The Biden Administration is responding to the panic phone calls that their Marxist philosophy will bring down the entire financial system. My ear is red as can be. I have had enough of the phone calls today to last the balance of the month. Trying just to do the right thing! Three banks have effectively gone down in the week of March 6th, which our computer was targeting. There have been Silicon Vally Bank, Signature Bank, and Silvergat Bank.
The Regulators perhaps saw the handwriting on the wall. This NO BAILOUT claiming that no taxpayer money will be used for a bailout of their hated rich, how about just using the taxpayer’s money you are throwing down the train in Ukraine? Depositors in Signature and SVB they are now saying would be made whole. If they do not cover ALL deposits, the monumental banking failure will be catastrophic.
Our forecast for a Banking Crisis is by NO MEANS confined to the United States. It will be far worse in Europe. We can see our computer not only targeted 2023 for a key turning point with a Directional Change but a Panic Cycle next year in bank stocks, but interest rates will be rising higher as also the risk of banks and governments escalated especially when they insist on waging war against Russia.
The yield curve is critical and we must understand that this insane war against Russia, even economically, will be a major financial disaster not much different from Vietnam which brought down Bretton Woods and forced Nixon to close the gold window on August 15th, 1971. It was that unrestrained spending directed by the Neocons. Then too, it was all about Russia they assumed was behind Vietnam.
Once more, the reckless spending on war promoted by the Neocons is undermining the entire economy. They have lost every war they have promoted – Vietnam, Afghanistan, Iraq, proposed Syria, Libya regime change, and now Ukraine. These people are never held accountable for all the devastation and the lives lost.
War is the primary driver of inflation and the central banks will not even address it for they do not want to “criticize” the Neocons. They might wake up with their dog’s head in the bed as in the Godfather. The central banks will NOT be able to contain this inflation or ever reach their 2% target regardless if the economy turns down just as what happened during Vietnam.
This is a warning to all small banks. Understand the REAL trend or you will NOT survive. Major capital is fleeing the long-term and rising into the short-term because they see rates are rising and any long-term bond investment during a period of war is going to be a major losing trade. Do not get trapped by the yield curve and understand that this trend is in play into 2025.
This Banking Crisis has been caused by Governments who artificially kept interest rates too low since 2008 and in the process, this banking crisis is unfolding because too many banks are UNSOPHISTICATED in forecasting and have been listening to the talking heads on TV and the desperate hope that inflation will decline while ignoring Ukraine entirely. Get that wrong – and you will NOT survive.
I strongly urge small banks to take our business services for access to real forecasting that is not biased or tarnished by human opinion with the two most dangerous words in forecasting:
COMMENT #1: Marty; Thank you so much for your warning at the WEC that we would now face a banking crisis with rising rates into 2024. You are always so far ahead of the pack. Live forever – please!
KQ
REPLY #1: Thank you, but that would sentence me to perpetual taxation indefinitely. No thanks.
COMMENT #2: Hello. I read your FREE blog because I am poor. Would you please stop posting PRIVATE stuff and post stuff that us peons can read?
Thank you kindly.
Ms. Terri
REPLY #2: My concern is since we forecast this last year, they will only blame me. That blog is only $15 a month, but it is blocked by Google so it is more free speech if you get my drift. I simple MUST be guarded in what I say publicly because they simply always view me as having too much influence.
I will offer this recommendation (publicly) for my ear is turning red from all the phone calls. As for the Biden Administration, if they DO NOT heed my warning, our forecast will be devastating. The Biden Administration MUST stand behind ALL deposits – not the $250,000 FDIC limit. If they do not, small businesses will pul; excess cash from banks, switch to 30-day T-Bills at a brokerage house, and say screw the FDIC and the Biden Administration’s anti-rich (small business which employs 70% of the workforce).
The compromise here is that we need a shotgun wedding where a larger bank takes over SVB at the raw price of the deposits. The shareholder loses, but ALL depositors are covered. Any value of the shares should be attributed to tangible assets only, not goodwill. You will penalize your “hated rich” and even the small businesses will be saved. If not, you will wipe out numerous businesses that cannot even pay employees. That will set off a contagion as you try to uphold your hatred of the “rich” while you pour money into the most corrupt government in the world at the real expense of taxpayers.
