WEBVTT 00:02.610 --> 00:08.990 This is the human action podcast where we debunk the economic political and even cultural myths of the days 00:08.990 --> 00:11.950 Here's your host dr. Bob Murphy 00:13.390 --> 00:19.710 Everybody welcome back to the human action podcast today. I'm gonna be going solo talking about something wicked 00:19.710 --> 00:25.710 No, not the Federal Reserve actually but the now movie but what was a Broadway show 00:25.710 --> 00:32.390 But before we dive into that let me remind you the Mises Institute has a special December book bundle available now 00:32.610 --> 00:36.810 For just twenty five dollars or more. You'll receive three essential reads 00:36.810 --> 00:41.030 Tom DeLorenzo's access of evil America's three worst presidents 00:41.030 --> 00:44.170 pair of islands how to think about the economy and 00:44.750 --> 00:47.330 Murray Rothbard's what has government done to our money? 00:47.670 --> 00:53.810 Support the Mises Institute and expand your library with these thought-provoking works claim your bundle now at 00:53.810 --> 00:57.470 Mises org slash human action to for 00:57.990 --> 01:04.090 That's the numerals to for donate twenty five dollars or more to secure this exclusive offer today again 01:04.090 --> 01:07.850 You want to go to a Mises org slash human action? 01:08.510 --> 01:08.870 24 01:10.230 --> 01:17.470 Okay, so as I say what I want to speak to you good folks about today is I'm sure you've seen there's been an 01:17.470 --> 01:24.630 enormous marketing blitz for this movie wicked and let me just give you some background to that the 01:25.670 --> 01:28.470 There was a book that was sort of a 01:29.290 --> 01:32.350 Parity is not the right word like an alternate 01:33.070 --> 01:35.770 Story or the real story of the Wizard of Oz right? 01:35.830 --> 01:39.430 That's kind of the premise and these things have been going around. There's some cute ones 01:39.430 --> 01:41.450 There was one that I saw years ago 01:42.070 --> 01:47.370 About the story of the the three little pigs in the big bad wolf but told from the wolf's perspective 01:47.370 --> 01:49.670 All right, it was a cute little thing, but there 01:50.810 --> 01:54.350 Even though the premise was funny whatever it I mean the wolf was lying 01:54.350 --> 01:57.030 Okay, so in that one it was clear 01:58.070 --> 02:02.710 That the writers were not saying. Oh, actually the wolf is the good guy and gets a bad rap 02:02.710 --> 02:05.230 It was the wolf, you know just being a 02:06.770 --> 02:10.350 Wolf and and so it was still a cute book if you know if you have little kids or something 02:10.350 --> 02:15.350 I guess they'd have to be a little bit older to understand the the irony involved and that sort of thing 02:15.350 --> 02:18.850 But you might check it out if you're a parent you I don't know the exact title 02:18.850 --> 02:25.530 But I'm sure if you googled around you'd find that something like the story of the three little pigs is told from the wolf's perspective 02:25.530 --> 02:28.070 Something like that, but the book wicked 02:28.850 --> 02:29.330 was 02:31.090 --> 02:36.670 An alternate take and partly why I'm going over this stuff is I think it would appeal. I know a lot of 02:38.190 --> 02:42.490 Viewers of the human action podcast are probably into 02:43.250 --> 02:43.530 A 02:44.650 --> 02:49.850 Revisionist history right where oh geez I learned as a kid that Abraham Lincoln was a good guy 02:49.850 --> 02:52.670 And that's not what Tom DeLorenzo thinks right? 02:52.770 --> 02:56.890 So I'm just saying if you're that sort of person where you at least like to consider these things 02:56.890 --> 03:01.390 it is very it's a very clever book wicked and it 03:02.290 --> 03:09.490 Again it it shows things that oh actually you've been taught that the witch from the what what wicked 03:09.490 --> 03:16.150 Witch the West is is wicked, but actually no she was the heroine and it's the wizard who's the bad guy 03:16.150 --> 03:19.290 Okay, and so it's it's just interesting. So they do 03:20.730 --> 03:23.070 Deviate from the standard 03:23.730 --> 03:26.970 You know the movie the Wizard of Oz that we've all seen a lot 03:27.890 --> 03:31.010 But anyway, I just thought that was interesting and 03:31.630 --> 03:37.250 You might be you might take a look at it and also the Broadway musical that they first made out of it 03:37.250 --> 03:41.910 I also thought was great. All right. I'm a lame is fan, but 03:42.830 --> 03:46.330 Wicked is up there and and partly I'm saying this stuff because 03:47.190 --> 03:47.630 unfortunately 03:48.490 --> 03:52.530 The marketing for the movie and the particular actresses involved 03:53.910 --> 03:56.950 It's you might think that oh, yeah, this is just some kind of woke stuff 03:56.950 --> 04:01.410 And I haven't seen the new movie and maybe it is I don't I don't know what they've done with it 04:01.410 --> 04:04.510 And certainly the marketing I understand why you might say I don't want to look at that 04:04.510 --> 04:07.810 But what I'm saying is if you're a person who likes musicals 04:08.270 --> 04:09.710 I encourage you to go 04:10.250 --> 04:15.350 Check out the the actual, you know musical that was on stage and I think it's still is going around 04:15.870 --> 04:20.330 Actually, I know it is someone I know just went to it recently. Okay, so that's I'll say that 04:21.330 --> 04:26.690 And now though what I really want to do in this episode is I thought okay since this is topical 04:27.930 --> 04:32.850 What many of you may not know is that there is speculation that the original 04:33.530 --> 04:35.170 Wizard of Oz so 04:35.750 --> 04:40.430 It was first a book and then it was itself 04:41.690 --> 04:43.410 You know a stage production 04:43.990 --> 04:49.250 Before then they made the movie, you know that we all know of is oh, yeah, that's the Wizard of Oz that famous movie with 04:49.250 --> 04:52.190 You know somewhere over the rainbow and so forth. Okay, so 04:52.770 --> 04:53.210 uh 04:53.210 --> 04:56.870 What's interesting is there's a lot of speculation that 04:57.690 --> 04:59.270 The author of that book 04:59.970 --> 05:03.690 Was among other things intending the story to be an allegory 05:04.210 --> 05:09.010 For the monetary debates that were raging in the united states at that time and specifically 05:09.690 --> 05:15.030 The argument over silver versus gold. Okay, so here just some 05:15.670 --> 05:19.890 Catch phrases that you may have heard of and I that's what I'm going to do in this episode 05:19.890 --> 05:23.750 It's kind of just spell some of this stuff out to you know, give you the rest of the story 05:23.750 --> 05:25.050 This paul harvey might say 05:25.670 --> 05:27.430 That um things like 05:28.070 --> 05:29.410 William Jennings bryan 05:29.990 --> 05:32.150 Who i'm sure you've heard of he he's a 05:33.170 --> 05:34.490 An accomplished man 05:35.190 --> 05:37.070 