I hear often that we should go to the gold standard that the currencies should be backed by gold. But the gold standard it is not a defence against the inflation.
In the book "Industrial Revolution in Middle Age" by Jean Gimbel I found a chapter in which Philip IV of France called the Fair, diminished the content of gold in coins because the economy was booming and need it more coins from the same gold.
The medieval economy which had a lower volume as ours needed cash, but it was limited by the usage of the gold standard for currency.
What are the functions of the currency after all?
The water and food are goods demanded everywhere they can be used as currency before they are spoiled.
The gold is used as currency because it is not spoiled, but how it transforming it self into goods?
Why the gold was in high demand before it was used in technology?
The feudal lords used force to collect excesses of goods from their territory, but they have to compete with others, for land,status, and for daughters of other princes.
If you show that you have an excess of food, then you can afford an army and your neighbours will respect you.
Gold and luxury goods were and indicators of the personal welfare.
Who had less gold was at bottom pecking order. and had less influence and could be attacked easily.
The feudal lords had food and they need gold.
On the other side the city dwellers need it food.
The merchants collected gold and exchanged for food from feudal lords or peasants.
Because it was a constant need of gold, lords bought luxury goods regardless of the situation, or in a dire situation, there were others who hoarded gold out of fear.
The value of gold is fear: fear of losing status from the elite, fear from losing savings from the common people.
Due to increase of the economy and of the modern state who didn't rely so much in personal display of gold for showing status, the role of gold diminished as currency.
We could say that distribution of gold, and the display of gold shows the distribution of power within a society.
More hierarchical and rigid is the society more gold it needs and it displays.
In the book "Industrial Revolution in Middle Age" by Jean Gimbel I found a chapter in which Philip IV of France called the Fair, diminished the content of gold in coins because the economy was booming and need it more coins from the same gold.
The medieval economy which had a lower volume as ours needed cash, but it was limited by the usage of the gold standard for currency.
What are the functions of the currency after all?
- It can be transformed into goods.
- Can be stored indefinitely.
- Offers information about the prices of goods.
The water and food are goods demanded everywhere they can be used as currency before they are spoiled.
The gold is used as currency because it is not spoiled, but how it transforming it self into goods?
Why the gold was in high demand before it was used in technology?
The feudal lords used force to collect excesses of goods from their territory, but they have to compete with others, for land,status, and for daughters of other princes.
If you show that you have an excess of food, then you can afford an army and your neighbours will respect you.
Gold and luxury goods were and indicators of the personal welfare.
Who had less gold was at bottom pecking order. and had less influence and could be attacked easily.
The feudal lords had food and they need gold.
On the other side the city dwellers need it food.
The merchants collected gold and exchanged for food from feudal lords or peasants.
Because it was a constant need of gold, lords bought luxury goods regardless of the situation, or in a dire situation, there were others who hoarded gold out of fear.
The value of gold is fear: fear of losing status from the elite, fear from losing savings from the common people.
Due to increase of the economy and of the modern state who didn't rely so much in personal display of gold for showing status, the role of gold diminished as currency.
We could say that distribution of gold, and the display of gold shows the distribution of power within a society.
More hierarchical and rigid is the society more gold it needs and it displays.
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