WEBVTT - Why It's Really Hard to Create a New Currency in a Revolution 0:00:09.160 --> 0:00:13.200 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:13.320 --> 0:00:17.279 I'm Joe Wisenthal and I'm Tracy Alloway. How are you doing, Tracy? 0:00:19.000 --> 0:00:23.320 I think I'm like dying of consumption or something. Consumption 0:00:23.400 --> 0:00:25.439 is a thing, right, Yeah, I think I think I 0:00:25.480 --> 0:00:27.080 think it used to be a thing and now there's 0:00:27.080 --> 0:00:30.640 probably another name for it. Anyway, Sorry to hear that. Um, 0:00:30.760 --> 0:00:34.000 So we've had a lot of bleak episodes lately. We 0:00:34.120 --> 0:00:39.879 just finished a sequence of episodes on money and crime 0:00:40.040 --> 0:00:43.200 and terrorism and the black market and stuff like that, 0:00:43.720 --> 0:00:46.720 and I think today's is also kind of going to 0:00:46.840 --> 0:00:50.320 be pretty bleak because we're gonna be talking about the 0:00:50.360 --> 0:00:54.720 French Revolution. People died of consumption in the French Revolution, 0:00:54.880 --> 0:00:57.360 right they probably did. Yeah, it's a good way to 0:00:57.400 --> 0:01:02.480 connect connect our episode to your current your current ailment. Okay, Joe, 0:01:02.480 --> 0:01:05.520 in all seriousness, Um, that that is very bleak. Uh. 0:01:05.760 --> 0:01:08.440 We seem to be on something of a very dark 0:01:08.800 --> 0:01:12.839 thematic pathway for two thousand seventeen. Yeah, maybe it says 0:01:12.920 --> 0:01:16.479 something about our times, but of course we're we're taking 0:01:16.520 --> 0:01:21.039 an angle that is relevant to past episodes that we've done, 0:01:21.280 --> 0:01:24.160 and I think it's one of my favorite questions and 0:01:24.240 --> 0:01:29.240 one of your favorite questions, which is what is money exactly? 0:01:30.200 --> 0:01:32.800 And the French Revolution will tell us something about what 0:01:32.880 --> 0:01:37.840 money is, right because every time in history, you know, 0:01:38.080 --> 0:01:42.680 the subject of coming up with a monetary system is important. 0:01:42.880 --> 0:01:47.520 And you know, economists and historians and people on financial 0:01:47.560 --> 0:01:51.280 markets tend to I think, sort of abstract away the 0:01:51.360 --> 0:01:54.240 question of money, and they just sort of come up 0:01:54.280 --> 0:01:58.000 with these models that take it for a given. And uh, 0:01:58.040 --> 0:02:00.640 it often seems to be the case that they people 0:02:00.680 --> 0:02:03.400 should go the other way, start by looking at the 0:02:03.440 --> 0:02:07.960 form of money and seeing what it says about the time. Right. Well, Also, 0:02:08.000 --> 0:02:12.360 people forget that money is intricately linked with power and 0:02:12.600 --> 0:02:17.040 therefore with politics, and sometimes money can be um, I guess, 0:02:17.600 --> 0:02:23.280 either reinforcing force um of the existing social structure or 0:02:23.280 --> 0:02:27.919 an instrument of change, right, right, And people money makes 0:02:27.960 --> 0:02:30.720 people do things that seem irrational. I mean, in theory, 0:02:30.800 --> 0:02:34.320 people should just want to increase their wealth and material wealth, 0:02:34.360 --> 0:02:36.800 but sometimes people just want to run up the score, 0:02:36.840 --> 0:02:40.280 so to speak. Okay, so I'm intrigued. So who is 0:02:40.320 --> 0:02:44.000 going to be um connecting the idea of money with 0:02:44.160 --> 0:02:47.720 the French Revolution for us, Well, there's the perfect guest 0:02:47.800 --> 0:02:50.360 We're going to be talking to Rebecca Spang. She is 0:02:50.400 --> 0:02:54.760 a professor of history at Indiana University, and she actually 0:02:54.840 --> 0:02:57.520 wrote a book called Stuff and Money in the Time 0:02:57.600 --> 0:03:01.600 of the French Revolution, which is essentially a monetary history 0:03:01.639 --> 0:03:06.560 