Of course, SVB can simply declare they “identify” as a Ukrainian Bank and then everything would be covered right down to the pensions of the CEO.
Posted originally on the CTH on March 12, 2023 | Sundance
BREAKING NEWS – The U.S. Treasury, Federal Reserve Board, FDIC and Joe Biden collectively announce that *all* depositors with Silicon Valley Bank (SVB) will have access to their funds – regardless of amount deposited. Also, all senior bank management has been terminated.
This announced action appears to cover those under FDIC protection ($250k or less) and those above FDIC protection (deposits greater than $250k). The only vulnerability is that SVB “shareholders and certain unsecured debtholders will not be protected.”
WASHINGTON DC – The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg:
Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe. (LINK)
Will this action help stop any contagion related to California’s largest bank?
…The odds are, yes.
Despite Friday’s action to stop trading of FRB, with this action, I doubt First Republic Bank (FRB) is now at risk.
QUESTION: The sales pitch seems to be that there is this $2 quadrillion in global debt that overhangs everything. Paper assets, therefore, will all implode! They seem to be saying that everything has risen due to this debt bubble and it was all created with Zero interest rates. Now that they are going up, the debt bubble will burst and everything will decline. The story seems to be that this decades-long Boom Bust cycle was created over and over by the Federal Reserve.
This seems to be like you have said, they try to reduce everything to a single cause and effect.
What really happens?
PCJ
ANSWER: These people seem to keep preaching the same story but have no historical understanding whatsoever of how the monetary system has ever worked. Their focus on the Federal Reserve shows that they are not looking at the world economy and they do not even comprehend how bad things really are outside the United States. They do not comprehend what is an interest rate. It is the compensation to a lender for his anticipation of inflation plus a profit. If I think the dollar will decline by 50%, why would I lend you dollars for a year if when you pay me back it buys half of what it did when I lent it to you?
Debt can be a performing asset. I advised many of the Takeover Boys during the 1980s. We would borrow in one currency to buy the asset in another using the computer to distinguish the long-term trends. I would not recommend that to someone just operating on a gut feeling.
We were also advising on real values, which Hollywood distorted and based the movie Wall Street with Michael Douglas and his famous speech on greed. What they did not really understand was that after a Public Wave that peaked in 1981, stocks were suppressed and the full-faith in government created the broadly supported bond market. Hence – bonds were conservative and stocks were risky. There were two aspects that were behind the entire Takeover Boom.
First, I was showing these charts and how in terms of book value, the Dow Jones bottomed in 1977. It was obvious that if you could buy a company, sell its assets, and double or triple your money, then the market was obviously not overpriced. We had forecast that the Dow was undervalued and that it would rise from the 1982 low of 769.98 and test the 2500 level in two years in 1985. Indeed, it reached 2695.47 by September 1987. We also projected that by the next decade, the Dow would test 6,000 on its next rally.
Even the press in Japan was shocked. We were also projected that Crude would fall below $10 in 1998. Indeed, that forecast was covered by Mark Pitman at Bloomberg News. It bottomed at $10.65 in 1998. In gold would forecast that it would drop to test $250 by 1999 completing a 19-year cycle low. Then gold would rally to test 1,000. Gold reached the $1,000 level by 2008. The Japanese press thought those forecasts were wild, to say the least.
The SECOND aspect of our advice to the takeover boys of the ’80s was something the press NEVER understood. We would advise borrowing in one currency for an asset in another. We were able to turn debt into a performing asset. We would make 20-40% profit on the currency alone. Often, the press would just look at the debt and not understand what we were even doing.
Most of this reasoning stems from Sir Tomas Gresham’s observations when he represented England at the Amsterdam exchange during the reign of Henry VI’s reign and debasement. As Henry debased the silver coinage as was taking place in Spain, the more they debased the coinage, the higher the inflation took place. His observation that bad money drives out the good has been grossly misunderstood. When I was growing up, they took the silver out of the coinage in 1965. People were culling out the silver showing that the debased new coinage of 1965 drove out of circulation the old silver coinage. The same thing has taken place with the copper pennings.
