Folks, this was originally written on January 29th of 2010 by Bill Bonner, the Editorial Director of The Daily Reckoning. I enjoyed it then and I enjoyed it again when the rolled it out for an encore a few months ago. I just read it again today and it deserves blogging about because it details one of the two hyperinflations that France had in the 1700's.
The first modern competition between gold and paper money ended like the pre-modern ones. Gold won. Herewith, a short summary:
A rogue, John Law, was the protagonist of the story. He killed Beau Wilson in a duel. Then, he went on the lam...first to Scotland...then to Amsterdam...and finally to Paris. Like Alan Greenspan or Ben Bernanke, he made himself useful to people in high places - in this case the Duke d'Orleans, who needed money. Law had a way to get it:
I have discovered the secret of the philosophers' stone, he is said to have remarked, it is to make gold out of paper.
A brief history lesson. It didn't work. Hang on to your gold coins and numismatic silver coins and pray it (hyperinflation) doesn't come to our soil. Questions? Call us today at Lear Capital and watch gold supply and demand!