And and I will say when I was younger 05:37.070 --> 05:41.210 I didn't like him and then now the older I get the more I do like him 05:41.790 --> 05:42.370 he was 05:42.950 --> 05:47.090 One of he was the guy in the famous scopes monkey trial that 05:47.630 --> 05:53.170 Clarence daryl put on the stand and tried to humiliate him for his silly fundamentalist religious beliefs 05:53.730 --> 05:54.030 uh 05:54.820 --> 05:58.330 On my own podcast recently. I have the bob murphy show 05:58.940 --> 06:04.710 I have gone through and reviewed the court transcripts and I have argued that no actually william jennings bryan 06:05.360 --> 06:05.850 did not 06:06.700 --> 06:10.990 Get humiliated on the stand and clarence daryl made some basic mistakes himself 06:11.590 --> 06:12.170 um 06:12.170 --> 06:16.010 But beyond that he was also the secretary of state bryan was 06:16.820 --> 06:21.570 Under woodrow wilson and he resigned in protest saying wilson is not being neutral 06:22.130 --> 06:24.970 He's unnecessarily dragging the united states into this awful 06:25.830 --> 06:29.710 You know european war so that's kind of cool 06:30.370 --> 06:30.870 um 06:31.710 --> 06:34.710 But he's also known famously for his 06:35.430 --> 06:38.730 So-called cross of gold speech of the democratic convention 06:39.330 --> 06:45.230 Where he was you know saying you won't crucify us on this cross of gold and so what he was arguing for there 06:46.090 --> 06:48.930 was what's known as the free coinage of silver 06:49.830 --> 06:56.150 And involved with all this is what partisans called the crime of 73 06:56.810 --> 06:57.910 referring to 06:58.670 --> 07:01.410 legislation from 1873 that effectively 07:02.050 --> 07:05.730 Ended the free coinage of silver or you might say demonetized silver 07:06.530 --> 07:11.890 Okay, so this is all real fascinating stuff at least to me that I just wanted to to spell out 07:12.450 --> 07:13.470 but just a 07:14.050 --> 07:16.370 Circle back on the the wizard of oz angle 07:17.060 --> 07:18.690 So the um 07:19.690 --> 07:22.850 Some of the the connections so for one thing 07:23.640 --> 07:25.630 The the yellow brick road 07:26.250 --> 07:30.510 Right that nearly got that and then in the original book 07:31.420 --> 07:33.050 And I think the original 07:34.030 --> 07:36.570 stage production, but i'm not certain about that 07:37.060 --> 07:38.130 Dorothy shoes 07:39.000 --> 07:43.630 Were silver okay in the movie that we've all seen their ruby red 07:44.270 --> 07:50.690 But my understanding is that was just because that stood out more like that was you know in terms of having a visually appealing movie 07:51.330 --> 07:53.250 That having those those red 07:54.050 --> 07:57.750 Slippers that you know, oh you could have gone home whenever you wanted the power was always here 07:57.750 --> 07:59.710 It's clear that it's her slippers 08:00.450 --> 08:02.510 That are the salvation for Dorothy 08:03.430 --> 08:03.870 not 08:05.190 --> 08:09.310 Going to you know, not following the yellow book road and going to the wizard who 08:09.810 --> 08:10.730 even in the 08:11.390 --> 08:13.010 In the you know movie we know 08:13.590 --> 08:14.090 Let alone 08:14.610 --> 08:22.210 The subsequent book wicked and and so forth the wizard of oz is not a good guy, right? He's a fraud and he's 08:22.210 --> 08:26.430 Um, I mean beside just the obvious like hey paying no attention to the man behind the curtain 08:26.430 --> 08:31.250 He's just putting on a big show to fool everybody and solidify his political power 08:31.250 --> 08:34.410 Beyond that though, I mean just think about what a jerk this guy is 08:34.410 --> 08:37.390 That he's got this young girl who shows up 08:37.910 --> 08:40.430 You know her house falls on one of the one of his enemies 08:41.070 --> 08:41.810 And then 08:42.310 --> 08:46.050 He's still got this other enemy who's now, you know angry at this girl 08:46.590 --> 08:50.810 For killing her sister and what does the wizard do he says? Oh, I can help you 08:50.810 --> 08:54.270 But I need you to go kill this witch first for me 08:54.270 --> 08:58.890 I mean that what kind of a grown man has asks a young girl go murder someone for me 08:58.890 --> 09:01.810 I mean, he can maybe say it's not murder go kill somebody put it that way 09:02.390 --> 09:06.670 Um, and then I'll help you like who does that? Well the wizard of oz that's who okay 09:06.670 --> 09:09.090 And so anyway, that's um 09:09.570 --> 09:15.210 So part of the the story in terms of people interpreting it and saying that 09:15.870 --> 09:19.450 Yes, uh frank bomb, you know the the author was 09:20.570 --> 09:21.530 Trying to 09:22.470 --> 09:26.810 Prom, you know make the case for silver in a subtle allegorical way 09:27.470 --> 09:30.330 Is to say that yeah the the wizard of oz was not your salvation 09:31.010 --> 09:34.330 It was you know following the yellow book road was not what dorthy needed to do 09:35.250 --> 09:41.090 The she the whole time she had the you know the silver shoes on her feet right there 09:41.090 --> 09:45.550 You know she had you know the power was hers all along. Okay, so there's that element and then also 09:46.170 --> 09:53.210 The wizard of oz and people speculate that you know oz is ounces right ounces of silver and gold. All right, so that's 09:53.210 --> 09:53.830 um 09:54.350 --> 09:57.510 If you if you want to see more here. I'm just touching on some of the obvious 09:58.770 --> 10:01.090 Points that the people who make this case bring up 10:01.600 --> 10:04.410 Um, but you you know you can just even look at the wikipedia entry 10:04.970 --> 10:10.250 On this stuff and it'll it'll talk about you know the monetary economics in the wizard of oz 10:10.770 --> 10:11.230 theories 10:12.270 --> 10:13.190 Okay, so 10:13.810 --> 10:16.830 Having said all that now. Let me just come back to the 10:16.830 --> 10:20.310 The economics and u.s history element of it 10:20.930 --> 10:22.970 So here i'm going to rely on 10:24.250 --> 10:29.170 Uh, I think it was chapter two of my book from the mises ensued understanding money mechanics 10:29.170 --> 10:31.230 And if you haven't looked at that 10:31.230 --> 10:34.490 I would encourage you if this if the stuff i'm talking about in this episode interests you 10:35.010 --> 10:38.930 Because I learned some stuff here when I did the research to write this chapter 10:39.550 --> 10:42.670 Specifically on the early monetary history of the united states 10:43.130 --> 10:46.450 And I you know I had known for years about oh, yeah, there was 10:47.130 --> 10:53.070 The the dollar used to be backed up by gold everybody knows that and that's why we're mad at nixon and then earlier fdr 10:53.590 --> 10:58.130 And then yeah, there was some stuff about it was silver two for a while 10:58.130 --> 11:00.810 And probably most of you are a little bit hazy on how did that work? 11:01.190 --> 11:05.870 So I spell all