Because people hoard old coinage, the money supply shrinks. That then forces the government to issue far more debased coinage to compensate for the coinage that has been withdrawn from hoarding. Consequently, inflation unfolds for all tangible assets to rise in value as expressed in the newly debased coinage.
What these people always try to sell is the same old scenario that they cannot point to a single instance in history where everything collapses to dust but only gold survives. Such periods will typically result in revolution. When Caesar crossed the Rubicon, that was also all bout a debt crisis.
You must also understand that interest rates will be at their LOWEST internationally in the core economy of the Financial Capital of the World – which is the USA right now. The further you move from the center, the higher the interest rate will be. Hence, I have warned that the United States will be the LAST to fall – never the first. This is not based upon my opinion, this is simply historical fact.
The Bottom Line is very simple. There is just no such period as people describe where everything turns to dust and only gold survives. Even if that were true, they what good would the gold do if everything else is worth ZERO? Gold would have also ZERO value since nothing would have value.
The real issue is that as government defaults unfold, tangible assets will rise in value for the amount of money in debt always dwarfs that in even the stock market. We are in a Sovereign Debt Crisis and that is very different from a private debt crisis.
COMMENT: Marty, you are 100% spot on about governments only ever being capable of lying and mismanaging money and raising taxes. The Australian Labor party that ran on a mandate to not change superannuation are now proposing to change superannuation. Their plan is the abolish tax benefits for accounts with balances above $3M, using the usual argument of targeting only the rich. That is always the selling pitch isn’t it? Only the rich and of course the majority take the bait. I have desperately tried to inform people that it is NEVER just the rich that re impacted. I have can not for the. life of me get people to understand that the so called rich, will be required to sell assets to meet tax commitments and have less money to buy assets into the future, and that, that in turn will impact asset prices and thus affect everyone. Rich and poor. And then there is the obvious. Thresholds never remain where they begin and are always lowered. Government is on the hunt for money in every country. Cheers
AQ
REPLY: That is the problem. Most people do not want to believe that the government only looks out for its own power. It is so critical to prohibit career politicians no matter which direction they lean. For in the end, they will always lean in their own favor.
Perhaps you might remind them of the “Luxury Tax” that the sales pitch was they were going to tax their Ferarries, Fur Coats, & their French Wines. I was there in Australia back then. Maybe I saw two Ferraries because they were already 100% taxed to import. Some perhaps wore a fur coat down in Melbin, and nobody ever served me French wine – its was always Australian. People cheered then too – get those evil rich people. Then they woke up and ALL electrical products were suddenly a luxury.
The bulk of all taxes is always from the common people simply because we outnumber the billionaires. There are less than 500 such people in the USA. Confiscate all their wealth and you will not balance the budget even for one year.
QUESTION: Do you think that this entire scam with cryptocurrencies that the government will be able to track, do they realize that in war you take down the power grid and all digital currency fails? If the backup system is destroyed, all your digital currency will vanish. Are they this stupid? Is this why they have shills saying you are wrong?
HK
ANSWER: Yes. I have spoken to people involved in creating this insanity. First, they do not think there will ever be a nuclear war. Second, they really do think that they will create regime change in Russia at the expense of probably every Ukrainian alive today who are fools being led to the slaughter. When I have brought up the subject – WHAT IF YOU ARE WRONG! They dismiss it and do not even entertain plan B. The whole digital currency is all about tracking every dime. I have said many times, this is all about the new world order which is Schwab’s Great Rest and he knows that is our 2032 forecast. They all believe that forecast and are preparing to redesign the world this time to achieve their totalitarian dreams.
When I asked – Did you authorize Bitcoin? They just do not reply. Silence is golden. The launch of Bitcoin was just too damn convenient. That was standard operational political tactics – you float a balloon and see how the people accept it.
If you have ever been to Nuremberg, Germany, they have a bronze statue there – the Ship of Fools. The sculpture named Ship of Fools by Jurgen Weber is based on the satirical allegory by Sebastian Brant. This is now a reality.
Watch the video above or click here for the latest interview with USAWatchdog.
