Debt: The First 5000 Years - autonomous learning

AGE OF THE GREAT CAPITALIST EMPIRES 337
all baser metals tend to evolve.73 Most, however, didn't feel that much
explanation was required; the intrinsic value of precious metals was
simply self-evident. As a result, when royal advisors or London pamphleteers
discussed economic problems, the issues they debated were
always the same: How do we keep bullion from leaving the country
What do we do about the crippling shortage of coin For most, questions
like "How do we maintain trust in local credit systems" simply
did not arise.
This was even more extreme in Britain than on the Continent,
where "crying up" or "crying down" the currency was still an option.
In Britain, after a disastrous attempt at devaluation under the Tudors,
such expedients were abandoned. Henceforth, debasement became a
moral issue. For the government to mix base metal into the pure eternal
substance of a coin was clearly wrong. So, to a lesser extent, was
coin-clipping, a near-universal practice in England, which might be
thought of as a kind of popular version of devaluation, since it involved
secretly shaving silver off the edges of coins and then pressing them
down so they seemed like they were still the original size.
What's more, those new forms of virtual money that began to
emerge in the new age were firmly rooted in these same assumptions.
This is critical, because it helps explain what might otherwise seem a
bizarre contradiction: How is it that this age of ruthless materialism, in
which the notion that money was a social convention was definitively
rejected, also saw the rise of paper money, along with a whole host
of new credit instruments and forms of financial abstraction that have
become so typical of modern capitalism True, most of these-checks,
bonds, stocks, annuities-had their origins in the metaphysical world
of the Middle Ages. Yet in this new age, they underwent an enormous
efflorescence.
If one looks at the actual history, though, it quickly becomes clear
that all of these new forms of money in no way undermined the assumption
that money was founded on the "intrinsic" value of gold and
silver: in fact, they reinforced it. What seems to have happened is that,
once credit became unlatched from real relations of trust between individuals
(whether merchants or villagers), it became apparent that money
could, in effect, be produced simply by saying it was there; but that,
when this is done in the amoral world of a competitive marketplace, it
would almost inevitably lead to scams and confidence games of every
sort-causing the guardians of the system to periodically panic, and
seek new ways to latch the value of the various forms of paper back
onto gold and silver.