History of US Money
Money is changing.
Cryptocurrency is coming.
But how did we get here? What is the history of US Money?
Let’s do a brief history together!
Join The Our Shawn for the Future Done Right(TM) Show as we explore what we are seeing and what we need for the future.
**NOTE: This is a general discussion of legal ideas and is not legal advice. You must consult counsel to get legal advice based on your facts and circumstances. Do not rely on the content of this message without consulting a lawyer. No attorney-client relationship is formed by this video.**
Here is the YouTube video: https://youtu.be/lVoftIO2v5o
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Below is a machine transcript of the interview —
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Hey everyone to see our shot. Welcome to an edition of future done right, we take a look at the future of business, the future of the economy and bring tips.
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To you, business leaders on how you can participate in the future, how you can build your businesses and stay relevant
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To the future economy. So the goal here today is Ruby, looking at the future of money and we’re gonna be doing it by looking backwards. We look at the history of US currency. So pull some sources together.
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To kind of give us an overview, an idea. So a lot of other people have a lot deeper knowledge in this to me, but I want to give us a nice overview, so that we can think about what happened historically
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With us money in particular, and then we can work forward to what’s happening in the future, potentially with money and currency.
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As we see currency bitcoin and some of the other technology come in.
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Those who don’t know me as well. My name is Dr. Sean I’m a corporate lawyer by training. I work with businesses on everything touched on the ownership and control their business that might be equity arrangements mergers capital raise
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contract negotiations and a lot of partnership agreements, bringing people together to work together in the business.
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And I always doing this future done right show what we’re looking at the future of technology, a future of business.
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To determine what’s happening next in the world. What we need to pay attention to and what trends are so important to our business.
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So today we’re going to dive back in history a little bit. We’re going to look at US currency and from there we’ll get a better understanding of what is happening for the future.
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I would like to remind you to like comment share let your friends know about this. In fact, we have a comment contest going on. I read the various comments wherever you’re watching, whether it’s Dr. Sean on LinkedIn.
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And we see particularly insightful comments we made like you wanted to show that we run a comment contest regularly.
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I remind you that this is not legal advice is not financial advice so Salter out advisor. Everything here is merely for your education.
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So let’s jump into it. Want to cover this in three parts here when we talk about US currency.
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Or the history of us, number one, let’s talk about what actually was the currency in circulation in the US. Number two, I want to talk about
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Our use of the central banking system. And number three, I want to talk about the backing of the currency and I might actually flip number two and number three. As we get into this today.
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So let’s talk about the currency of the US. So the US as most of us know is comprised of a lot of land in North America, which came from a few countries.
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The primary leader in this movement was the British so there is no surprise that the British kind of lead the US monetary system. And that’s where we start is with currency from England being circulated throughout the United States.
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That worked for a while. These colonies were very tied
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To to the to the to the British system, but eventually they started to want their own currency to circulate because there were shortages of British currency and other things. So as early as the
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We see the US colony starting to issue currency. This is largely on a colony or state level to to finance their internal operations and these were often back. These were backed by gold or silver
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And they should, they should have been redeemable for gold or silver, but sometimes that did happen.
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Then UBC some private printing
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Benjamin Franklin, of course, a famous printer was printing some of this currency, we’re seeing in the US.
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And this is going on for a while. Of course, the British was getting more and more concerned about the independence and separation of the US colonies and particularly the payment of taxes.
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And so because of that, at some point, the British in 1764 exactly came and banned the issuance of paper money in the US, then of course this clause of circulation.
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Issues and worse. We have all this other prior history of privacy. So we’ve got a little disruption here trying to bring the US back under British rule, no history lessons that that didn’t work us ended up separating
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From from England and Britain and it’s 1775 we see the Continentals or the first currency of the US, of course.
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Some people may remember the phrase, it wasn’t worth a continental which refers to the fact that indeed this currency became very worthless.
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It was via currency not backed by anything and a lot was printed and it became very work. So moving forward, the US dollar comes in by the authorized by Congress and starts its history of moving forward.
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So this is how we get to having US dollars now. Now what backs a US dollar. What supports a US dollar. Well, if he asked kids.
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In school least away I trained is, you know, US currency was backed and gold until 19 until the 1970s when we remove the gold standard.
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But it’s actually a little more nuanced than that of course we have the cotton nettles. In the early 1700s.
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Which were backed up you know by fiat, then we move to the gold and silver standard we were using gold and silver in the US, but that was not universal, believe it or not, there was different points in history, different things happen.
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In the 1930s,
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The federal government said that they would stop redeeming these gold and silver certificates for individual citizens they were still using redemptions for world banking. So if a trade balance or a foreign country got too much the currency.
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Or they would do an exchange of gold or silver from the, from the vaults of the US to pay for that. So we did have some backing it was an indirect backing at that point from 1932 1930s until the 1970s.
