In 16th-century England, Thomas Gresham formulated what is now known as Gresham’s law, which stipulates that bad money drives out good. Paper money tends to circulate more freely than silver, and silver more freely than gold, because people hoard whatever type of money is seen as best. It’s why we spend those torn dollar bills first.
The busiest subway stop in downtown Washington was until recently festooned with green banners and billboards warning of a terrible danger. One of America’s great national symbols is under attack: the dollar bill.
We’ve all grown so accustomed to using little round pieces of metal to buy things, it’s easy to forget that coins arrived quite late in the history of the world. For more than 2,000 years, states ran complex economies and international-trading networks without a coin to hand.
China Investment Corp. Vice Chairman Gao Xiqing said that central banks’ quantitative easing policies are hurting the value of money just one day after the Federal Reserve maintained plans to buy $600 billion of Treasuries.
In 2012, it isn’t unusual to go days without using actual money: Lunch goes on the debit card, a clothing purchase goes on the credit card and in some cities even parking meters take plastic. As the Internet and instruments of credit continue to transform our relationship with money, it is worth reflecting on the forms that money has taken in the past.