Recently by Simon Black: RED ALERT: World's Biggest Gold Storage Company Dumps USCitizens
Reporting From Santiago, Chile
By 1789, a lot of French people were starving. Their economy had long since deteriorated into a weak, pitiful shell. Decades of unsustainable spending had left the French treasury depleted. The currency was being rapidly debased. Food was scarce, and expensive.
Perhaps most famously, though, the French monarchy was dangerously out of touch with reality, historically enshrined with the quip, “Let them eat cake.”
The Bourbon monarchy paid the price for it, eventually losing their heads in a 1793 execution. But it took the French economy decades to finally recover.
Along the way, the government tried an experiment: issuing a form of paper money. It didn’t matter to the French politicians that every previous experiment with paper money in history had been an absolute disaster.
As French Assemblyman M. Matrineau put it in 1790, “Paper money under a despotism is dangerous. It favors corruption. But in a nation constitutionally governed, which itself takes care in the emission of its notes [and] determines their number and use, that danger no longer exists.”
Translation: This time is different. We’re different. We’re smarter. We won’t suffer the same fate. TRUST US.
Within a few years, hyperinflation had taken hold in France. A measure of flour that sold for two francs in 1790 was selling for 225 francs by 1795. Everything soared. Carriage hires. Butter. Sugar. Everything.
Naturally, the French government decided to fix this problem by printing even more money, doubling the money supply from 7 to 14 billion units in a six-month period.
When these measures also failed, the French government imposed every control in the book– price controls, capital controls, information controls, people controls. They confiscated lands, they filled the prisons, they waged genocide against their own people.
History shows there are always consequences to entrusting a paper money supply to a tiny handful of men. The French experiment is but one example. Our modern fiat experiment will be another.