Commentary from Greg Hunter:
Legendary financial and geopolitical cycle analyst Martin Armstrong said at the end of last year the U.S. is being set up for a “nightmare fall.” Train derailments and political problems are spinning out of control, but the biggest threat is war. Armstrong explains, “They want a war, but they also need it because the monetary system is collapsing. . . . You have had interest rates at negative since 2014. So, suddenly interest rates are rising. Any bond owned by any institution in Europe is a loser. They have lost so much money, it’s incredible. What happens? Nobody is interested in long term debt – period. . . . If you have interest rates rising, and rates are going to be going up because the Fed cannot stop this kind of inflation. Then, you got war. You have untold billions of dollars being shipped into Ukraine which is absurd. This is what you have. . . . You also have to look at what Janet Yellen said, and she was concerned with the tons of new debt coming out. You are exceeding the balance sheets of the Primary Dealers. To be a Primary dealer you have to be able to guarantee you will be able to buy X amount of debt. If you can’t sell it, what happens? The bank is stuck with the debt, and then, they go bust. So, we have a real problem here. They cannot continue to issue this kind of debt in perpetuity. They have been borrowing money since WWII with no intention of paying anything off. . . . The Fed is independent, and they don’t want the long term debt. They have been moving towards the short end of the curve. How do you continue to fund a government if there are no buyers for the debt? This is on a global scale.”
So, war checks all the boxes? Armstrong says, “Absolutely. They get to default on all this debt which is the real objective. That’s why (Klaus) Schwab is out there saying you’ll own nothing and be happy. He’s trying to make it sound like they are doing this for you. We are going to default on all debt and relive you of all your debt. This is because they are going to wipe out everything. Pension funds will be all gone. That’s why they are coming out with guaranteed basic income to replace your pension. They’ve got this all worked out. That’s what the end goal is here because they cannot continue to function this way. They cannot continue to borrow whatever they need with no intention of ever paying it back.”
Armstrong reveals why the 2024 elections may not happen. Can the Deep State commit enough voter fraud to keep Biden and the rest of the Neocons in power? Armstrong says most of what is happening today is the fault of the Neocons, and they have control of both parties. Armstrong points out Democrat Hillary Clinton paid for the phony Trump/Russia dossier, and Republican John McCain delivered it to the FBI. Armstrong calls it the “Uni-party,” and goes deep on the problems the Neocons are causing on purpose.
Armstrong also talks about the dollar, gold, civil unrest, tangible assets and the Ukraine war. Armstrong’s sources say the real number of casualties of Ukraine Army stands at a whopping 250,000 dead. Armstrong says Russia is NOT losing the war. It is winning.
History repeats because human nature never changes. During the Roman Republic, the name of the moneyer would appear on the coinage just as today the Secretary of the Treasury’s signature appears on our paper currency – i.e. Steven T. Munchin. To this day, our coins are denoted by which mint produced them – Philadelphia, Denver, or San Francisco.
The collapse of the monetary system following the capture of Emperor Valerian I in 260AD by the Persians, set off a collapse in public confidence whereby the people suddenly saw Rome as vulnerable. What is fascinating is that the “hyperinflation” of Rome which took place in just 8.6 years, was aided by the corruption within the Deep State of the Roman Empire. This raises the question: We will see the same thing take place during our final 8.6 years into 2032 which begins by May 2024. The debasement of the coinage was NOT on the decree of the Emperor. This was the greed of those in the Deep State.
Following the assassination of Emperor Gallienus, that is when Claudius II came to power and the debasement reached it lowest point during his reign. The Goths invaded Rome and brought the plague with them from the East. Emperor Claudius II died of the plague. Claudius’s brother, Quintillus tried to succeed him, but Aurelian and his troops marched against him. His troops deserted him and he committed suicide.
Therefore, Aurelian became emperor in 270 AD and he returned to Rome in 271 AD, where he had to pacify a terrified city. He immediately halted the rioting and restored order to the capital. The controller of the mint in Rome began a rebellion over the monetary reforms laid out by Aurelian. He ordered that all the debased currency be purchased back and replaced with a new currency of higher content in silver. The rebellion was led by Felicissimus. It appears that those who had been running the mint were embezzling the intended silver and issuing the debased coinage at least in part on their own authority.
