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Part 1:  Money as an Instrument of Government

In order to learn what the future may hold we must become students of the past. Understanding the history of money, monetary systems and the reasons for their endurance or lack thereof, can shed a powerful light on the origins and causes of our own present financial crisis. But more to the point, these powerful historical insights can also give us an idea as to what to expect in our immediate financial future.

The first two fundamental lessons to be learned from studying the history of money are as follows:

First, when all cultures reach a certain size, population density and technical prowess, they undergo a profound spontaneous economic change. This change is the introduction of money. Money is the mechanism to simplify the exchange of goods and services between individuals. Money at its most basic level is an economic phenomenon. It comes into existence by the needs of the people. Its emergence has absolutely nothing to do with the government.

With the introduction of money into a culture, the growth of that culture fundamentally changes. It begins to deepen and accelerate. This historically has been referred to as the rise of civilization. As long as this new mechanism of exchange of goods remains in the economic control of the people, it stays stable and durable.

The second historical truth is that once money has emerged and become the primary economic driving force for production, all governments eventually step in and monopolize this financial mechanism. At the moment they do so, that culture's money disappears. What replaces it is what can be called currency. In this conversion, the government profoundly and fundamentally amplifies its power and control over the people.

Unfortunately, when government replaces money with currency, the only way this organization can expand its power by means of this mechanism is to expand the amount of currency beyond the economic needs of the people. This produces a surplus of currency that the government then uses to go into competition against its people to purchase what it feels it needs.

The effects of this behavior with regards to currency have disastrous long-term consequences to the culture. As this expansion occurs, there is a corresponding increase in debt. As time passes, and the government becomes more and more reliant on this mechanism of control, the debt grows ever more rapidly. Ultimately all of this government-induced debt gets saddled on the population at large. The final consequence is that it drives the population into poverty.

The second consequence of this expansion of currency is that it destroys the purchasing power that the individual acquires through hard work.

It is very simple to explain how this comes about. As the government expands the currency beyond the economic needs of the people, the supply of currency exceeds the production of goods and services. At that point, the fundamental law of supply and demand comes into force: there is more money chasing after fewer goods and so as a consequence each unit of currency becomes less valuable.

When this surplus of currency reaches critical size, it leads to economic collapse. This is the ultimate broken record of mankind. In fact there have literally been thousands upon thousands of cultures, governments and currencies that have suffered this same fate.

Part 2:  Historic Examples of Government Monopolized Money
 

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