The need for a monetary alternative: Intro
In 1716, when Isaac Newton served as the master of the Royal Mint of Great Britain, the monetary system of the Western World had seen its first “Great Recoinage”. Britain inadvertently adopted a de facto gold standard in 1717 when Sir Isaac Newton set the exchange rate of silver to gold far too low, whereby silver coins were taken out of circulation. Another “Great Recoinage” followed in 1816, when the Bank of England suffered massively from overspending for the Napoleonic Wars. A shortage of silver and copper led to a shortage of coins. For this reason, the Bank of England rounded up all of the old silver currency in exchange for new, lower-quality crowns, shillings and sixpence (Westfall, 1993).
History has shown that the existing monetary system is subject to the shortage of commodities and to the ruling of central banks and government institutions. The years 1913-14 brought about a fundamental change in the Western monetary system as the Federal Reserve Bank of the United States and the major European powers moved off the gold standard (Westfall, 1993). Germany, England and the US had excessively overspent their funds by the start of World War I and were forced to depeg their currencies from gold (Frisby, 2014). The gold standard, fixed the value of national currencies at predetermined amounts of gold.
Europe suffered from great inflation in the years after World War I; Wealth accumulated over generations was lost, livelihoods destroyed, eventually leading to economic depression and World War II. During and after World War II, the US and its allies went on and off the gold standard. By 1970, the US no longer had enough gold to back foreign dollar holdings. The gold standard finally ended in 1971 with the “Nixon shock” when President Nixon broke the US dollar-gold peg on August 15th. The problem of fiscal uncertainty remains today. Individuals living in countries with over-leveraged, vulnerable banking sectors, such as Greece, Cyprus, Venezuela or Zimbabwe, face arbitrary taxes and regulations (Frisby, 2014).
I will show why a monetary alternative is needed to protect individual freedom. Recently, bitcoin has established itself as a better alternative to existing monies, especially where there is little access to traditional banking infrastructure. It protects individual freedom and offers a platform for new forms of trade and a fair redistribution of wealth.
Continue reading: The need to protect Individual Freedom