The work of Sir Isaac Newton, as Master of the British Mint, in creating the classical gold standard is relatively well known.
The work of an equally great scientist, Copernicus, who gave us the heliocentric model of the solar system, is less so.
Leszek Zygner of Nicolaus Copernicus University, recently referenced in another entry here, provides substantial information on Copernicus's great contributions to monetary theory. These are by no means no less relevant today than are his breakthrough contributions to astronomy.
A drawing by Johan Schübeler from the second half of the nineteenth century, depicting Nicolaus Copernicus presenting his treaty De monetae during a session of the Royal Prussian Parliament in Grudzi?dz. Nicolaus Copernicus University Library
Copernicus wrote three versions of his treatise on the reform of Prussian coinage in the years 1517-26 which have survived in the form of copies and translations. As has been proved in the course of a thorough analysis of their contents, they are subsequent versions of the same work. The text of the first draft, usually referred to as Meditata, was written in Latin in 1517. This document was produced with Bishop Fabianus Lusianus and members of the cathedral chapter of Warmia in mind and was to support their arguments in debates on monetary reform held during assemblies of the Estates of Royal Prussia (Stany Prus Królewskich). The treatise consisted of two parts. In the first Copernicus discusses general issues related to the theory of money and formulates inter alia a law of bad money driving out good. In the second he focused on the current monetary situation in Royal Prussia and in particular on the decline in the value of Prussian coinage, enumerating its types and explaining the reasons for the decrease in value of individual coins. The second version, known from the 16th c. as Modus cudendi monetam (The Way to Strike Coin), was a German translation of the Meditata of 1517. This translation, incidentally abounding in oversimplifications and inaccuracies, was made in 1519 most probably as a document to be presented to the Prussian Assembly attended by the Polish King Sigismund I the Old (Zygmunt I Stary). Copernicus read the German version of his treatise before the Royal Prussian Assembly attended by King Sigismund Is envoys at Grudzi?dz (Graudenz) on 21 March 1522. Referring to the debate held before his speech, he concluded his presentation with a proposal to mint three Prussian szel?gi as an equivalent of one Polish grosz (groshen) and thus to equalize the value of the new Prussian coinage with that issued by the Crown. The third version of his treatise on money entitled Monete cudende ratio (On the Minting of Coin) survives in three copies and was most probably written before April 1526. This revised version partly based on the text of his 1517 paper, was complemented by a general theory of money with special emphasis placed on the debasement of money as one of the main reasons for the fall of a state.
The gold standard, in short, has an unrivaled intellectual pedigree.
... While the Fed's easy-money policies have not produced many jobs, they have produced a persistent, low rate of inflation that is choking the American middle class. Since the asset purchases began five years ago, the average American family has experienced rising prices and stagnant wages. The resulting decline in living standards explains why voters ranked rising prices nearly tied with unemployment as their top economic concern during the 2012 election.
... It is difficult to interpret [Jeb] Hensarling’s declaration to hold hearings on “the entirety of their hundred year history and what America has looked like since adopting a fiat currency” as anything but an intention to bring the Commission up for a vote. Hensarling promises to process vast amounts of information. The constraints on a committee hearing, and on a committee staff, cannot do such a huge topic justice. As Rep. Kevin Brady put it in his own remarks at Cato, a “brutally bipartisan” Commission — with Hensarling a Commissioner — is called for.
Publisher's Note: Originally released in June/July of 1991, this detailed report discusses Jacques Rueff's economic theories and applies them to modern economic events.
By John D. Mueller
The Problem of the Quantity Theory of Money
Rueff’s first work in monetary theory, Theorie des Phenomenes Monetaires (1927), was devoted partly to examining the theories put forward by Irving Fisher in The Purchasing Power of Money (1911). Rueff himself owed a large debt to Fisher, as does all of economics, for ideas like the modern understanding of income and capital. But Fisher is best remembered for his famous Equation of Exchange:
MV + M’V’ = PT
where M is the supply of money, M’ the supply of bank credit, and V and V’ referred to the “velocity of circulation” of money and bank credit, respectively.
"By means of the lawful stamp of convertibility to gold, a near-worthless paper was suffused with a monetary life of its own. It circulated in place of coins and bullion because it was even more convenient, equally divisible, and above all secured by the substance of real money. Moreover, convertible paper and deposit currencies conserved still further the scarce mineral, labor, and capital resources previously invested in the production and circulation of precious bullion or coins. One sees in the evolution of this extraordinary commercial institution of exchange that money became a unique conservator, and the effective mechanism of growth of a civilization born of scarcity."
Venezuelan President Nicolás Maduro rules by degree. His own puppet legislature is apparently not sufficient reliable. His latest decree lowered the prices of electronic appliances to populist-appealing levels.
Under Maduronomics, food producers have been driven out of business, and basic necessities have been driven off the store shelves. The Los Angeles...
This cartoon cleverly presents the tension between the proponents of the classical gold standard and the prairie populists demanding "the free coinage of silver."
Image courtesy of authentichistory.com via BigThink.com
In the mouth of the "silver dog with the golden tail" is a bone, labeled Election.
The 1896 election, which the gold standard...