of the French Revolution, looking specifically at how they dealt 0:03:06.600 --> 0:03:09.520 with what is money and how that really shed some 0:03:09.600 --> 0:03:13.880 interesting light on a on this period in history. Very cool, Okay, 0:03:13.880 --> 0:03:16.600 So I have a feeling, in addition to asking about 0:03:16.639 --> 0:03:19.600 the French Revolution and money during that era of time, 0:03:19.840 --> 0:03:22.040 we're going to have a whole bunch of questions about 0:03:22.360 --> 0:03:28.240 money now as well, right, like things like bitcoin you, yeah, 0:03:28.400 --> 0:03:32.160 Trump's relationship with gold, um, all sorts of current events 0:03:32.160 --> 0:03:35.040 stuff too, so much, so much we can take from 0:03:35.040 --> 0:03:49.040 the past to apply the present. So without further ado, Rebecca, 0:03:49.120 --> 0:03:51.640 thank you very much for joining us. Oh, thank you 0:03:51.680 --> 0:03:55.080 for inviting me. I'm delighted to be here. So let's, uh, 0:03:55.160 --> 0:03:59.280 let's start with the question of why this angle on 0:03:59.400 --> 0:04:04.200 studying the French Revolution. No doubt there have been numerous books, uh, 0:04:04.480 --> 0:04:10.279 much academic study about this period of time. Why explore 0:04:10.280 --> 0:04:15.840 it through the monetary system. There's a well established way 0:04:15.920 --> 0:04:19.719 of thinking about the relation of money and the French Revolution, 0:04:20.360 --> 0:04:27.280 which is to say that the French revolutionaries were utopian 0:04:27.440 --> 0:04:32.000 philosophers who had little understanding of the practicality of government, 0:04:32.640 --> 0:04:37.240 and so one of the ill advised things they are 0:04:37.360 --> 0:04:43.240 caricatured having done was to issue paper currency in great quantities. Um. 0:04:43.279 --> 0:04:46.000 It was issued in such quantities that so called hyper 0:04:46.000 --> 0:04:50.240 inflation resulted and the whole system collapsed. And that is 0:04:50.279 --> 0:04:57.560 something that historians, economists, and policy makers, ever since the 0:04:57.640 --> 0:05:00.600 debate on the green back in the aftermath of the 0:05:00.600 --> 0:05:04.280 American Civil War, that is a story that people know 0:05:04.680 --> 0:05:09.440 and are familiar with and site as true. I went back, 0:05:10.000 --> 0:05:12.919 everybody takes it for granted exactly um, And so the 0:05:12.920 --> 0:05:17.000 French Revolution can always be offered as an example of 0:05:17.080 --> 0:05:20.279 why fiat currency is a bad idea. I wanted to 0:05:20.320 --> 0:05:23.599 go back to that episode re examine it, and I 0:05:23.640 --> 0:05:25.760 think I've come up with something different to say. Can 0:05:25.839 --> 0:05:29.599 you maybe explain for those who aren't entirely familiar with 0:05:29.640 --> 0:05:35.080 the subject exactly what the money system was during the 0:05:35.080 --> 0:05:38.440 time of the French Revolution and how it went wrong 0:05:38.520 --> 0:05:42.520 and how it became this lynchpin for people to focus 0:05:42.600 --> 0:05:47.040 their fiat currency criticisms around what you need to know 0:05:47.440 --> 0:05:51.080 is that the French Revolution is precipitated UM by a 0:05:51.200 --> 0:05:56.880 very heated political debate about government debt, and it's a 0:05:56.920 --> 0:06:00.200 lot like recent debates we've seen. It has more to 0:06:00.240 --> 0:06:04.560 do with politics than it does with the actual viability 0:06:04.600 --> 0:06:10.160 of the state's finances. Nonetheless, when the representatives who formed 0:06:10.200 --> 0:06:13.760 the first French National Assembly, this is in seventeen eighty 0:06:13.839 --> 0:06:17.400 nine UM, declare themselves to be a national Assembly, they 0:06:17.440 --> 0:06:21.200 face a considerable debt they want to repay it. They 0:06:21.240 --> 0:06:24.520 also have an operating deficit. They can't fail, and so 0:06:24.560 --> 0:06:26.719 they decide that what they're going to do is they're 0:06:26.720 --> 0:06:31.640 going to nationalize land formerly held by the Catholic Church. 