User ID posted: " https://www.youtube.com/watch?v=wBBDuzBFM6s The Three Monetary Systems in History by Joseph Brown There have only ever been three types of monetary systems in history. Sometimes they have existed side by side, in competition with one another. At othe"
There have only ever been three types of monetary systems in history. Sometimes they have existed side by side, in competition with one another. At other times, they have ruled globally unchallenged. Despite the apparent future failure of fiat and the seemingly new invention of bitcoin, none of the current or future monetary systems are new to history. They have all been done before.
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What's up everybody my name is Joe Brown and this is Heresy Financial have you ever wondered how we ended up with a global fiat monetary system especially in light of the disadvantages that it seemingly brings to so many people and then when considering the eventual downfall of the current system fierce debate shows up many think we're gonna go back to a gold standard others think that bitcoin is the future what most don't realize though is that fiat bitcoin and gold those are just subsets of larger monetary systems and what even fewer realize is that none of these monetary systems are new or recent inventions so today we are going to look at the three different types of monetary systems that have existed in world history and where they've shown up ready let's dive in right now we have a fiat monetary system around the world where it looks like gold is the challenger is that's what central banks are storing up on and the wild card here is bitcoin and while the future is uncertain the past is clear we've had all three of these monetary systems in the past fiat is really a debt or a credit monetary system gold is a commodity-based monetary system and bitcoin is a public ledger based monetary system all three of these monetary systems are well documented time tested ancient and proven debt systems commodity systems and public ledger systems so let's start with the oldest many people would think that this is going to go straight to gold but it is not the oldest monetary system in the world is a debt debt-based or credit-based monetary system this is extremely well documented by the late David Graeber in his book Debt: The First 5,000 Years, great book it's linked in the description below when examining the anthropological evidence a debt-based or credit-based monetary system think favors pre-dates commodity-based monetary systems by probably about 2,000 years an easy way to think about this is like a rural community who is constantly doing favors for each other to help keep the community sustained I do something for you now owe me one and you return the favor by giving me something when I'm in need or helping me out with something when I need help you now owe me one but since you owe me one I can use that favor that debt that you owe me as payment to somebody else if I owe something to somebody else I can transfer that debt as payment and now instead of you owing me one you owe him one instead now despite first impressions this is actually a very complex and sophisticated financial system of virtual money they had all sorts of clever tracking systems because these financial systems did get fairly complex even though it was thousands of years ago one of these was called a tally stick where you'd have two people each with matching sticks with the same number of notches on them until that debt was repaid and you could always compare the two to make sure one person wasn't trying to cheat the other one out one would go to the creditor one would go to the debtor and you would always be able to compare and say okay this is what the debt currently is and then it would be resolved or you could even use those sticks as payments to transfer that debt to someone else now this monetary system is so old that it shows up deeply ingrained in human institutions like religions when you look at ancient religious texts you can see there is debt-based language pervasive through it and it shows up in traditions in history especially as you look at how institutions like judicial systems came around and evolved over time so the monetary system that we have today this fiat-based monetary system is actually the oldest that the world has ever seen it's a debt or credit-based monetary system and in fact if today every single debt was paid off there would be zero money in circulation this is because at the base layer the bottom layer of money is debt it's essentially IOUs now after that original monetary system based on debt based on credit it transitioned to a commodity-based monetary system this transition took a very long time which is key to remember and while monetary transitions are happening you have competing monetary systems that are existing at the same time and these transitions can take hundreds of years with commodity-based monetary systems you've had gold we've had silver we have copper shells beads even things like rice it's simply a system where a commodity something physical serves as the roll serve that function of money and naturally globally this has tended towards gold being the one that won over time this is because for a commodity to serve well as money it has to have certain characteristics like it's got to be durable it has to be fungible it has to be difficult or potentially impossible to counterfeit and it has to have relative scarcity compared to all of the other stuff in existence now over time gold has been realized to fit these characteristics better than any other commodity and that's why the world over the last two three thousand years has tended towards gold as that pristine base layer of money because of this once the gold standard was firmly in place it existed basically uninterrupted at least somewhere in the world for the last three thousand maybe two thousand years but then about 150 years ago the world started a new slow transition back to a system of debt-based monetary system a credit-based monetary system now as I mentioned these transitions take a long time again while they're happening there's multiple systems competing at the same time and this most recent transition from commodity-based money to debt based money began with the invention of the central bank for the last few hundred years central banks have been tried over and over and over again most of the time failing every time one failed the local system reverted once again to commodity money until slowly and little by little people got used to using a debt-based monetary system in fact in the united states alone we had three central banks that all failed before the fourth one finally stuck the fourth one is the federal reserve that we still have now it was started in 1914 but by 1914 that transition had already started because we already had a debt layer of money on top of the commodity-based money that was at the bottom people rarely used gold and silver coins for most of their transactions at that point people were