that stuff out, you know from first principles and not getting too deep into it 11:05.870 --> 11:06.850 So it's a pretty quick read 11:07.770 --> 11:11.910 As I say if you just even want to check out just this early chapter in the book and it's 11:11.910 --> 11:15.850 Free pdf is everything is that's published by the mises ensued. So again, that's my book 11:16.730 --> 11:20.310 Understanding money mechanics if you just google robert murphy understanding money mechanics 11:20.310 --> 11:22.730 You'll you'll see the pdf that you can get 11:23.070 --> 11:26.690 So that's what i'm gonna let me just read a little bit from that here 11:26.690 --> 11:29.770 And then i'll spend the balance of this episode of the human action podcast 11:30.410 --> 11:33.890 Just elaborating on what i'm gonna read here. So these are 11:34.750 --> 11:35.270 excerpts 11:35.990 --> 11:38.050 From my book understanding money mechanics 11:39.210 --> 11:39.730 um 11:40.390 --> 11:43.790 So I first started out and said how since the u.s 11:44.350 --> 11:47.730 The original 13 colonies were part of the british empire 11:48.370 --> 11:50.890 originally their money officially was 11:51.590 --> 11:57.450 Great britain's money, you know pounds shillings and pens and at the time great britain was on a silver standard 11:58.390 --> 12:03.470 Okay, and if you just think about like the pound sterling like that's the you know the term we use for the british currency 12:04.470 --> 12:08.370 That's you know going back to the days of it was a it was a physical weight 12:08.970 --> 12:09.410 of 12:09.930 --> 12:12.930 The metal right the pound it was pound sterling right? 12:13.890 --> 12:14.010 um 12:14.010 --> 12:17.070 And so what i'm partly going over here is to explain 12:18.510 --> 12:23.730 You may think that oh, yeah back in the days of hard money all the major powers were on gold 12:24.270 --> 12:27.330 And you might just think that oh, yeah, it was always gold and i'm saying that no actually 12:28.090 --> 12:34.530 There was a period where silver was actually the you know the money of 12:35.150 --> 12:36.910 The advanced nations 12:37.490 --> 12:38.010 okay 12:39.990 --> 12:45.530 During the revolutionary war the continental congress issued unbacked paper money called continental currencies 12:46.170 --> 12:48.850 It had you know that led to rampant price inflation 12:49.370 --> 12:56.170 And you may have heard the expression not worth a continental right so that's where that comes from that once the price inflation got out of hand 12:56.750 --> 12:59.130 People didn't want the continental currency 13:00.090 --> 13:07.750 Okay, um and then among the foreign coins circulating among the american colonists the most popular was the spanish silver dollar 13:08.390 --> 13:10.970 And this made the term dollar common in the colonies 13:11.950 --> 13:17.470 Explaining why the continental currency was denominated in dollars right rather than shilling or pence or whatever 13:18.010 --> 13:21.850 And so it was getting it was a spanish. It wasn't the spanish gold. It was a spanish silver dollar 13:22.570 --> 13:26.530 That is what made american colonists 13:27.070 --> 13:27.590 start 13:28.130 --> 13:34.870 Using that term dollar in commerce and thinking in terms of dollars being their money and then that again is why 13:35.530 --> 13:35.850 once 13:36.910 --> 13:37.430 us 13:39.150 --> 13:42.310 Officials either you know the colonial governments or then later 13:43.020 --> 13:51.270 The you know the country the the new republic. That's why they use that term dollar for what their currency was 13:52.010 --> 13:55.670 Or I should say their money right because currency is a more specific term 13:56.390 --> 13:57.210 okay, and so here 13:58.050 --> 14:04.090 I want to read something it is crucial for today's readers to understand that from the inception of the modern 14:04.090 --> 14:09.730 By which I mean the post constitution united states in the late 1780s 14:09.730 --> 14:13.010 Through the eve of the civil war in 1861 14:13.750 --> 14:19.430 The federal government issued money only in the form of gold and silver coins 14:20.370 --> 14:23.910 Okay, and there was a borderline exception the war of 1812 where they had some 14:24.490 --> 14:28.270 Treasury notes that were quasi money. Okay, but besides that 14:29.070 --> 14:29.890 border case 14:30.570 --> 14:31.630 my point is 14:32.850 --> 14:35.950 It's not that the federal government 14:36.670 --> 14:43.310 In the early days again from the foundation of the constitution, you know with george washington being the first president in that 14:43.850 --> 14:46.210 Scenario, that's what we're talking about that regime if you will 14:46.710 --> 14:52.830 Up through the eve of the civil war or the war between the states or the war of northern aggression if you're a tom de laurenzo fan 14:53.790 --> 14:58.530 My point is in that period you may have thought that. Oh, yeah, they issued 14:58.530 --> 15:03.490 Uh, you know u.s paper currency issued by the federal government 15:04.110 --> 15:07.050 But it was backed up by gold or maybe silver 15:07.650 --> 15:08.110 somewhere 15:08.730 --> 15:15.150 Whereas, you know fdr removed that backing up in the nixon final and i'm saying no it when we'd say 15:15.630 --> 15:16.830 that in the in the beginning 15:17.950 --> 15:18.510 dollars 15:19.310 --> 15:20.830 Were gold and or silver 15:20.830 --> 15:27.290 I don't just mean there was green pieces of paper that were backed up somewhere with gold and silver in a vault 15:27.890 --> 15:33.630 No, the u.s government again to repeat did not issue paper currency at all in this period 15:34.990 --> 15:37.590 What would happen is they defined 15:38.650 --> 15:42.650 What the weight in terms of either silver or gold was 15:43.630 --> 15:45.210 Um for for a dollar 15:46.090 --> 15:47.050 and then 15:47.810 --> 15:55.610 If people had quote raw gold or silver they could bring it to the mint and it would be stamped into official coins 15:56.250 --> 16:00.710 You know legal tender. This is this is what we mean by official u.s dollars 16:01.250 --> 16:02.370 is their coins 16:03.270 --> 16:06.810 Of silver or gold with the appropriate, you know 16:07.390 --> 16:08.350 Statutorily specified 16:09.130 --> 16:12.710 Weight, you know in terms of the grains, right? I'll get I'll get to the numbers in a minute 16:12.710 --> 16:16.370 But i'm just first explaining how the thing worked. All right, so the 16:17.050 --> 16:18.730 It's not that the authorities 16:19.610 --> 16:21.010 Determined the money supply 16:21.550 --> 16:23.670 No, that was um 16:24.870 --> 16:27.330 Endogenously determined if you know if you know what that word means 16:27.330 --> 16:31.410 It was uh a market outcome if you will right just like 16:31.910 --> 16:35.910 The authorities don't determine how many barrels of oil get produced each year 16:35.910 --> 16:39.870 Likewise, the authorities