Obviously, any reform to the monetary system that called for an increase in silver content would have been unprofitable for those running the mint for personal gain. In the rebellion, as many as 7,000 soldiers died when Aurelian was forced to trap and execute them and their allies, some of the senatorial ranks, in a terrible battle on the Caelian Hills. Thereafter, Aurelian then introduced mintmarks to identify if any mint was cheating the silver content.
When Diocletian (284-305AD) reorganized the coinage when he came to power as well as the political structure of the Roman Empire. With respect to politics, he divided the empire in two creating two emperors with their eventual successors given the rank of Caesar. This became the Tetrarchy.
The monetary reform introduced the new bronze coinage silver plated known as the follis terminating the radiate antoninianus which had begun as a double denarius during the reign of Caracalla (198-217AD). Diocletian required each mint to engrave their coins with an identifiable mint mark, and also letters or marks to indicate the individual workshops (officina) within the mints. Thereby, any collusion to debase the coinage would be identifiable to a specific group within each mint.
Each mint mark from Diocletian onwards consists of a group of letters identifying the mint (normally in the exergue) and usually (but not always) letter(s) and/or mark(s), sometimes in the exergue, sometimes in the field, These identified the individual workshop within the mint. In the West, workshops were numbered either in Latin numerals I, II, III or in the initial letters of Latin ordinals such as P(rimus), S(ecundus), T(ertius). The problem with Latin surfaced when trying to distinguish between S(ecunda) and S(exta) or between Q(uarta) and Q(uinta). They had to develop in the West a mixed system of Greek and Latin to give P(rima), B, T(ertia), Q(uarta), E, and S(exta) valid meanings. Western mints sometimes used the Greek system at varying times.
Here we can see a silver Argentius (2.87 grams) with the “R” Roman mint mark. Lugdunum used “PL” for their mint mark as illustrated by this follis of Maximianus – Diocletiuan’s co-emperor.
COMMENT: Mr. Armstrong, Now with Switzerland outlawing a cashless society, I understand your point that cryptocurrency is really a dead end. Without power, it cannot exist and as you said in times of war, you take down the power grid and they can do that with an EPM pulse. These Bitcoin zealots are clueless about history and humanity. It’s just another way to separate a fool from his money.
Thank you for the education
BH
REPLY: The whole blockchain was the perfect creation of a totalitarian state. They can trace everything. How would you bribe politicians? It would all have to revert to barter. Do this and I will give you that – off the grid. This is why people are still buying real estate, precious metals, ancient coins, art, collectibles, and various things that are tangible and are thus off the grid.
Having funds in any cryptocurrency is still on the grid. When I was one of the three top market-makers in gold back in the ’70s, the IRS walked in and said they declared me to be a bank. Thus, I was supposed to report every transaction of $10,000 or more. They acknowledged I did not realize I was a bank, so they waived the fines. They seized all my records and went off to audit over 3,000 clients. They claimed that gold was not DEMONETIZED as money, just suspended for a while. I retired because I was supposed to report customers but not everyone else in the field. My lawyers said I could fight it. It would take years. My model warned that gold would decline for 19 years anyway so I choose to retire. The clients still wanted the research and thus Princeton Economics was spun off separately.
They can declare every person running an exchange in crypto is now a bank and must report every transaction. They can be put them out of business in the blink of an eye. These people have no idea who they are messing with. You will not win. All this is because of their twisted view of fiat money. They no more understand money and assets any more than Karl Marx.
During inflation, assets rise in value, and money declines. That took place during the 19th century when a gold coin was money. MONEY has NEVER been of a constant value – NEVER! These people yelling fiat simply do not comprehend that for thousands of years, there has always been a business cycle and that means money rises and calls in purchasing power REGARDLESS of whatever it has been. The fiscal irresponsibility of governments is well documented throughout history long before paper money.
