Ok, I'm still trying to grasp this money thing. One question I have is, where did the first dollar come from and how did it get into circulation? In other words, when we first went to our current money system, how was money distributed? Did people trade in coins from the old money system? Obviously a lot was distributed by employers, but how did they get their little fingers into it?

I'm asking this because, depending who you believe, it appears that the national debt is equal to the total money supply. Of course, I could have misunderstood this.

Help!

-- Amy Leone (leoneamy@aol.com), February 08, 2000

Answers

I thought one of the founding fathers (Ben Franklin?) advocated the decimal monetary system (versus continuing with the British pound, which, before the late sixties? still wasn't decimalized). Of course, I'm peering back through the haze of too many contradictory history books to know for sure...

-- Deb M. (vmcclell@columbus.rr.com), February 08, 2000.

Read up on the formation of the Fed Reserve System in 1912. Prior to 1912, the dollar was defined by a measure of gold. The paper doller was simply a certificate of gold ownership which could be exchanged for gold at a bank. This was the era of "free money", which included small government, few wars, great personal freedom, stable prices and economic growth rates that the 20th century could never match.

-- aracnni (itsy@bitsy.spider), February 08, 2000.

I think it started in the Maria Theresa Valley in Germany, but the M-T part is from memory. Anyhow, "valley" auf Deutsch is "tal" and the coins were therefore "talers" which is where "dollar" comes from.

-- bw (home@puget.sound), February 08, 2000.

The word "dollar" comes from "taler", as another reply points out. The original talers were gold coins. Paper money as a concept was invented in China. The US Constitution gives the Congress the power to "coin money." The Federal Reserve system was created in 1912. The Fed was a political bastard fathered by investment bankers out of ideas that originated with the prairie Populists. Needless to say, the Fed is not currently a populist institution. The USA abandoned the gold standard in 1932 or 1933 (I forget which).

If you want to "grasp this money thing", I strongly recommend reading "Secrets of the Temple" by William Grieder. Especially the first 150 pages or so that covers some of the history of the FRB and how it works.

Greider has a definite point of view, but he is not some kook who believes the FRB is illegal or a conspiracy of the Rothschilds. He is a respected journalist. He documents everything and is very much above-board. He quotes experts inside and outside the Fed in their own words.

A must-read for anyone who wants to know why Wall Street quivers every time Alan Greenspan opens his mouth, and yet you and I can read the WSJ and listen to CNBC for years and not garner a frigging clue WHY this is so, only THAT is so!

-- Brian McLaughlin (brianm@ims.com), February 08, 2000.

Amy,

Just a couple of comments:

only a small portion of federal debt has been monetized.

the transition to US coinage was gradual.

Jerry

-- Jerry B (skeptic76@erols.com), February 08, 2000.

Amy,
try this link:Mon ey
Good info about money.

-- Possible Impact (posim@hotmail.com), February 08, 2000.

Point to ponder...

.....Can the paper become what it promises to pay by removing the promise?

-- Patrick (pmchenry@gradall.com), February 08, 2000.

The federal debt is NOT equal to the money supply. If that was the case, we would be using debt free money. Instead the WHOLE Federal debt is nothing but pure interest that we pay on our own money! It is unbelievable that a Nation as great as ours, pays interest on their own money. This is utter stupidity and total madness. And no Congressman has the GUTS to abolish the Federal debt. The debt is a scam and is fraud.

-- ... (...@...com), February 08, 2000.