in this early period 16:40.390 --> 16:41.350 Did not determine 16:42.250 --> 16:47.030 How many how many dollars are we going to print because again the authorities weren't even printing dollars period 16:47.030 --> 16:48.670 It was just they said 16:49.310 --> 16:54.110 The dollar is defined as either this amount of gold or this amount of silver 16:54.610 --> 16:58.390 And if you bring that amount of gold or silver to the mint, we will turn it into 16:58.910 --> 16:59.890 official coinage 17:00.530 --> 17:03.230 At their you know appropriate ratios or weights 17:04.550 --> 17:09.550 Okay, so you know just think through the implications of how far we've come from that 17:09.550 --> 17:15.010 Okay, so what probably many of you think of is oh, yeah back during the days of hard money under the gold standard 17:15.010 --> 17:20.210 Even that was a much weaker version of hard money than what we're talking about here 17:20.770 --> 17:25.430 There, you know in that period where the u.s. Government was issuing paper 17:26.110 --> 17:26.670 greenbacks 17:27.270 --> 17:29.970 That you could redeem for specie 17:30.670 --> 17:36.030 All right that again was was a one step weaker than what we're talking about here where the actual 17:36.650 --> 17:37.650 official money 17:37.650 --> 17:41.730 According to the government were gold and silver coins 17:42.330 --> 17:46.610 Now to be clear i'm going back to quoting here in this early period 17:46.610 --> 17:52.630 Commercial banks were allowed to issue their own paper notes that were redeemable and hard money 17:53.410 --> 17:57.890 And to the extent that they were trusted might circulate in the community along with full-bodied coins 17:57.890 --> 18:03.130 But these banknotes were not the same thing economically or legally as gold and silver dollars 18:03.910 --> 18:09.090 Okay in summary for the first 70 odd years after the modern federal government's creation 18:09.810 --> 18:17.050 Official u.s. Dollars consisted in actual gold and silver coins that regular people carried in their pockets and spent at the store 18:17.810 --> 18:23.010 Indeed so bad was the constitutional framers experience with the continental currency 18:23.570 --> 18:27.430 That they included in the contract clause of the you know the constitution 18:27.890 --> 18:33.670 The prohibition that quote no state shall make anything but gold and silver coin a tender in payment of debts 18:33.670 --> 18:37.170 All right, so i'm just giving some of the background there 18:37.170 --> 18:38.890 Okay now let's get to the numbers 18:40.650 --> 18:50.270 In the coinage act of 1792 the u.s. Dollar was defined is either 371.25 grains of pure silver 18:50.970 --> 18:51.550 or 18:51.550 --> 18:54.930 24.75 grains of pure gold 18:55.730 --> 18:59.730 Okay, so again, it's not saying the dollar is a paper note 18:59.730 --> 19:05.950 That's backed up by either of those two numbers. No, it's saying the definition right like to it's like um 19:06.590 --> 19:09.950 And here when it says like the congress shall have power to coin money 19:10.830 --> 19:16.890 It wasn't set or to regulate the value thereof right so a lot of people point to that as constitutional authority 19:17.590 --> 19:21.170 For the federal reserve and for the you know the fiat paper money 19:21.990 --> 19:23.830 that the authorities produce 19:24.570 --> 19:25.050 and 19:25.050 --> 19:27.650 There is uh, I think correct 19:28.130 --> 19:31.370 School of thought that says no not at all. That's not what they were doing 19:31.860 --> 19:35.730 All they were doing in the an original constitution when it came to 19:36.610 --> 19:40.750 The federal government being able to regulate the value thereof of the coinage 19:40.750 --> 19:42.150 of the money 19:42.940 --> 19:45.710 Was just in their capacity as like setting 19:46.490 --> 19:49.070 Weights and measures right so just like 19:49.840 --> 19:56.150 If people wrote contracts promising. Oh, i'm going to sell you this many yards of fabric 19:56.910 --> 20:00.730 And then somebody gives uh, you know a certain number of feet 20:01.370 --> 20:04.310 And they say oh well what I meant by a yard was was four feet 20:04.890 --> 20:09.070 And or they would say two feet right to to undersell and to to under deliver 20:09.610 --> 20:11.870 And say yeah, that that's what I meant by a yard right so 20:12.570 --> 20:15.030 The the courts would need to know 20:15.030 --> 20:20.710 They have some official measure of what do these terms mean if they're like in a contract and somebody owes 20:21.270 --> 20:25.270 You know, there's 12 inches in a foot. There's three feet in a yard and so forth 20:25.730 --> 20:31.350 In terms of weights and whatnot right just for the enforcement of contracts and just for the rule of law to exist 20:31.370 --> 20:34.410 And so likewise that was the function here when they were saying 20:35.070 --> 20:36.890 You know if there's a contract saying 20:37.450 --> 20:43.110 You owe somebody, you know, if you have a debt instrument you owe somebody 10 dollars 10 us dollars 20:43.110 --> 20:44.630 What does that mean? 20:45.230 --> 20:47.330 How can you satisfy that and say oh 20:47.990 --> 20:51.910 What it means is again this with this original coin eject of 1792 20:52.550 --> 20:59.290 The dollar is either 371.25 grains of pure silver or 24.75 grains of pure gold 21:00.190 --> 21:03.370 Okay, and the reason they picked those particular numbers if you do the arithmetic 21:04.250 --> 21:08.270 That established a gold silver ratio of precisely 15 to 1 21:09.290 --> 21:13.470 Right that you needed 15 times as many grains of pure silver 21:14.210 --> 21:17.310 To count as a dollar as you did grains of pure gold 21:18.010 --> 21:19.010 Right so that gold 21:19.610 --> 21:20.590 Had a value 21:21.130 --> 21:26.990 15 times higher than silver under this original definition. All right. I'm going to go back to reading now quoting for myself 21:27.710 --> 21:31.550 Part of the rationale for this policy of bi-metalism, right? 