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US currency only had an indirect backing, meaning that if you wanted to convert it, you had to be a foreign government so currently would actually have to leave the US.
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Getting hands on a foreign government and then it could be converted. So really some of the fiat backing was lost as early as 1930s.
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So that gives us almost 100 year history of a fiat currency versus a a backed currency going for going back from that, though there were a couple of wars and disruptions were actually
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We had system where we remove the gold standard or the silver standard and the backing behind it. So we’ll see that
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In history, a couple of times, including World War One World War two, where the currency was was the exchanges were stopped so
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You know, so from time to time, the US government pools. This fiat, it turns the currency from being back to being Fiat
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Until finally just goes that direction. So we’ve had backings a time we’ve had non back at times.
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And we’ll get a little bit forward as we look to the future. Towards the end of this about what happens with the future of currency.
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And where we’re at with cryptocurrency in particular. So, so we have currency. It’s back to different times. It’s not back at different times. Of course, this removal and replacement of the backing.
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Of the currency is causing you know real issue because it’s not truly back if you keep pulling it in and out. So eventually we get to where we are today, which is Fiat
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Most fiat currencies issue by major governments work. However, the cover them is via currencies issued by unstable governments.
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Don’t seem to work. So that will be an important narrative as we move into cryptocurrency later in the segment. The third thing is, who’s keeping control over the system.
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And what is the central bank or who controls this whole monetary system. Well, originally there wasn’t a central bank and the US has had three attempts at Central Banking
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Throughout its history. So when people argue both ways on this, the central banks do get a lot of power.
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But the idea of having a central bank is that, you know, we have somebody to stabilize to support the banks within the system.
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And to keep control over the overall system and the amount of money in circulation, the speed of circulation and how money is flowing in the economy.
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So it was tried from 1791 teen 11 the first central bank. And was there a lot of people didn’t like it. This is early in the US history.
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The strong federal government that we have today was kind of a foreign concept, people weren’t wild about the idea of having a lot of power in one government. So the early central banking is
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Is attempted, but not reauthorized by Congress. So second central banking attempt comes when we hit the Second Bank of the US in 1816 to 1836
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And again, it was not renewed
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When it expired. So we have to Central Banking concepts that were both tried for 20 year periods at both of them fail. So that’s the early starts at Central Banking and but people in the US really aren’t taking the idea of having this powerful Central Bank.
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That controls. So then from 1836 until the run up of the Civil War, we actually see another currencies and additional currencies.
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Emerging in the US. And not only are there multiple banks in play, but they’re issuing their own currencies and they’re circulating with various effects or not so
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Of course, this allows people to do check transactions and to do clearing of checks.
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To allow people to settle accounts, this is this is good for the economy that we can move money without actually moving currency.
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That, of course, the Civil War cops and we get the National Banking Act, which is going to shut things down here.
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To establish the Federal dollar as the sole currency of the US. So up until this point, we still had the US dollar. We had other currencies floating around.
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Now we’re moving to an era where we’re saying just the federal Federal dollar as the US currency. And so this will let gives us a great deal of uniformity and also gives a lot of power.
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To central government, of course, because we no longer have these competing currencies.
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At that point, we see a lot of financial issues we see some running on the banks and some other issues so
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1908 leads us to an attempt to have a decentralized Central Bank.
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So we had that plan and that didn’t work so 1912 creates the Federal Reserve Act and Woodrow Wilson brings this into effect, and of course later is historical
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Accounts will say that he regrets doing it because the Federal Reserve System was set up to be somewhat independent of of the government. And so it gets to move
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Move money in and out of the economy, including purchasing Federal securities particularly bank note or Federal Reserve Notes
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And also issuing currency and getting a lot of bank regulatory power Federal Reserve being the lender of last resort to banks setting kind of terms and conditions and overnight rates.
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A lot of power goes into this Federal Reserve System and they become very powerful for managing monetary policy.
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Go forward from there. And of course, you know, we’ve had a lot of ups and downs in the US economy and the Federal Reserve has played an important role.
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In moving money in and out of the economy during recessions, etc. So a lot of power in that central bank.
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But people can always of course question their decisions whether somebody’s inflation rates that we have our natural right people talk about two to 4% inflation rate as being more well
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We don’t really know if that’s right or not. We just know that’s what most countries are aiming for.
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This probably stems from New Zealand, which was the first country small country to peg and inflation rate.
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We also see on employment rates, you know, talk back to the inflation. If we get below 5% but we’ve actually gone below 5% unemployment without spiking inflation. So a lot of these numbers are arbitrary to cause a lot of questions. There’s a lot of power in one institution.
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So what does this mean going forward for cryptocurrencies with not done this brief history of us money well cryptocurrency gives people a lot more predictability.
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Than what we’ve seen with our current system right right now if you hold US dollars. Regardless, where you are in the world as being the world reserve currency, of course, people aren’t using
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US dollars throughout the entire globe wherever you’re using US dollars you’re really betting on the US Federal Reserve to do the right thing.