used to keeping their gold and silver in storage at the banks and using certificates which was an IOU that was debt they used that as money instead and so there's this layer of debt on top of the commodity-based monetary system and the implementation the successful implementation of a central bank was the last step it took to completely wean the population off of a commodity-based monetary system and from its establishment in 1914 it only took about 50 years to completely get the entire world off of a commodity-based system to the point where the entire world was now on a debt-based monetary system and now about 50 years after that people are saying we're undergoing another transition now with the advent of the internet and the prosperity and the abundance that technology brings many are looking ahead at internet money as being the future but like I said earlier bitcoin cryptocurrency the invention of the blockchain this is not a new monetary system it's not a new invention as far as monetary systems go this is what's known as a public ledger monetary system where the money is a public ledger it's not a commodity and it's not debt it's a public ledger and it also just like debt and commodities is very old it just wasn't ever as widespread this is well documented in the book the bitcoin standard again linked in the description below there's a little known population of the Micronesian islands that use something called Rai Stones as money until the early 20th century and you might look at this and think okay well there's stones that's commodity money no it's not these stones were huge they were carved out to look basically like giant donuts and they were so big that once the community quarried them and got them in place they were too big to actually move so ownership of these giant Rai Stones was transferred not by geography it's not like a coin where you'd hand it to somebody when you buy something ownership was transferred of these basically just by the community acknowledging that ownership had been transferred the tribe would get together and they would say okay john owns this big giant stone right now but he's buying this cow from Amy so now Amy owns this giant stone and she's giving the cow to john and now the entire community knows and remembers that Amy owns that giant stone until the next time that she needs to transfer it for payment for something else this meant it was impossible for anyone to steal money because if somebody walked up and said I own this everybody would just say no you don't we know that Amy owns that recorded in the entire memory of the community was who had what money and the history of where all that money came from the transactions that led up to where it was the current ownership this is a public ledger monetary system you can also imagine this like imagine there's a giant billboard that's a magic billboard that everybody in the world can see at one time and this giant billboard has the full record of how much money every single person on earth has and not only that it also shows the history of let's say you've got you know a hundred thousand dollars it shows the history of every single one of those dollars where it came from before it came to you back until the very beginning and since everybody can see this giant magic billboard it eliminates the possibility of fraud because if you go and you edit the billboard to say oh I've got a million dollars well everybody can see that you edited it which means your fraudulent edit would be rejected but even further than that let's say for somehow we didn't see you make that fraudulent change we'd be able to immediately recognize that your million dollars didn't come from any of us because it didn't have the history nobody transferred their money to you and so even just from that standpoint your fraudulent edit would be rejected this is exactly what bitcoin is it's just a public ledger as money for the monetary system that's what the blockchain is it is a public ledger that anybody has access to go look at and you can see every address that has any fraction of any bitcoin and you can see the history of every single address that that fraction of a bitcoin has been owned by all the way back to the very very beginning of the invention of bitcoin so back to the Rai Stones if that was such a good system why did it fail well this isolated people group had a fatal flaw that they just could not have anticipated they didn't realize that there was a whole another world out there with better technology than they had so when explorers from Europe arrived they quickly realized they could exploit this monetary system and get a lot of resources natural resources for very cheap compared to how where they could get them from elsewhere using better industrial methods they could quarry these stones a lot easier and a lot cheaper from elsewhere and then import them to the islands and use them as payment for real natural resources and by the time the old wise leaders realized the devastation that this could bring the damage was done it was too late and the community was already addicted to the false sense of wealth that this influx of new money was bringing into the community resulting in basically a hyper-inflationary crash but bitcoin in its creation had the benefit of hindsight and has a supply cap of 21 million so no more bitcoins other than the 21 million that will ever exist can ever be created this would be just like if the community members of the Micronesian islands had had this foresight they would have been able to say okay all the Rai Stones that we have right now these are the only ones that can ever count as money and regardless of if any others are ever made or brought in they don't count as money only the ones that we're currently using and this would have completely prevented any economic devastation from explorers coming in and trying to bring in new Rai Stones so in conclusion it's very important to remember there's nothing new under the sun even with monetary systems and while fiat shills like to declare the brilliance of modern virtual government money systems they forget that it's actually just the oldest system there is and technology is just a tool that amplifies or magnifies it provides leverage it brings abundance to scarcity and so bitcoin is a monetary system or any other cryptocurrency it's a public ledger monetary system again something that's very old with a technological application and finally transitions from one monetary system to another take a very long time sometimes hundreds of years they don't happen overnight and despite long-lasting incumbents it is not possible to predict if a challenger let alone when or which challenger will come out on top and finally if you'd like to learn more about these topics I highly recommend the two books I mentioned Debt: The First 5,000 Years and the bitcoin standard I've got them both linked in the description below as always I really appreciate you guys thank you so much for watching have a great day
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