Even under a gold standard, there were periods of inflation and deflation. Read the history of the California Gold Rush. During the 1849 Gold Rush in California, the journalist for the New York Tribune, Bayard Taylor (1825-1878), arrived in San Francisco by ship during the summer of 1849. He was shocked at what he encountered and did not think that anyone would even believe what he was going to write. His dispatches about the gold rush economy in California stunned many and helped to create the 1849 Gold Rush.
The average wage for a laborer in New York was about one or two dollars a day. In California, individual hotel rooms were rented to professional gamblers for upwards of $10,000 a month, which is the equivalent of about $300,000 today. The degree of inflation in terms of gold was astounding and lacks comparison in modern times. There was so much gold, that the value of goods rose even though they did not in New York. The inflation phenomenon was local.
Gold became so common; they were even striking $50 gold coins in California when $20 was the highest denomination elsewhere and $1-dollar coins down to 25 cents all in gold. Eventually, there were $1 gold coins minted in the United States for general circulation throughout the USA. Indeed, Taylor wrote:
“[One] citizen of San Francisco died insolvent to the amount of forty-one thousand dollars the previous autumn. His administrators were delayed in settling his affairs and his real estate advanced so rapidly in value meantime that after his debts were paid, his heirs had a yearly income of $40,000 [$1.2 million today].
“These facts were indubitably attested; everyone believed them, yet hearing them talked of daily, as matters of course, one at first could not help feeling as if he had been eating ‘of the insane root.’”
It does NOT matter what is money. It will always rise and fall as measured against tangible assets as it has done since Babylonian times. In fact, the very first attempt to control inflation, as the central banks are doing right now, were the wage and price controls put in place by the legal codes of the Assyrians and Babylonians.
So – stop the BS. Understand that there are times when CASH will be king regardless of what money is at that moment in time, and then it will fall in value when everyone wants tangible assets. There is a business cycle – learn to live with it and we will be better off. The hard-nosed cryptocurrency zealots will never admit they are wrong. They are like politicians and will cling to their theories no matter what evidence you show them.
I asked one once, to name a single period in history where money was constant and never declined in value. He could not!
Bitcoin is an instrument for trading. This very chart CONFIRMS it is by no means a store of wealth. It rises and falls like ant commodity of stock. It is still influenced as part of the business cycle. Sorry – there is NOTHING that is a perfect store of wealth. Everything fluctuates. Trade Bitcoin, that is fine. But do not make a religion out of it for you will lose not just your shirt, but your pants as well.
COMMENT: Martin, After several years of reading your blog, I have concluded that Socrates’ prognostications appear to be spot on. I also share your assertion that a study of history supplies an insight into future events due to the constancy of “human nature.” Where we appear to part ways is in the definition of “money.”
In the early 20th century J. P. Morgan said: “Gold is money; everything else [used as currency] is credit.” Hence, paper money, (and digital entries in an electronic ledger) when issued by a monopolist i.e. government, inevitably descends to its intrinsic value: zero.
AN
ANSWER: Human society has recorded our monetary history and you should not confuse irresponsible government with what is really money. I have a great deal of Respect for J.P. Morgan. If you asked the question of what is money in a Babylonian, it would be a silver shekel. Even the Bible spoke of weighing the silver and how Judas sold out Christ for a handful of silver coins. To a Greek from Anatolya (Turkey), he would have said it is a stater. To an Athenian, he would say a drachma. A Roman would have replied a denarius. But when Rome was first forming, money had been cattle which became thereafter bronze. Indeed, if you had asked before all of them, a Minoan, would have it was bronze. Money has been many things including sea shells, and cattle.
A Spanish during the 15th century would have said it was a one-ounce silver reale. The German would have said no – it’s the silver thaler. The British would disagree and said it was the pound sterling (.925 silver). The Americans, not wanting to be subservient to England, adopted the dollar, which was a version of the German thaler. In Asia, it was the cash, then the yen.
Saint Patrick in the 5th Century AD upon his arrival in Ireland, found that MONEY was expressed in human slave girls. He wrote in his Confession,“I think that I have given away to them no less than the price of fifteen humans.” This passage shows something very important. First, MONEY is not defined as the Medium of Exchange exclusively. It also serves the purpose of a Unit of Account. In fact, this becomes the true function of MONEY even more so than what it is. MONEY is a language of value.