21:31.590 --> 21:36.590 So it's that's a bi in the front. So meaning like to just like bi-weekly, you know that kind of a usage 21:36.590 --> 21:40.270 So bi-metalism means the us at this point 21:41.090 --> 21:42.190 was on 21:43.610 --> 21:49.870 Two different metallic standards. It was both a gold standard and a silver standard. Okay, so why did they 21:50.630 --> 21:51.190 um 21:52.610 --> 21:54.610 Had this policy of bi-metalism 21:55.590 --> 21:59.250 Was that silver coins were convenient for small denominations 21:59.250 --> 22:06.590 Including fractions such as a half dollar a quarter dollar and so forth and that's where we get the terms like oh, here's a quarter 22:06.590 --> 22:08.650 Here's a dime so on 22:10.310 --> 22:13.630 While gold coins were preferable for larger denominations 22:14.530 --> 22:19.550 And so what they had in practice is they're really in the beginning were just silver dollars 22:20.050 --> 22:23.030 The coins right there was no such thing as a 22:23.750 --> 22:27.290 In the beginning as a as a single coin that was made of gold 22:27.870 --> 22:31.570 That was one that was stamped one dollar. No the coins were 22:32.470 --> 22:32.990 um 22:34.010 --> 22:37.550 Eagles right and so a ten dollar eagle and a twenty dollar double eagle 22:38.670 --> 22:43.890 Okay, whereas it was the silver that was used for the smaller amounts and that made sense right just physically 22:44.970 --> 22:45.490 because 22:46.630 --> 22:47.150 you 22:47.790 --> 22:50.430 To only have one dollar worth of gold 22:50.990 --> 22:54.990 Wouldn't be that much gold and so, you know, there wouldn't be that much 22:54.990 --> 22:58.350 I mean they by the way, they weren't made of pure the pure metal 22:58.910 --> 23:02.970 But they would be they wouldn't wouldn't work right you you would also put in baser metal 23:02.970 --> 23:07.130 Just to make the coin sturdy and you know, they could pass around in commerce 23:07.690 --> 23:09.590 But my point is in the beginning 23:10.590 --> 23:15.730 Um partly the reason they had it both gold and silver is because they thought the demands of commerce 23:16.510 --> 23:20.470 It can't just be one or the other if you just had a pure silver standard 23:21.470 --> 23:24.810 Then large transactions, it would be difficult. You would need a bunch of coins 23:24.810 --> 23:27.770 You'd a high weight of silver to buy something expensive 23:28.290 --> 23:32.750 But on the other hand, it couldn't just be gold coins because then for smaller transactions 23:33.310 --> 23:36.530 You know that the amount of gold you would need to hand over would be too small 23:36.530 --> 23:40.450 And it would be impractical to have a coin that just had that limit. Okay, you get the idea 23:40.450 --> 23:41.770 So that's why they did that 23:42.370 --> 23:43.050 and then 23:44.230 --> 23:45.030 the um 23:46.070 --> 23:47.670 The reason they originally 23:48.130 --> 23:53.130 Picked that 15 to 1 ratio was in 1792 when they were codifying this 23:53.130 --> 23:54.930 Then happened to be roughly 23:55.410 --> 23:58.430 The global market exchange rate between gold and silver 23:58.930 --> 24:02.070 Okay, so they were you know, we're just pulling that number out of the air 24:02.070 --> 24:06.830 They were trying to make it so that they were fairly codifying. Oh, yeah, this is the actual 24:06.830 --> 24:10.050 relative valuation of gold versus silver and we're gonna 24:10.610 --> 24:13.290 Um distill that down into our statute 24:14.270 --> 24:16.570 Okay, but the problem is so here I'm reading 24:16.570 --> 24:22.450 However, the problem with bimetalism is the phenomenon known as Gresham's law summarized in the aphorism 24:22.450 --> 24:23.910 Bad money drives out good 24:23.910 --> 24:28.030 Specifically when a government defines a currency in terms of both silver and gold 24:28.030 --> 24:33.230 Unless the implied value ratio of the two metals is close to the actual market exchange rate 24:33.230 --> 24:37.370 One of the metals will necessarily be overvalued while the other is undervalued 24:37.370 --> 24:41.090 And people then only spend the overvalued metal while hoarding 24:41.090 --> 24:45.370 Or melting or sending abroad the undervalued metal. Okay, so 24:46.390 --> 24:50.810 What happened originally things were fine because again, they picked 24:51.470 --> 24:53.590 The the legal ratios 24:54.210 --> 24:58.210 To correspond roughly to what the market ratio was but then over time 24:58.750 --> 25:02.370 I'm just reading again increased silver production relative to gold 25:02.890 --> 25:08.690 Led to a gradual erosion of the world price of silver, right? So more silver was being mined 25:09.450 --> 25:10.810 And brought into circulation 25:11.510 --> 25:13.650 Then gold and so over time 25:14.290 --> 25:19.070 Silver's value relative to gold slipped in terms of actual market exchange rates 25:19.850 --> 25:24.770 Moving the actual market ratio closer to 15 and a half to one, right? So silver 25:25.610 --> 25:25.930 or 25:26.610 --> 25:31.430 Gold originally was 15 times more valuable than silver on a per weight basis 25:31.430 --> 25:35.030 And then its premium rose to about 15 and a half to one 25:36.170 --> 25:38.310 Okay, and so then as that happened 25:39.070 --> 25:43.550 You know the the rules were still in place in terms of you bring gold or silver to the us mint 25:43.550 --> 25:46.370 We're going to stamp it into gold or silver coins according these ratios 25:46.890 --> 25:47.590 so now 25:48.730 --> 25:49.170 if 25:50.770 --> 25:54.850 Silver in terms of the official ratio is being relatively overvalued 25:55.570 --> 25:57.110 You're only going to bring your silver 25:57.550 --> 26:02.070 To get turned into coins and you would be foolish to bring your gold to the mint 26:02.070 --> 26:05.070 I had that stamped into gold coins because that's locking it in now 26:05.070 --> 26:09.670 If you're going to spend it as dollars rather than holding it as the raw metal 26:10.250 --> 26:11.750 You're you're losing out 26:12.330 --> 26:12.850 Okay 26:13.390 --> 26:15.410 And so as Rothbard says 26:16.190 --> 26:21.050 From 1810 until 1834 only silver coins circulated in the united states 26:22.830 --> 26:29.710 And again, this this is what gresham's law refers to I want to be clear just if I can go off on a an aside for a moment 26:30.870 --> 26:31.350 Um 26:33.830 --> 26:37.350 I think sometimes people even in the free market community 26:37.930 --> 26:42.830 Misunderstand what gresham's law is saying and so for example, they will they might say things like 26:43.450 --> 26:49.830 Oh, yeah, you can't have a free market currency that will never work because hey gresham's law says bad money drives out good 26:50.510 --> 26:55.530 And so you can't trust market forces to produce money because some competitor will come along and produce 26:56.290 --> 27:00.370 You know a shoddier type of money and that will drive out all the good money 27:00.370 --> 27:01.030 No 27:01.770 --> 27:03.890 Gresham's law is in the context of government 27:05.270 --> 27:09.270 Mandates forcing people to accept it as a payment of of legal 27:09.270 --> 27:13.410 You know of debts the legal tender laws. Okay, so the idea is 27:14.270 --> 27:16.350 If you owed somebody contractually 27:16.350 --> 27:22.510 Because you know you borrowed money from them and they have an iou that you issued or you have a bond or whatever a mortgage 27:23.190 --> 27:24.070 if you owe somebody 27:24.750 --> 27:28.370 Things that contractually are are denominated in us dollars 27:28.980 --> 27:30.430 And then the government is saying 27:31.080 --> 27:33.050 As far as the court system is concerned 27:33.760 --> 27:38.410 We will say you have satisfied your debt if you pay the dollars either with 27:38.990 --> 27:39.570 silver 27:40.260 --> 27:44.870 You know with a