The history of money – why do we need cryptocurrencies part VI

We stopped last time, when gold coins that coexisted with silver returned to the economic cycle. The monarchs also began to publish exchange rates. The economy was clearly developing.

What is interesting not everyone liked the growing role of money and trade. The church referred to these aspects of life with suspicion. The merchants were accused of not creating value by selling items they bought and thus they should not make money. In the eyes of the hierarchs of the Church, they were even parasites! It began to change only in the thirteenth century. Saint Albert the Great acknowledged the necessity of the existence of money. Next came the Saint, who lived more or less in the same period. Thomas Aquinas. He came to the conclusion that merchants may even demand for goods more than they paid for because of the different location of the sale or improving given goods (a medieval proof of work? 😉).

Fair price

Medieval economists-philosophers (this first concept appeared already in antiquity, so we can use it with the adjective “medieval”) even came up with the idea of ​​establishing the definition of the so-called fair price. Henryk from Ghent (interestingly, whether the modern inhabitants of this city remember him) has established three reasons for earning on the sale of goods. We present them below, just in case a time machine was invented, and you would like to make a fortune in the dark ages.

1. You are allowed to impose a margin on a given product if you have carried it elsewhere. For example, you bought in Rome and you are already selling in Aachen. In the end you had to carry the product for many miles, along the way you risked from being attacked, and the horse pulling your wagon, it visibly disintegrated.
2. You bought it cheaper and you see that the price of the item has risen, so you just earn on the different. Simple? (And it works until today, even on cryptocurrencies.)
3. You know what you sell ergo you can sell it for better price. It’s a bit like today – you pay for Mercedes more than for Fiat, because in your opinion you pay extra for quality and reliability.
After this presentation of the case, there was no contradiction between the market and the Church.

Eleventh: money is just a tool!

A little more up the hill had money in all this. According to the Church, it was possible to use it, but only as a tool, it was not allowed to collect it (checkmate holders!). Accumulating became the source of corruption and evil. The theories of infertility of money, the then thinkers, took, curiously, from the pagan – Aristotle. Pecunia pecunium parere non potest – he often talked about the Greek philosopher’s box office.

Hence the contempt for usury. In the Church’s understanding, the usurer earned the passage of time, and time did not belong to him. (How much easier is the life of modern bankers or payday loans when we all know the saying “time is money!”)

Not only was the Church driving the usury itself uphill. In the the guide for confessors, one could find a “though” over whether, for example, the heirs of the usurer would take over the obligation to remunerate the wrongs he caused. Yes, it was established ..

However, these church bans could be easily circumvented. Even the datum emergens, or compensation for the delay in the devolution of mammon, were invented. Both parties accepted a contract for an interest-free loan, which could not be repaid in a specified, extremely short term. Hence, the late party paying off paid interest.

Over the years, the Church began to accept usury. You can suspect that this was due to the fact that the clerics themselves began to borrow money on interest …

Learning about money

Clerics were so interested in the money that they began to create their monetary theories. Antonin of Florence thought about the physical nature of the coins. He claimed that they could be made of leather, although the metal seemed more practical to him. He also saw the difference between money and capital, which opened the door to recognizing borrowing as a percentage.

The most prominent economist of the 14th century ( Hayek, Keynes or Friedman of these ages – whoever you prefer) was Nicholas from Oresme. If he lived today, his profile on Linkedin would make an impression and he was the object of jealousy! He was a lecturer at the Sorbonne, a chaplain to the king of France, Charles V Wise and bishop Lisieux. He wrote above all the treatise “On the origin, essence, rights and principles of coins”. It is hard to find a more spoiler title, but the work is outstanding. Nicholas of Oresme believed that money should have its own value as ore. He opposed the treatment of coin issuance as a source of income for rulers, because the pecuniary spoiling of money by inflation leads to economic collapse or the collapse of trade. He noted that the effect of spoiling coins is also the disappearance of better money from the market as a result of, for example, exporting them abroad (this is one of the reasons for the fall of Poland several centuries later). Thus, he formulated the principle that later spread to the law of Copernicus-Gresham (bad money drives out good).

To prove to you that what we are repeating everything today, was created much earlier than you think, we also remind you of Jeanie Buridanie. Well, he noticed that the price depends on the needs, not on the “inherent values”. Therefore, it can not be regulated by top-down solutions through the prism of morality. Today, Buridana is considered to be the precursor of market thinking.

The market slowly began to take shapes that are closer to us today. Humanity began to be accompanied by banks …

To be continued…

image: imf.org

Leave a Reply

Your email address will not be published.

Pin It on Pinterest