PART2: ECONOMY STORY
About 700 years before JC the sovereigns were able to impose the use of money as a means of payment in the form of an object for which they claim exclusive production. And right now the currency is in the form of coins of gold, silver, copper and which served as payment for their soldiers who waged wars conquering new territories.
So to obtain food and equipment, the soldiers imposed by force on the peasants and merchants this currency as payments. Then the power then recovered this currency when collecting taxes. Very quickly, as everyone had to have this currency to pay taxes, it became the new means of debt settlement. Money then saw the light of day. It was accepted as payment and spread throughout the community. The sovereigns could therefore buy food and goods etc. thanks to the money they produced themselves. It was the time of debt bondage.
This explains how the monetary system was created by sovereigns to extort a part of the production of the populations while living well and dressing without making the least effort of work. It is by this principle that empires were built. Historically, barter was only practiced in unstable times of war and crisis when citizens ran out of money. In the Middle Ages, with the development of trade, precious metals like gold and silver have become an international currency. It was risky to own and carry around these precious metals. We risked having them stolen. From the 17th century, merchants began by entrusting their precious metals to goldsmiths. In exchange, these goldsmiths gave them a receipt or a nominative certificate of deposit for proof of deposit of precious metals in their regard, which allows depositors to come and collect their precious metals at any time.
Thus during the withdrawals the latter ask for a small sum for the storage service rendered since they take serious care that these metals are well kept in safe.
By evolving like this, these certificates have become non-nominative. They now carried the weight of the metal they simply represented. So very simple, merchants began to pay themselves not necessarily in precious metals but with these certificates. It was the beginnings of paper money.
Now goldsmiths have found that merchants leave their precious metals lying around in their chests; they had the idea of lending these metals to other merchants so that they could develop their trade. But rather than lending these metals, placed in their safe, they preferred to issue certificates. When they repaid their debt, they returned the certificates and paid interest, these certificates were always destroyed immediately. after payment. The goldsmiths began to print many more certificates than the precious metals available in their vault, to lend them to others and so on.
This practice allowed them to enrich themselves in multiplying the interest received. And like the possibility of exchanging paper money for precious metals was accepted by merchants as payment, goldsmiths could print it for their own needs. So as long as the borrowers and depositors did not all arrive at the same time to request exchanges of their certificate against the equivalent in precious metals, their little magic trick to get rich remained secret. Today these precious metals are replaced by central currencies. With the advent of the republic and democracy, it is indeed the legislative code which drafts the law in the name of the people and the States.
Nations have their own money made by the central bank. The law says that every citizen has an interest in accepting this state currency as debt settlement. It is, however, what makes the currency legal tender. This currency is called fiduciary, from the Latin fiducia which means trust. So the banking system and the monetary policy of the time have come to light and are the result of this little goldsmith's game over time.
In the time of goldsmiths, when merchants paid themselves in precious metals, it is like when today we and merchants pay for our goods and services in the central currency of banknotes. Then when they were paid with certificates, it's like when today, we pay merchants by transfer of scriptural money from our bank account to that of the merchant.
And we must also remember that when goldsmiths made credits, they issued many more certificates of deposit than precious metals available in their vault. When the merchants came to reimburse them, they destroyed these certificates. It's the same thing today with private bank money. When a bank extends credit, it creates scriptural money in an account out of thin air. And it creates far more than it has central currency in those coffers. And when the client to whom she granted the credit manages to repay his credit, she destroys this scriptural money created which was just intended to credit the account of this client. Let's say it's called money creation and money destruction.
As scriptural money is accepted as payment, banks can also create money out of nothing to cover their expenses as they have the possibility of extending credit to themselves. So this monetary policy of central banks and those private whose goal is the interest gives rise to an inflationary economy maintained around 2%. When this inflation manages to exceed the bar of this normality of 2%, the economic system begins to experience stability difficulties such as. Inflation is therefore the cause and the consequences are multiple and drastic. Bitcoin, which wants to be revolutionary in this banking industry, can be the solution to this whole banking maneuver story?
