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A Brief (and Incomplete) History of Money

A Brief (and Incomplete) History of Money

The history of money is a very broad topic but this module will highlight a few subtopics that are relevant to our course.  

Daniel Martin Katz

February 14, 2018
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  1. @ computational professor daniel martin katz danielmartinkatz.com BLOCKCHAIN, CRYPTOCURRENCY AND

    LAW professor nelson rosario A BRIEF (AND INCOMPLETE) HISTORY OF MONEY nelsonmrosario.com @ nelsonmrosario BLOCKCHAINLAWCLASS.COM
  2. DANIEL MARTIN KATZ E D U | I L L

    I N O I S T E C H + S TA N F O R D C O D E X B LO G | C O M P U TAT I O N A L L E GA L S T U D I E S . C O M PAG E | DA N I E L M A R T I N K AT Z . C O M C O R P | L E X P R E D I C T. C O M NELSON ROSARIO B LO G | L AWO F C RY P TO C U R R E N C Y. C O M PAG E | N E L S O N M RO S A R I O . C O M F I R M | M A R S H A L L I P. C O M BLOCKCHAINLAWCLASS.COM L A B | T H E L AW L A B . C O M E D U | I L L I N O I S T E C H - C H I C AG O K E N T L AW
  3. BLOCKCHAINLAWCLASS.COM THE HISTORY OF MONEY IS A VERY BROAD TOPIC

    BUT ALLOW US TO HIGHLIGHT A FEW SUBTOPICS THAT ARE RELEVANT TO OUR COURSE
  4. “MONEY IS ANY ITEM OR VERIFIABLE RECORD THAT IS GENERALLY

    ACCEPTED AS PAYMENT FOR GOODS AND SERVICES AND REPAYMENT OF DEBTS IN A PARTICULAR COUNTRY OR SOCIO-ECONOMIC CONTEXT. “ BLOCKCHAINLAWCLASS.COM
  5. RAI STONES AND YAPESE SOCIETY THE STONES DIDN’T NEED TO

    MOVE THE YAPESE PEOPLE USED RAI STONES AS MONEY TRANSFERRING OWNERSHIP OF STONES WAS DONE ORALLY BLOCKCHAINLAWCLASS.COM
  6. RAI STONES AND YAPESE SOCIETY IN FACT, ONCE A STONE

    SANK TO THE BOTTOM OF THE OCEAN WHILE BEING TRANSPORTED AND IT IS STILL CONSIDERED GOOD MONEY BLOCKCHAINLAWCLASS.COM
  7. RAI STONES AND YAPESE SOCIETY MONEY CAN BE DEPENDENT ON

    SOCIAL CONSENSUS NOT JUST INTRINSIC VALUE BLOCKCHAINLAWCLASS.COM
  8. THE IRISH BANKING STRIKES (1966-1976) MAY 7 – JULY 30,

    1966 MAY 1 – NOVEMBER 17, 1970 JUNE 28 – SEPTEMBER 6, 1976 THREE TIMES IN TEN YEARS FOR SEVERAL MONTHS AT A TIME BLOCKCHAINLAWCLASS.COM
  9. THE IRISH BANKING STRIKES (1966-1976) THE STRIKES SHUT DOWN ALL

    OF THE CLEARING BANKS IN THE REPUBLIC OF IRELAND. THUS, PEOPLE WERE NOT ABLE TO GET MONEY OUT OF THE BANKS BLOCKCHAINLAWCLASS.COM
  10. “Here’s what orthodox economics would have predicted for a country

    without banks: A collapse in the money supply, a credit crunch, a trade implosion, mass unemployment, an atomized GDP, and the gears of industry and commerce grinding to a crashing halt.” https://hbr.org/2010/11/the-irish-banking-crisis-a-par BLOCKCHAINLAWCLASS.COM
  11. Though the money supply did contract sharply, neither trade, commerce,

    nor industry came to a grinding halt. https://hbr.org/2010/11/the-irish-banking-crisis-a-par BLOCKCHAINLAWCLASS.COM How? People created their own currencies, to substitute for the collapsing money supply. They kept using checks to pay one another, but then, people’s checks began trading within communities.
  12. In fairness to ‘orthodox economics’ it is not clear what

    would have happened if the strikes continued indefinitely BLOCKCHAINLAWCLASS.COM OVERSTATED IMPLICATIONS ?
  13. That said, it is still an interesting example of how

    peer to peer transacting can occur in the absence of central institutions BLOCKCHAINLAWCLASS.COM PEER TO PEER TRANSACTING
  14. BLOCKCHAINLAWCLASS.COM PARTICULARLY IN THE SECOND HALF OF THE 20TH CENTURY

    WE SEE AN ACCELERATION IN THE LEVEL OF FIAT IN CURRENCY
  15. BLOCKCHAINLAWCLASS.COM WHERE THE CURRENCY IS SET EQUAL TO THE GRAIN

