Today's world is awash with electronic money.
But yesterday, much of Australia's electronic money disappeared for up to 14 hours with the crash of the Optus electronic network. The disruption to business and the community was "immediate and profound".
Rail networks, hospital services, retailers and banking were affected. Naturally this was not helped by babbling politicians waving big sticks.
Shoppers rushed ATM’s to get cash for a cup of coffee. Some were unable to pay for meals they had already consumed.
Electronic money is the modern expression of a very old monetary fraud – "fiat money".
"Fiat Money" is token currency supplied and regulated by governments and central banks. Its value relies on a government decree that it alone must be used as "legal tender" in paying for anything in that country. Its value falls as its supply increases.
Fiat money is not new - Marco Polo described its use in China over 700 years ago. Travellers and traders entering China were forced by Kublai Khan to exchange their real money (gold and silver coins and bars) for his coupons, made from mulberry bark, each numbered and stamped with the Khan's seal. The Khan decreed that local traders were forced to accept them ("legal tender"). Foreigners got the goods, the great Khan got the bullion and the Chinese traders got the mulberry bark (a bit like getting the rough end of a pineapple). By controlling the supply and exchange rates for mulberry money, he became fabulously wealthy, and his citizens were impoverished.
But unlike electronic money accessed via Optus, mulberry money could not disappear in a flash.
The world has a long history of pretend money.
During the American War of Independence, the colonial rebels had no organised taxing power so they printed the Continental dollar to finance the war. As the war dragged on, they printed too many dollars, and its fast debasement gave rise to the phrase "Not worth a continental". Later, in the American civil war, confederate paper money used to support the army also became worthless. It was widely referred to as "shin-plaster", after its highest value use in helping to bandage wounds.
Many dictators over the years tried the fiat money trick, but so many lost their heads or their thrones that it fell into disuse, being replaced by trusted real money such as English sovereigns, Spanish doubloons, Austro-Hungarian thalers and American gold eagles. It is mainly in wartime that people are sufficiently distracted or scared to allow rulers to secretly tax everyone who holds their depreciating pretend money.
Financing Big Wars
The last century or so has seen the explosion of big governments and big wars - race wars, class wars, world wars, regional wars, the war on want, the war on drugs, the war on inflation, the war on terrorists, the war on Covid and now the Net Zero War on carbon fuels and grazing animals.
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