0:06:32.040 --> 0:06:35.080 This amounts to probably about ten percent of the property 0:06:35.120 --> 0:06:38.680 in France. They do this because, after all, they say, 0:06:39.040 --> 0:06:41.479 Jesus doesn't say to the disciples go forth and be 0:06:41.600 --> 0:06:45.039 property developers. So why does the Catholic Church have all 0:06:45.040 --> 0:06:48.880 this wealth the nation? The state is going to take 0:06:48.960 --> 0:06:52.359 over the property. In exchange, it will also pay the priests, 0:06:52.400 --> 0:06:54.880 it will do all the charity work, and it will 0:06:54.920 --> 0:06:58.440 then pay off its debts with this land. But you know, 0:06:58.480 --> 0:07:01.119 people don't necessarily want to be be paid in land. 0:07:01.160 --> 0:07:03.560 It's not always the case that you know, an armament 0:07:03.640 --> 0:07:09.640 supplier wants a used monastery in Brittany. Say. So what 0:07:09.680 --> 0:07:13.120 they say is, we'll have this piece of paper that's 0:07:13.160 --> 0:07:18.920 worth leavre that was the unit of account at the time, um, 0:07:18.920 --> 0:07:24.560 and that's backed by a used monastery in Brittany, say, 0:07:24.640 --> 0:07:28.080 and will issue the paper and then when somebody wants 0:07:28.160 --> 0:07:32.520 to buy the used monastery, it will come back into 0:07:32.560 --> 0:07:36.920 the central government. So we won't have created paper. We're 0:07:36.960 --> 0:07:41.640 just creating land in a form that can circulate. And 0:07:41.720 --> 0:07:45.240 the that was supposed to be and these physical bills 0:07:45.280 --> 0:07:48.720 their paper money, they were called a and so they 0:07:49.080 --> 0:07:51.840 explain to us a little bit more the mechanism by 0:07:51.880 --> 0:07:54.840 which they were ostensibly backed by the land. Did they 0:07:54.840 --> 0:07:57.640 pay any sort of dividend or yield or anything like 0:07:57.680 --> 0:08:01.200 that or they how did uh, how did the actual 0:08:01.600 --> 0:08:06.160 backing work? Okay, So actually that's interesting. For the first 0:08:06.320 --> 0:08:10.320 six months they were supposed to be interest bearing, and 0:08:10.360 --> 0:08:14.400 that's really complicated because imagine that you've got a bill 0:08:14.720 --> 0:08:19.440 for a thousand leave and it's going to carry four 0:08:19.640 --> 0:08:26.240 percent annual interest. So that means that after six months 0:08:26.320 --> 0:08:30.480 it's actually worth a little bit more than a thousand 0:08:31.160 --> 0:08:33.760 so how do you make change for that? Um So 0:08:33.880 --> 0:08:36.280 after the first six months when these are supposed to 0:08:36.320 --> 0:08:40.040 be interest bearing, the government decides now they're not going 0:08:40.080 --> 0:08:43.199 to be interest bearing, and they introduced some other changes 0:08:43.240 --> 0:08:46.800 as well. UM. In fact, there were some who argued 0:08:46.840 --> 0:08:52.880 that the best way to make them widely accepted would 0:08:52.880 --> 0:08:56.520 be for each bill to be backed by a very 0:08:56.559 --> 0:09:00.000 specific piece of land, so that they would in effec 0:09:00.160 --> 0:09:04.280 to be real estate trading cards. The problem with that 0:09:04.880 --> 0:09:10.400 is that it would have greatly complicated making any exchange, 0:09:10.440 --> 0:09:13.280 because while somebody might be happy to take a bill 0:09:13.480 --> 0:09:18.280 backed by five hundred livre worth worth of land, there 0:09:18.360 --> 0:09:20.560 might be much more skeptical about a piece of bill 0:09:20.920 --> 0:09:26.240 that's only this little corner of a wheat field, because 0:09:26.280 --> 0:09:29.440 then everybody has to become an expert on all the 0:09:29.480 --> 0:09:33.199 different