Deflation Made Simple (Part III)
A falsely vilified phenomenon (Entry 191)
The citizens of Paris, like French subjects everywhere in France at the time, were in need of a medium-of-exchange. The counterfeit currency — namely, government issued bills (money-ex-nihilo — and debased coin had forced the cambitas into hiding or completely out of the country.
Indeed, why would anyone want to trade something of real market value for something of real market value, when one could trade a poorly kept promise that someone else made for the same real something? The loaf of bread, the gun, and the smith’s labor were all very real, and if you good obtain these for fancy-looking paper or debased coin, rather than fine gold and silver with superior market value, would you not? If you were honest and not completely stupid, you would surely hesitate, but if it were all that anyone was willing to pay you in exchange for your own hard labor, crafted wares, or purchased merchandise, your honesty would easily become compromised by the reality of your situation.
Indeed, if it were not you who had been tricked by the Noblesse de robes de Paris, then it was surely someone else with whom you conducted your daily affairs. No matter, someone had absconded with the real thing, and it had not taken all that long. All that was left was junk paper with a royal seal or the king’s image — “Blessed is the [l]ord!”. It was all a false promise that one hoped might one day be fulfilled.
It had taken thousands of years for the voluntary, free market to select gold and silver as the two principal goods of real value that worked best as a standard for all other real goods and services. At this point, anything else of real value could have been used, but there was nothing that could rival these two. What is more, who had time to rediscover the wheel? Someone in a very high place had played with the system, and you had better play along, if you hoped to survive — well, at least, until it was clearly understood by everyone what had happened, and the matter could be rectified. Just be thankful that your business did not depend on overseas imports, for there would be next to no one who would accept your paper or debased coin at its stated — as opposed to real market value — real worth.
It had taken only seven years for the French monarchy to generate nearly 230 million livres worth of phony paper, and things just kept getting worse. By 1708 the Caisse des emprunts had already issued 60 million livres of promeritum-ex-nihilo. By 1715 two years after the Peace of Utrecht — a kept promise, by the way — it had issued already 147 million livres-worth of same — nearly 2.5 times more! If you were lucky enough to find specie (cambitas) you could only fetch 80 percent of what you hoped to purchase with such currency.
No bank in Amsterdam would sell a loan at a three-percent rate-of-interest, and Amsterdam was still, by far, the credit-capitol of the world. No, it does not appear that the Noblesse de robes de Paris were as sophisticated and technologically “advanced” as our own Jerome Powell (1953- ) and Janet Yellen (1946- ) of the 21st century: the Caisse des emprunts had not yet invented ZIRP (zero interest rate policy). No, this would take another three centuries of human theft and endeavor.
In liberty, or not at all,
Roddy A. Stegemann, First Hill, Seattle 98104