conversion to dollars in terms of this ratio or gold and that 27:45.430 --> 27:47.510 Ratio that they're announcing implied 27:48.330 --> 27:51.650 That gold was only 15 times more valuable than silver 27:52.190 --> 27:55.950 But in reality in the market gold is 15 and a half times more valuable 27:56.470 --> 28:00.450 Then the idea is you're just going to pay your debts off using silver coin 28:01.170 --> 28:02.230 because it's actually 28:03.170 --> 28:09.490 You know in over valuing what is really worth or the other way around 28:11.290 --> 28:17.010 The amount of your dollar debt that you think you should be knocking down by handing over an ounce of gold 28:17.610 --> 28:20.050 The court system is going to say no, we only think 28:20.050 --> 28:24.910 You know your your dollar debt should have been reduced by this amount because this is how we value 28:24.910 --> 28:28.570 You know, this is the implicit price the dollar price of gold that we're using 28:29.110 --> 28:31.430 Okay, so that's maybe another way of thinking about it 28:31.970 --> 28:34.530 Okay, so that's what gresham law is saying if it weren't 28:34.530 --> 28:38.570 for government rules forcing merchants to accept 28:40.170 --> 28:45.450 Gold and silver coins according to certain ratios if their prices are posted in the store in the form of dollars 28:46.090 --> 28:48.010 and even you know more specifically 28:48.790 --> 28:50.410 The extinguishing of debts 28:50.410 --> 28:55.570 Denominant dollars then gresham's law wouldn't matter right? It's not like 28:56.630 --> 29:01.110 Americans had to use zimbabwe currency because oh bad money drives out good and that's why 29:01.670 --> 29:03.630 Zimbabwe currency flooded our markets 29:04.230 --> 29:09.770 A few years ago and you know, we had no choice but to buy everything in terms of no nobody just accepts it because that's 29:10.510 --> 29:15.510 A a cruddy currency. I don't mean to use foul language so close to christmas 29:16.210 --> 29:21.790 Right and then why is that because the zimbabwean government had no authority over us to force americans 29:22.270 --> 29:24.410 To accept their worthless currency 29:25.130 --> 29:25.870 okay, but 29:26.950 --> 29:29.530 Americans beck at this time, you know, they were 29:30.550 --> 29:34.070 under legal rules and court system and property titles and such 29:34.810 --> 29:37.830 Saying that if somebody gives you hand you over this many 29:38.450 --> 29:38.930 silver 29:40.170 --> 29:40.650 coins 29:41.450 --> 29:47.430 Then you know that they they're good. We're as far as we're concerned. They paid off their debt. All right, so that's why 29:48.290 --> 29:48.770 um 29:49.510 --> 29:55.350 You know, it was a de facto silver standard and mises has some quotes. Some are saying in practice 29:56.110 --> 30:02.330 A bimetallic standard refers to alternating monometallic standards and we'll get into that here in a second 30:03.070 --> 30:03.750 um 30:04.170 --> 30:07.170 The coinage acts of 1834 and 1837 30:07.690 --> 30:13.010 Revised the implied content of the gold dollar down to 23.22 grains of pure gold 30:13.490 --> 30:16.910 While leaving the silver dollar at 371.25 grains 30:17.510 --> 30:22.530 Because there are 480 grains in a troy ounce these definitions of the metallic content of the dollar 30:23.130 --> 30:27.230 Implied a gold price of approximately 20 and 67 cents per ounce 30:27.230 --> 30:32.430 So you might that might sound familiar to you if you've read a little bit in terms of the classical gold standard 30:32.990 --> 30:33.930 That was the number 30:35.030 --> 30:37.830 You know before f dr came in and devalued things 30:38.310 --> 30:42.210 Okay, so again, it was the coin. It wasn't the original coinage act of 1792 30:42.650 --> 30:45.330 No, it was the coinage acts of 1834 and 1837 30:46.310 --> 30:50.610 That refined the gold content of the dollar and that ended up 30:51.090 --> 30:51.490 sticking 30:52.450 --> 30:55.690 Okay, and an unchained silver price of approximately a dollar 29 30:56.410 --> 30:58.930 Okay, so now if you do that arithmetic you realize 30:59.650 --> 31:00.330 Oh 31:00.870 --> 31:02.310 It went from 31:03.010 --> 31:04.410 gold being roughly 31:05.270 --> 31:13.210 15 times or exactly 15 times more valuable than silver in the original 1792 legislation to now when they revised it 31:13.910 --> 31:17.290 Now gold is just a hair under 16 to 1 31:18.610 --> 31:21.230 But so now they just did the flip side of the of the same problem 31:21.230 --> 31:25.490 All right, so before because the market rate was about actually about 15 and a half to 1 31:26.590 --> 31:31.490 When gold was only 15 times more valuable than silver everyone just used silver in the us 31:32.010 --> 31:35.670 But then when they revised it to make gold more like 16 to 1 31:36.510 --> 31:38.550 It flipped and now everyone just used gold 31:40.070 --> 31:42.170 Okay, and so as I say here 31:42.710 --> 31:43.130 um 31:43.610 --> 31:52.550 The us though still officially committed to a bimetallic standard after 1834 flipped from a de facto silver standard to a de facto gold standard 31:56.350 --> 31:58.530 Okay, and then let me just jump ahead 31:59.550 --> 32:00.190 um 32:02.550 --> 32:09.910 The classical gold standard refers to the period beginning in the late 19th century when a growing number of countries tied their currencies to gold 32:10.450 --> 32:12.030 Because the process was gradual 32:12.030 --> 32:18.470 It's difficult to state precisely when the period began and here i'm quoting from a historian in 1873 32:18.470 --> 32:22.950 There were some nine countries on the gold standard in 1890 22 countries 32:23.410 --> 32:30.570 And by 1900 29 countries and finally in 1912 49 countries. All right, these were all ones that officially 32:31.390 --> 32:33.350 Were tying their sovereign domestic 32:34.130 --> 32:36.690 You know money to a specific weight of gold 32:36.690 --> 32:41.430 And it was it was kind of a snowball process and a network effect as more and more countries were doing that 32:41.430 --> 32:43.570 It made more sense for the remainders 32:44.300 --> 32:50.670 To you know get off silver and flip over to gold if that's what they'd been doing and so everyone again by 1912 the eve of 32:50.670 --> 32:54.810 The first world war 49 countries all officially were 32:55.650 --> 32:57.090 defining their currencies 32:58.030 --> 33:03.330 Uh in specific weights of gold and that's what we mean as the classical gold standard period 33:04.290 --> 33:05.470 Okay, this is back to me 33:05.470 --> 33:11.970 Recall from the previous section that going into the civil war the u.s. Dollar was defined in grains of the precious metals that implied a mint price 33:11.970 --> 33:15.310 Of either twenty dollars and sixty seven cents per troy ounce of gold 33:15.310 --> 33:21.890 Or of 120 not one dollar and twenty nine cents per troy ounce of silver for a gold silver ratio