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To not quote monetize the debt and pay out the debt in the form of printed currency or additional bank deposits right to
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The US government could, at some point, essentially pay off some debt by issuing currency.
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Obviously, causing massive devaluation but a very plausible and possible strategy. A lot of people have discussed we’re dealing with the US debt. We also have the ability of the Federal Reserve to shrink.
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The amount of monetary base through their operations, they can actually reduce the amount of money in circulation and they can increase the mind circulation.
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A lot of power. One thing a lot of people are attracted to with Cryptocurrency is the idea that there is a fixed base.
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cryptocurrencies have a formula that determines the amount of currency in circulation, so that you can’t just keep printing
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Which should allow supply and demand to set up value of it should keep scarcity there that can’t be interrupted by additional printing or disruptions. So a lot of pluses there.
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But cryptocurrencies having a lot of the same challenges that the early currencies did in the US. Right. We talked about a lot of periods.
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in US history where we had multiple currencies circulated where there was not a standard where people didn’t believe in the currency or the value
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Exact same issues are happening with cryptocurrency it needs to become standard. And as I talked about yesterday show with with wolf call and you can see that at future done right calm.
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Wolf and I spoke at great length about the need for standardization right if you don’t have standards or norm that we don’t have a market. And so people need to be using actual cryptocurrency and believing that it will be there that they can let it go.
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You know, you may want you may want to research the Capitol Hill babysitters co op as a great example.
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Of a system that just didn’t have enough currency and didn’t wasn’t in a uniform enough and the history of this Capitol Hill babysitter’s co op
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Which happened in Washington, DC, where various people who were had husbands or wives on Capitol Hill to change babysitting services they issued a script.
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For a babysitting a session. And the problem was that everybody was hoarding these babies babysitting certificates, because everybody was trying to hold them.
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And there wasn’t a free market until they printed more scripts, which open the market up same issue EXACT SAME ISSUE IS HAPPENING WITH A LOT OF cryptocurrency
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People are holding this for investment purposes they want to get a whole crypto, they want to buy and hold. They’re looking at the value going up that everybody’s buying and holding
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There is no market. Nobody’s trading nobody’s getting in and out. If people are getting a cryptocurrency regularly.
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We would have a different situation. So we need to look at that too. We can learn a lot from history about this uniform adoption and universal ization
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And that’s where we need to get to with Cryptocurrency is we need to have some form of, you know, uniformity.
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And trust and global use it took a long time for the US dollar to get there. I expect cryptocurrency will get there faster.
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Than what we expect for the US dollar. However, it’s going to take a while to get there and people need to start doing actual transactions in it, not just sporadic
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Things right now, most of the crypto currency transactions. I see are one offs are not made commerce activities as people start to put me in commerce activities on there and start to really
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transacting cryptocurrency I think we’ll see more uniform uniform would love your thoughts on US history and banking and lessons you’ve learned. Obviously this was very brief.
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To fit in our standards segment size would love to talk to you about what you’ve seen would love to bring some experts on about us. If you know great historians that people know about US history of money.
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Let’s get them on here, I just want to do an overview, so that we can see our thought and think more about what we’re seeing.
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With cryptocurrency and the future would love your comments like, comment, share let your friends know what we’re doing here.
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At future done right, get them in the loop so that they can start thinking about the future and building their future I remind you, we have a comment contest going on.
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Where I invite the person with the best comment on to the show. So we’re really looking to hear great things and opening up our, our guests slots.
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People, a great know how. And that’s really what do we want to build a great experience for guests. I am looking to work with some motivated individuals so you can check that out at future done right.
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Excuse me, planning done right comm slash intern. So you’ll learn a little bit more about our intern program what we’re doing there. What’s happening and would love to see
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Some great people apply because we can do some amazing things together.
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Aside from that, you can get ahold of me at the are shot, you’ll see me on Dr. Shaw McBride on LinkedIn, you’ll see me at McBride for biz on YouTube.
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Are Sean McBride fans of audiences on Facebook and the future done right YouTube channel on YouTube. So reach out comment let me know what you’re seeing. Let me know if you know a great guest.
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will remind you there’s past episodes at future done right calm and you see a lot of great guests have been on the past and including wolf call who I just mentioned earlier today and other great stories about taxation.
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The future of cryptocurrency what we’re seeing, etc. We’ve talked about all these and past episodes of this show or its predecessor.
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Check those out learn a little something. Drop your comments. You can also see our upcoming guests at future done right calm, so I’m looking forward to hearing from you. And don’t forget to join our mailing list at future done right.
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So I can send you updates about upcoming things and things that we’re seeing out there in the world. Good luck, folks. Thanks for joining me. Hope you have a great day and the future economy is your I will talk with all of you very soon.