Many of the major bankers, kings, and heads of companies were ancient coin collectors including President Teddy Roosevelt. JP Morgan understood banking and credit – but not money. This was a Syracuse Dekadrachm of Dionysios I (405-367BC) was one of the coins from his collection that was eventually sold by the coin firm Stacks of New York in September 1983. You can download that catalog. People like Josiah K. Lilly Jr. and Paul A. Straub donated their collections to the Smithsonian.
Teddy Roosevelt (1858-1919) loved the high relief of ancient Greek coins. When Teddy Roosevelt became president on September 14, 1901 – March 4, 1909, he commissioned the artist Augustus Saint-Gaudens (1848 –1907) to redesign the $20 gold coin and made it high relief as the ancient coins had been struck. The machines could not handle the high relief for the dies would break and they lacked the power of an individual stamping out coins. Thus, the new $20 gold coins had to be reduced in their relief. Nevertheless, we have ancient coins to thank for the limitation on the confiscation of gold in 1934. It was that very reason that his cousin FDR exempted ancient gold coins from confiscation when FDR was himself a stamp collector instead.
I would say the problem here is the definition of money and what predates coinage was the development of a weight standard to enable trade. That invention of weighing technology appears to emerge around 3100 to 3000 BC. This was the most significant turning point in monetary history for it marked the beginning of economic history itself.
It was private merchants during the Bronze Age that created the weight systems. Trade took place through informal networks, but it was clearly Mesopotamian merchants who established a standardized system of weights that later spread across the Western region and into Europe. This innovation enabled international trade across the continent. By the second millennium BC, merchants could potentially trade anywhere in Western Eurasia simply by knowing the conversion factors of a multitude of local weight units. What was emerging was the formation of weight systems that was the foundation for the booming commercial interaction of the Bronze Age world.
From the very beginning, MONEY has been a commodity – nothing more. It simply began a barter. I will give you these carrots for potatoes. When the Lydian King Kroisos (561-546BC) created the first bimetal monetary system, a gold stater was about 10.71 grams and the silver-gold ratio was 13.33:1 because gold was common in the Turkey. The inflation caused by war led to a gold weight reduction to 8.71 grams. Fiscal mismanagement existed from the very beginning. This would have been no different than FDR revaluing gold in 1934 from $20.67 to $35 per ounce.
There were competing standards from the very beginning. The Lydian/ Milesian standard began with an electrum stater at 14.2 grams. The stater as minted under the Euboic Standard was 17.2 grams of electrum. There was the Phokaic Standard placing the electrum stater at 16.1 grams. Obviously, foreign exchange dealers became necessary for international trade among the city states.
I can find no evidence of a single standard that dominates the nations at this time. By 530BC, the invention of coins spreads to Greece and now the first city state begins to strike a silver stater at 12.6 grams – the Isle of Aigina. In Greece, silver was common and gold was rare.
In Athens they established the Attic Standard based on a silver didrachm (2 drachms) of 8.6 grams, but as inflation emerged, the standard coin became the tetradrachms (4 drachms) at 17.2 grams. So you can see there may have been gold and silver used as MONEY, but by no means was there a unified standard agreement as to weight. In Corinth, they set their stater at 8.5 grams and divided it into three drachms. Standardization comes only with conquest as was the case with Napoleon. Athens dominated many city states and in 449BC issued its famous enigmatic “Coinage Decree” promulgated by Perikles that restricted other city states from striking coins making their coins a single currency. Perhaps it was just a power play. On the other hand, it was most likely just the profit earned over the raw metal cost known as seigniorage. In other words, the coins once minted purchased more in goods than the raw metal.
China did not use gold. They had a silver standard. The West had to create silver trade dollars set to their weight standard, which was heavier than the standard United States silver dollar. There have been different monetary systems throughout world history. They have not all been based on precious metals. What it always boils down to is the capacity of the people to produce. There are plenty of places with natural resources and the countries are barely even 3rd world. China, German, and Japan rose from the ashes without gold. Their people produced and they rose to the top of the list of economies despite others having gold.
The bottom line has always been that the wealth of a nation is nothing more than they total productivity of its people.
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