of about 16 to 1 33:22.450 --> 33:26.370 And because world prices of gold and silver were closer to 15 and a half to one 33:26.370 --> 33:31.930 There was little incentive to bring silver to the u.s. Mint for conversion into coins and here's the critical thing 33:32.490 --> 33:40.610 Consequently there was little opposition in 1873 when congress discontinued the free coinage of the standard silver dollar 33:44.270 --> 33:47.030 As there had been little demand for the option 33:47.690 --> 33:48.090 okay 33:48.810 --> 33:50.110 So again, just don't understand 33:51.090 --> 33:52.310 because of the 33:53.150 --> 33:55.710 Uh relative overvaluation of gold 33:56.630 --> 33:57.550 for decades 33:58.350 --> 33:58.690 People 33:59.470 --> 34:07.010 Nobody had been bothering to try to turn their raw silver into silver coins because it it was the the official price was undervalued with silver 34:07.670 --> 34:12.210 Put this way the market price of silver measured in u.s. Dollars 34:13.050 --> 34:15.830 Was higher than a dollar 29 34:17.050 --> 34:18.650 For per troy ounce 34:18.650 --> 34:23.610 So if you took your raw silver to the mint and had it physically transformed into coins 34:23.610 --> 34:24.850 stamped as 34:25.470 --> 34:27.710 You know one dollar or a quarter dollar or whatever 34:28.710 --> 34:32.770 That would be worth less than the bullion price of the raw metal 34:32.770 --> 34:36.330 So you would be silly to do it. So nobody was taking advantage of that option 34:36.990 --> 34:38.630 And so in 1873 34:39.250 --> 34:45.130 The government officially discontinued they had actually earlier in 1853 discontinued like dimes and quarters 34:45.810 --> 34:47.390 But up until 1873 34:48.170 --> 34:53.070 You still officially had the option the right to take raw silver and have it turned into 34:53.740 --> 34:55.410 One dollar silver coins 34:56.190 --> 35:00.110 But then in 1873 that also that last message of the silver standard 35:00.780 --> 35:01.090 was 35:01.990 --> 35:02.610 discontinued 35:03.350 --> 35:04.790 Okay, but at the time 35:04.790 --> 35:05.950 nobody really 35:06.870 --> 35:07.490 protested 35:07.490 --> 35:13.330 Because nobody had been no one had been doing it for decades. There had been it was uneconomical, right? 35:14.670 --> 35:16.110 So back to my narrative here 35:16.110 --> 35:21.090 However later in the decade of the 1870s when world silver prices dropped 35:21.090 --> 35:24.030 And that was partly as a result of silver discoveries 35:24.030 --> 35:29.630 And partly as a result of other countries demonetizing silver, particularly the german empire 35:30.250 --> 35:36.470 The change of policy would be viewed in a different light indeed pro-silver interests eventually referred to the momentous event 35:36.990 --> 35:38.850 as the crime of 73 35:39.610 --> 35:40.770 Okay, so again 35:41.650 --> 35:42.910 What was happening was 35:43.570 --> 35:44.390 all along 35:45.170 --> 35:48.190 The government was basically saying they didn't do it in these terms 35:48.190 --> 35:51.350 But in terms of the the grain definitions it implied 35:51.870 --> 35:56.950 That the us was valuing silver officially at one dollar and 29 cents per troy ounce 35:57.630 --> 36:01.310 And so when silk when the world price of silver was higher than that didn't really matter 36:01.310 --> 36:02.830 They discontinued that option and then 36:02.830 --> 36:06.790 Because there were more silver discoveries and then as other countries around the world 36:07.470 --> 36:09.410 left the silver standard and went to 36:10.290 --> 36:11.850 a pure gold standard 36:13.010 --> 36:15.890 That reduced the demand for silver and those other countries 36:16.510 --> 36:20.510 And so now there was like a glut of silver so that pushed down 36:21.070 --> 36:24.190 The market price of silver below a dollar 29 36:24.950 --> 36:29.070 And so now if the u.s government is saying hey if you show up and bring raw silver 36:29.070 --> 36:31.790 We'll stamp it into official u.s coinage 36:32.410 --> 36:37.010 At the rate of one dollar and 29 cents per troy ounce of silver that you bring to us 36:37.630 --> 36:42.170 And the global price of silver is lower than that now there's an arbitrage opportunity 36:42.770 --> 36:44.470 But oops once that happened 36:45.250 --> 36:50.130 Everyone realized oh wait a minute back in 1873. They took away that option from us 36:50.790 --> 36:54.470 Okay, and so that was the controversy and that's why people were outraged 36:55.490 --> 36:55.930 um 36:56.990 --> 36:58.610 Yeah, I'll just read one last thing here 36:59.150 --> 37:04.750 There was much drama in the battle between silver and gold interests the most notably william jennings bryan's famous 37:05.330 --> 37:09.890 Cross of gold speech which called for return to buy metalism and the free coinage of silver 37:10.510 --> 37:14.030 Is a method of helping the indebted farmers at the expense of the wall street elites 37:14.470 --> 37:19.490 And he delivered that at the 1896 democratic national convention where he was nominated for president 37:20.310 --> 37:27.630 Yet bryan lost the general election to the pro-gold republican william mckinley who signed the gold standard act of 1900 into law 37:28.210 --> 37:32.510 This legislation codified the definition of the gold dollar that had been established back in 1837 37:33.050 --> 37:37.390 Which we recall implied a dollar gold price of about 20 and 67 cents per ounce 37:38.010 --> 37:41.550 This was the dollar's gold content throughout the classical gold standard period 37:41.550 --> 37:44.430 And would prevail until f dr's devaluation 37:44.850 --> 37:49.290 In 1933 slash 34, which you know, I explained later in the chapter 37:50.250 --> 37:51.410 Okay, so 37:52.190 --> 37:52.950 let me just 37:53.730 --> 37:55.450 Spell out a few things here 37:56.250 --> 37:57.170 number one 37:58.130 --> 38:00.030 You may have thought that 38:00.830 --> 38:02.390 the roth bardian 38:03.470 --> 38:08.610 tradition in austrian libertarianism, you know austral libertarianism, I should say 38:09.390 --> 38:15.370 We're big fans of the of william mckinley and the gold standard act of 1900 because hey, we we like hard money, right? 38:15.470 --> 38:16.590 And we're big fans of gold 38:17.050 --> 38:20.790 And we think if the government just got out of the way that the market would return to gold and 38:21.510 --> 38:23.630 Rothbard and mises both wrote things 38:24.130 --> 38:29.050 Talking about how could the us go back to hard money and involved tying the dollar back to gold 38:29.650 --> 38:32.970 And you know different proposals and what ratio should we use and that sort of thing? 