Can anyone provide an example of a paper currency which doesn't or did not have an army to defend it against counterfeiters?
It seems that when one state goes to war against another state, a common tactic is for one to attempt to counterfeit the currency of the other. If a free society emerged which had generic paper tokens of value, (even paper claims on gold, for example), would that society have any defense against an aggressive group forging their tokens?
Also, I've read about the Knights Templar, which some people claim were the first modern bank and first modern corporation. The Knights Templar seem to have made their fortune by establishing outposts along routes to the 'Holy Land;' pilgrims or travelers could deposit their gold at the first outpost, get a receipt, and then pick up their gold at the last outpost, which made travelling safer.
The Templars established such a reputation that people began to trade Templar certificates as if they were gold, and the Templars gained the ability to issue gold receipts on a fractional reserve basis; they basically became a source of inflation, able to issue more tokens than they had gold, making them fabulously wealthy.
Could they have managed this if they weren't also an elite military force, with friendly relationships with various states to boot?
Does this imply a causal relationship between fractional reserve banking and the establishment of military forces?
does the army now respond to counterfeit money investigations?? of do you consider any govt law enformcement branch to be an army???
It seems that when one state goes to war against another state, a common tactic is for one to attempt to counterfeit the currency of the other.
i dont know if thats true or not. do you know if such counterfeit currncy was created in greeat enough quatitity to fool enough people into accepting the counterfeits that would allow the production of hundreds of tanks?? millions of gallons of fuel??? to convert auto plants into plane plants???
if it was a common tactic did it really go any where??? enough to influence an outcome to any great degree??
Hitler printed up £134,610,810 of counterfeit British money with the goal in mind of sabotaging the British economy. They started too late in the war though and couldn't get it into Britain effectively.
During the revolutionary war, Britain forged colonial scrip, debts issued by the Continental Army, leading in part to the currencies collapse. Some say currency is what the war was really about; Britain was trying to impose Bank of England money on the colonies while the colonies wanted sovereign control over their local currencies.
As I alluded to, the crusades were financed in part by Templar banking, that is, the Templars ability to issue their own currency basically. Julius Caesar was assasinated for issuing bronze coins and mandating by law that they could be used to repay debts owed in gold coins. It's why he was so popular with the (heavily indebted) people and so unpopular with the Roman Senate. We can speculate about whether he came up with such a plan before or after he crossed the Rubicon.
Somalia has paper money with no military or centralized state to "impose" it. However, it is effectively backed by a cost standard on producing the notes.
Agreed. I think that illustrates the distinction between paper money and fiat money. Not all paper money is fiat money. Notes issued by a bank which is fully liable to bankruptcy in the event that it cannot cover its deposits (not given a bailout guarantee) is not fiat money. Whether such paper can be fractioned or not is a theoretical question that I believe could be settled, in practice, only through (free market) law.
I think Benjamin's link between armies and fiat money is exactly on the mark. Fiat money creates a sort of "abstract national border" that exists wherever the national fiat money flows. However, fiat money (or paper money, for that matter) does not rely on "armies" or - more generically - force to prevent counterfeiting. If one takes the view that IP is generally not legitimate (which I do), then prevention of counterfeiting is primarily a technical problem.
Clayton -
did armies ever defend against counterfitting? arent currencies issued by nations...dont nations generally have armies?? if you know of a country without an army that may help you answer your question.
FORT KNOX IS WHERE ALL OF THE OLD GOLD IS THAT WAS TAKEN FROM CITIZENS DURING THE FDR'S ERA
ITS PROTECTED BY FULL ARMY DIVISION
TALK ABOUT FASCISM
The US Government only has $11 Billion of gold left in Ft. Knox according to the AP Dec. 21, 2009, 3:44PM, and the US government is continuously allowing our freshly printed US Bonds, US Dollars and other Securities owned by foreigners to be redeemed by purchasing title to privately owned land, hotels, farms, businesses, casinos and other wealth and assets located in the USA that were created by previous generations of US citizens, before the de-industrialization of the USA, instead of redeeming these currencies for gold from Ft. Knox, as other nations do to support the value of their currencies.
These existing US located wealth and assets are finite, and the industrial nations will stop "loaning back" the US government more and more of their US dollars after the foreigners own (almost) all of the wealth and assets that are located in the USA.
The value of the outstanding US debt of 12Trillion in Bonds and T-bills plus $829B in currency will equate to very little buying power of the US dollar if foreign nations stopped buying our freshly printed US T-Bills, US Bonds, or other US Securities and/or wanted the US government to redeem our currency in gold (just like other nations).
Any family, tribe, country, etc. and its individual members can prosper or become debt ridden in accordance with their industrial behavior, government spending behavior, and/or other economic actions of the leaders of that family.
If any family or nation purchased imported things from outside of their family of less monetary value than the monetary (or otherwise useful value) of the items that they sold and exported to others outside of their family, then that family would have a net positive foreign trade balance of gold, grain, cattle, etc. into that family. Only a net positive foreign trade balance will increase the value of the accumulated real wealth of privately owned wealth and assets within that family.
Apparently it does not http://www.bitcoin.org/
BitCoin isn't papper though but bitcoins are just sequences of numbers in a computer which is even less valuable then paper. The fact that bitcoin has managed to gain value from nothing (while having an initial agenda of inflatiory policy) must be the result of a huge unftilled demand for conducting anonymous transactions so it is a special case I guess.
Escaping Leviathan - regardless of public opinion
"Democracy is the road to socialism." - Karl Marx