulated. But, as now, a lack of fiscal discipline and inflation led to a delinking from real money (as Nixon did with the dollar in 1971). Then, as now, the pernicious effect of money printing asserted itself.
“This was the most brilliant period in the history of China. Kublai Khan, after subduing and uniting the whole country and adding Burma, Cochin China, and Tonkin to the empire, entered upon a series of internal improvements and civil reforms, which raised the country he had conquered to the highest rank of civilization, power, and progress.
Population and trade had greatly increased, but the emissions of paper notes were suffered to largely outrun both…All the beneficial effects of a currency that is allowed to expand with a growth of population and trade were now turned into those evil effects that flow from a currency emitted in excess of such growth.
These effects were not slow to develop themselves…The best families in the empire were ruined, a new set of men came into the control of public affairs, and the country became the scene of internecine warfare and confusion.”
There have been innumerable instances in history of excess paper money printing to cover deficits (‘quantitative easing’ in modern parlance). They have generally ended badly. Go to story
excerpt from Morning Walk, Johannesburg, October 16, 1975:
HARIKESA: So actually this money doesn’t even exist in Vedic society—money.
PRABHUPADA: Money is not required. You require things. Just like instead of money, you are getting papers. Money means gold. Where is gold? You are cheated. Money means gold. So instead of possessing gold, you are possessing some paper, written there, “hundred dollars.” And you are such a fool, you are satisfied. You are being cheated. Bank’s check and currency notes, you keep it in your…, “Oh, here is my money.” Is that money? Just see.
DEVOTEE: They only do that to make it easier for them, because they’ve got so much money that they can’t carry it…
PRABHUPADA: That’s all right, but actually it is not money. You are befooled. You are such a fool that you accept a piece of paper as money. Therefore I say you are rascal. That is my business. If I say “Government, give me gold,” and government has passed law, “No, you cannot possess gold,” that means cheating. How I shall keep gold, that is my business. First of all you give me gold. It is due to me. But you are giving me paper. That means cheating is begun from you.
HARIKESA: How will the government decide what my gold is and what his gold is? How does the gold get distributed?
PRABHUPADA: Gold coins. Formerly there was gold coins. We have seen in our childhood gold coins, silver coins. There was no paper.
…Formerly British government, in the beginning, to prove their honesty, as soon as you go to the currency for changing, they will offer you, “You want coins or paper currency?” So if you think that paper currency will be convenient, you can take. Otherwise, if you want coins, they will pay you.
PUSTA KRSNA: Gold coins.
PRABHUPADA: Yes, gold, silver, whatever you want. That was the… Now this is stopped. You can not ask now gold coins and silver coins. Whatever government will give you, you have to accept. Where is honesty?