38:33.430 --> 38:36.670 So you may have thought that murray rothbard himself 38:38.070 --> 38:41.430 Thought this was a great thing and that night that gold standard act of 1900 38:41.430 --> 38:45.570 And I really like mckinley and all his back and no if you go read 38:46.230 --> 38:51.750 The various places where rothbard talks about this stuff. I think he tells the story in different ways 38:52.270 --> 38:53.790 um in various of his works 38:54.290 --> 38:54.770 but 38:56.410 --> 38:56.890 it's 38:59.010 --> 39:01.890 I don't want to oversell it, but it's almost like 39:02.450 --> 39:03.970 Is in rothbard's narrative 39:04.530 --> 39:10.130 The pro-gold people are the bad guys like right in terms of like the bankers and such and you know, they had different factions 39:10.790 --> 39:14.790 And the people who were pushing for the gold standard act 39:15.830 --> 39:16.270 um 39:16.270 --> 39:18.890 Are not the heroes in rothbard's narrative 39:19.890 --> 39:22.530 And so it's just it's very interesting 39:22.530 --> 39:26.630 And I I was actually surprised when I first read rothbard stuff because back then I didn't fully understand 39:26.630 --> 39:31.010 And I didn't really get the whole biometallic thing and whatever. I just didn't know enough the history 39:31.490 --> 39:33.910 And so anyway, I was actually surprised by that 39:33.910 --> 39:36.590 I had assumed going into it that rothbard was going to be a champion of 39:36.590 --> 39:41.550 The pro-gold people since he liked hard money and that's not what was going on in retrospect 39:42.030 --> 39:45.470 It's not surprising right because to be pro-gold 39:45.470 --> 39:47.970 Doesn't necessarily mean you want the u.s federal government 39:48.550 --> 39:52.910 Intervening and doing things right really if you're a rothbard and you want the government to not exist 39:53.570 --> 39:54.010 um 39:54.010 --> 39:57.230 And then you know to say nothing about money or banking 39:57.690 --> 40:00.530 All right, so anyway, there's that interesting element there 40:01.010 --> 40:03.390 But also let me just explain 40:04.100 --> 40:08.390 What was going on with the people wanting the free coinage of silver and the return to biometallism? 40:08.650 --> 40:14.630 And how would it be that the free coinage of silver would help the farmers right so the idea was 40:15.330 --> 40:16.790 a bunch of the farmers 40:17.790 --> 40:18.330 had 40:19.270 --> 40:22.770 Mortgage their property right so they went to the banks 40:23.410 --> 40:29.870 They pledged their farms as collateral got loans so the loans are denominated in dollars of course 40:31.110 --> 40:31.590 and 40:32.290 --> 40:33.950 Who owns the loans? 40:34.470 --> 40:42.130 Well, the you know the fat cats on wall street, you know to to paint with a broad brush right the the monied interests the capitalists 40:42.850 --> 40:45.250 Okay, so if you're a populist like brian 40:45.810 --> 40:47.710 Who are you going to favor there? You're going to favor 40:48.250 --> 40:51.170 The indebted farmers, you know the salt of the earth 40:51.730 --> 40:55.670 The people who you know are raising a family and taking them to sunday school and such 40:56.190 --> 40:58.650 Not the guys on wall street with their top hats 40:59.130 --> 41:00.090 and so 41:01.230 --> 41:01.830 once 41:03.170 --> 41:07.330 Global silver prices had dropped below the dollar 29 threshold 41:08.350 --> 41:11.930 If you allowed for the resumption of the free coinage of silver 41:12.590 --> 41:15.270 That would effectively be very inflationary 41:15.770 --> 41:20.690 Right a bunch of people would take raw silver that they could purchase for less than a dollar 29 41:21.210 --> 41:22.170 Take it to the mint 41:22.710 --> 41:23.930 Have it turned into 41:24.810 --> 41:27.650 official u.s coinage with an official rate 41:28.350 --> 41:29.710 You know of a dollar 29 41:30.750 --> 41:31.190 per 41:31.190 --> 41:32.550 Troy ounce of silver 41:33.010 --> 41:38.490 And then use that to for example go pay the interest or the the principal on their debts 41:39.430 --> 41:43.330 Okay, so it was basically a way so, you know, there's different ways you can think about it that 41:43.790 --> 41:48.050 You could take raw silver that was had a market value that you could obtain 41:48.050 --> 41:52.770 You know by selling your eggs or you know milk or whatever you get raw silver 41:53.290 --> 41:57.370 It less than a dollar 29 then have it turned into official u.s coinage 41:57.970 --> 41:59.290 Can use that to pay down 42:00.230 --> 42:02.230 The dollar debt that you owed the bank 42:04.110 --> 42:04.630 Um 42:05.170 --> 42:07.250 Or you can also think of it equivalently as 42:08.010 --> 42:12.270 By allowing for the resumption of the free coinage of silver now again 42:12.270 --> 42:15.090 It's not that the authorities determined the money supply 42:15.810 --> 42:19.750 It was an endogenous outcome based on what the public did 42:19.750 --> 42:25.770 And so now if you're opening up the floodgates and allowing people to bring their raw silver and to be turned into official 42:26.370 --> 42:27.250 us dollars 42:27.730 --> 42:34.190 That's effectively inflating the money supply. It's it's expanding the total quantity of us dollars in existence 42:34.790 --> 42:38.230 So other things equal. What's that going to do? It's going to push up prices 42:38.230 --> 42:44.250 It's going to devalue the dollar and so if you're a debtor other things equal and there's an unexpected 42:45.790 --> 42:50.850 devaluation of the dollar in real terms that makes it easier for you, especially if you're 42:51.490 --> 42:56.930 A farmer who's selling, you know goods that people need you're selling milk and eggs and 42:57.870 --> 42:58.950 beef and whatnot 43:00.430 --> 43:00.990 Then 43:02.470 --> 43:04.350 A general inflation 43:04.350 --> 43:09.050 Is going to help you right because the prices of the eggs and whatever respond 43:09.630 --> 43:12.450 to the increasing quantity of dollars in existence 43:13.130 --> 43:15.310 But your debt is fixed 43:15.830 --> 43:21.510 Right, it's not that they had inflation, you know purchasing power clauses in the mortgages on the farm back then 43:21.510 --> 43:25.370 Okay, so that's that's the idea. I'm just explaining the mechanics of it 43:25.370 --> 43:29.810 And why would it be that if you were a populist in 1896 43:31.110 --> 43:32.070 That you would 43:32.590 --> 43:38.610 Want the you know resumption of the free coinage of silver in order to help the indebted farmers and to stick it 43:38.610 --> 43:43.710 To those fat cats on wall street and that the guys who own the banks, right? That's the idea 43:43.710 --> 43:46.590 Okay, so again, if you're interested in this stuff 43:47.170 --> 43:52.690 I would encourage you to go check out my book understanding money mechanics. It makes a great christmas gift as well 43:52.690 --> 43:54.930 you can get the physical book and 43:55.610 --> 43:58.970 Either way, thanks for your attention everybody. See you next time 44:00.910 --> 44:04.350 Check back next week for a new episode of the human action podcast 44:04.350 --> 44:08.670 In the meantime, you can find more content like this on nieces.org