Paper Banknotes and the Indebting of Nations

On April 3, 1024, “the imperial Sung Dynasty began to print and circulate chiao-tzu notes [paper money] in the province of Szechwan”.

p. 11 Ralph Foster, Fiat Paper Money: the History and Evolution of Our Currency, 2nd ed., 2008

In China, paper money was a monetary form of ‘Hamburger Helper’, an addition to the royal treasury that allowed Chinese dynasties to stretch their budgets by allowing them to spend what they didn’t have.

In the West, paper money had a different purpose. There, the invention of paper money would also allow governments to spend more than they possessed; but, in the West, governments would have to borrow their own money from bankers.

When money is issued as debt, everyone becomes a debtor

TERMINALLY INDEBTED GOVERNMENTS: A PHENOMENA CREATED BY THE CHINESE, SCOTS AND JEWS

Paper money and fractional monetary reserves appeared first in China in 1024 and, although China’s monetary advances were noted by Jewish traders, it would be the Scots who 600 years later would transform China’s paper money into a credit-based conveyer of debt in the West.

Note: It’s no coincidence that today’s largest bank in terms of market value and profits is HSBC, incorporated by Sir Thomas Sutherland in 1865. Sutherland was a Scot.

In 1694, a Scottish banker, William Patterson, convinced England’s King William III to establish a central bank that would issue debt-based paper money alongside gold and silver coins. The king agreed to do so in return for loans to pay his war debts and more loans to fight more wars.

The Scots’ bogus paper banknotes—marginally backed by gold—would eventually replace gold as money throughout the world, proving again the ancient dictum, bad money drives out good.

Invented in China and transformed by the Scots, it would be the Jews, however, who would leverage paper money and credit and debt into untold wealth and power. William Patterson’s combination of paper money and money lending would catapult the Jews from societal outcasts to rulers of the financial world; but because of deeply ingrained anti-Semitic attitudes in the West, it would take almost a century for this to occur.

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via Paper Banknotes and the Indebting of Nations.

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