    HARVEST AND YOU HAVE THE OPTION TO REDEEM CURRENCY FOR GRAIN
  16. GOLD DOES NOT ROT BUT AT THE SAME TIME GOLD

    IS NOT IMMEDIATELY CONSUMABLE BLOCKCHAINLAWCLASS.COM
  17. ITS VALUE IS LINKED TO A COLLECTIVE BELIEF THAT IT

    IS VALUABLE BLOCKCHAINLAWCLASS.COM
  18. IN OTHER WORDS, THE IDEA THAT IT WILL BE ACCEPTED

    BY OTHERS IS THE SOURCE OF ITS VALUE BLOCKCHAINLAWCLASS.COM
  19. COINAGE IS OFTEN A GREATER FORM OF FIAT THAN THE

    UNDERLYING INPUTS BLOCKCHAINLAWCLASS.COM
  20. WHEN THE NOMINAL VALUE OF A COIN EXCEEDS THE MELT

    VALUE IT IS FIAT THAT FILLS THE VOID BLOCKCHAINLAWCLASS.COM
  21. PAPER MONEY REQUIRES AN ADDITIONAL LEAP OF FAITH (FIAT) IN

    ORDER TO BE SUSTAINED BLOCKCHAINLAWCLASS.COM
  22. BLOCKCHAINLAWCLASS.COM US CURRENCY FROM 1863-1933 WAS REDEEMABLE FOR GOLD COIN

    THE REDEMPTION OPTION 1907 AUGUSTUS SAINT-GAUDENS INDIAN HEAD EAGLE
  23. THE END OF THE REDEMPTION OPTION BLOCKCHAINLAWCLASS.COM “ON MARCH 25,

    1964, C. DOUGLAS DILLON, THE 5 7 T H S E C R E T A R Y O F T H E T R E A S U R Y A N N O U N C E D T H AT S I LV E R C E R T I F I C AT E S WOULD NO LONGER BE REDEEMABLE IN SILVER D O L L A R S . ( 3 1 U. S . C . 4 0 5 A - 1 ) . CO N G R E S S A L L O W E D T H E E X C H A N G E O F S I L V E R CERTIFICATES FOR SILVER BULLION UNTIL JUNE 24, 1968.”
  24. ‘NIXON SHOCK’ BLOCKCHAINLAWCLASS.COM T H E N I X O

    N S H O C K W A S A S E R I E S O F E C O N O M I C M E A S U R E S U N D E R TA K E N B Y P R E S I D E N T N I X O N I N 1 9 7 1 , T H E M O S T SIGNIFICANT OF WHICH WAS THE UNILATERAL CANCELLATION OF THE DIRECT INTERNATIONAL C O N V E R T I B I L I T Y O F T H E U N I T E D S TAT E S DOLLAR TO GOLD.
  25. THE END OF THE GOLD STANDARD BLOCKCHAINLAWCLASS.COM P R E

    S I D E N T N I X O N E N D E D T H E G O L D STANDARD (AKA BRETTON WOODS) SUCH THAT FOREIGN GOVERNMENTS COULD NO LONGER EXCHANGE THEIR DOLLARS FOR GOLD
  26. LIKE MANY OTHERS IN THE MODERN ERA THE US DOLLAR

    IS A TRUE FIAT CURRENCY BLOCKCHAINLAWCLASS.COM
  27. NOT VERY EFFICIENT TO HAVE EACH MERCHANT MAINTAIN A LEDGER

    ACROSS THEIR RESPECTIVE CUSTOMERS BLOCKCHAINLAWCLASS.COM
  28. AMONG OTHER THINGS, THIS PUT EACH MERCHANT IN THE DEBT

    COLLECTION BUSINESS BLOCKCHAINLAWCLASS.COM
  29. MODERN CREDIT CARDS ARE REALLY A POST WWII INVENTION BLOCKCHAINLAWCLASS.COM

    DINERS CLUB WAS ONE OF THE FIRST EFFORTS AT A CREDIT CARD
  30. THE CENTRALIZED CREDIT CARD HAD MUCH LOWER TRANSACTION COSTS THAN

    STORE BY STORE CHARGE CARDS OR CREDIT ACCOUNTS BLOCKCHAINLAWCLASS.COM
  31. IN TERMS OF TRANSACTION THROUGHPUT, CRYPTO HAS A LONG WAY

    TO GO BLOCKCHAINLAWCLASS.COM “Today’s representative blockchain such as Bitcoin takes 10 min or longer to confirm transactions, achieves 7 transactions per second maximum throughput …”
  32. BLOCKCHAINLAWCLASS.COM “… mainstream payment processor such as Visa credit card

    confirms a transaction within seconds, and processes 2000 transactions per second, with a peak rate of 56,000 transactions per second” IN TERMS OF TRANSACTION THROUGHPUT, CRYPTO HAS A LONG WAY TO GO
  33. DANIEL MARTIN KATZ E D U | I L L

    I N O I S T E C H + S TA N F O R D C O D E X B LO G | C O M P U TAT I O N A L L E GA L S T U D I E S . C O M PAG E | DA N I E L M A R T I N K AT Z . C O M C O R P | L E X P R E D I C T. C O M NELSON ROSARIO B LO G | L AWO F C RY P TO C U R R E N C Y. C O M PAG E | N E L S O N M RO S A R I O . C O M F I R M | M A R S H A L L I P. C O M BLOCKCHAINLAWCLASS.COM L A B | T H E L AW L A B . C O M E D U | I L L I N O I S T E C H - C H I C AG O K E N T L AW
  34. @ computational professor daniel martin katz danielmartinkatz.com BLOCKCHAIN, CRYPTOCURRENCY AND

    LAW professor nelson rosario A BRIEF (AND INCOMPLETE) HISTORY OF MONEY nelsonmrosario.com @ nelsonmrosario BLOCKCHAINLAWCLASS.COM