https://internationalman.com/articles/like-so-much-mulberry-bark/

by Jeff Thomas

In 1260, Kublai Khan created the first unified fiat currency. The jiaochao was made from the inner layer of bark of the mulberry tree. It’s of interest that the mulberry tree was quite common in Mongolia. What allowed Kublai Khan to get away with treating tree bark as currency was that each bill was cut to size and signed by a variety of officials. They affixed their seals to each bill. To further ensure authenticity, forgery of the chao was made punishable by death.

But even then, why would people accept bark as being of the same value as gold and silver, which had successfully served as “money” for thousands of years? Well, to begin with, the chao was redeemable in silver or gold. But just to make sure it was accepted, Kublai decreed that refusing to accept it as payment was also punishable by death.

Today, we’re more sophisticated. Governments no longer threaten to kill people for refusing to use a fiat currency; they just make it extremely difficult to deal in anything but fiat currency.

At the time, Kublai was involved in an ongoing war with the Song. The war had drained the treasury and Kublai was finding it difficult to continue to finance the war. And so, in 1273, he issued a new series of the currency without having increased the gold and silver in the treasury.

In 1287, Kublai’s minister, Sangha, created a second fiat currency, the Zhiyuan chao, to bail out the previous one, to deal with the budget shortfall. It was non-convertible and was denominated in copper cash.

There’s an old saying that, if you find yourself in a hole, the first thing to do is stop digging. Yet, throughout history, leaders, having created a Ponzi scheme of fiat currency and finding out that it has its pitfalls, invariably keep digging ever faster. Read the rest of this entry »