pieces of land exactly, and then there's going to 0:09:33.280 --> 0:09:35.160 be people who say, oh, well, I don't want that 0:09:35.240 --> 0:09:39.000 five hundred, I want that five hundred. So it creates 0:09:39.120 --> 0:09:42.720 non equivalency. At the very least, though you would have 0:09:42.760 --> 0:09:48.600 expected that um these papers or certificates backed by land 0:09:48.920 --> 0:09:53.839 would have been relatively stable in value, right like land 0:09:53.960 --> 0:09:59.280 is usually pretty stable, so creating money backed by land 0:09:59.440 --> 0:10:02.800 should have made some sense, but I'm guessing it it 0:10:02.840 --> 0:10:07.160 all went wrong, right. So that was exactly the logic 0:10:07.320 --> 0:10:10.839 of the French revolutionaries. They say the price of land 0:10:10.960 --> 0:10:15.360 is stable. They say the land is ours, nobody can 0:10:15.360 --> 0:10:19.559 take it away from us. What they didn't think through 0:10:20.160 --> 0:10:25.040 very well, um, was that by having taken the land 0:10:25.160 --> 0:10:29.360 that once belonged to the Catholic Church, they had created 0:10:29.559 --> 0:10:36.640 politically controversial money. So something like fifty of the population 0:10:36.679 --> 0:10:40.480 of France right from the get go, says these bills 0:10:40.520 --> 0:10:44.320 are illegitimate because the state never had the right to 0:10:44.400 --> 0:10:47.920 the land. The land belongs to the church. It would 0:10:47.920 --> 0:10:51.080 be a sin to take one of these bills. So 0:10:51.400 --> 0:10:55.040 how did you know Initially these starts you were very 0:10:55.120 --> 0:10:59.160 high denomination bills, right, not. These were not designed to 0:10:59.240 --> 0:11:02.320 be money that you could go to the store and 0:11:02.360 --> 0:11:05.760 buy some apples or buy a loaf of breadwidth So 0:11:05.840 --> 0:11:09.800 how did they become go from these sort of essentially 0:11:10.040 --> 0:11:14.000 paper money, very big or you know, bills at very 0:11:14.080 --> 0:11:18.400 high denominations, to money that started to circulate and be used. 0:11:18.760 --> 0:11:21.360 That's a really good question, um. In the beginning, they're 0:11:21.440 --> 0:11:25.480 large denominations because they represent pieces of land and really 0:11:25.520 --> 0:11:28.640 you can't get very much land for a dollar and 0:11:28.720 --> 0:11:32.559 a half, say um. But as you say, it's just 0:11:32.600 --> 0:11:35.920 not practical if they are also supposed to be a 0:11:36.080 --> 0:11:40.080 medium of exchange to only have five hundred and a 0:11:40.160 --> 0:11:45.280 thousand as the smallest denominations in circulation. Um. So at 0:11:45.320 --> 0:11:50.440 the beginning, what happens is that all across France, literally 0:11:50.640 --> 0:11:57.720 thousands of bodies, municipalities, counties, for profit banks, they say, well, 0:11:57.720 --> 0:12:01.280 will make small change. We'll take this bill that's good 0:12:01.320 --> 0:12:03.600 for a thousand, and we're going to lock it up 0:12:03.600 --> 0:12:06.920 in our safe, and we will issue a thousand of 0:12:06.920 --> 0:12:10.560 our own bills, each of which is equal to one, 0:12:10.800 --> 0:12:14.160 and then those can circulate, and when they all come 0:12:14.160 --> 0:12:17.040 back into us eventually, then we can take the thousand 0:12:17.080 --> 0:12:20.320 out of the safe. So what ends up happening in 0:12:20.360 --> 0:12:26.000 the course of is that you get this proliferation of 0:12:26.400 --> 0:12:34.280 different issuers of small change, which the central government enthusiastically 0:12:35.440 --> 0:12:41.280 welcomes as people doing their patriotic duty and evidence of 0:12:41.480 --> 0:12:44.280 what ingenious people will do in a country that has 0:12:44.400 --> 0:12:48.800 freedom and liberty. That also sounds like a recipe for 0:12:49.280 --> 0:12:54.280 lots of confusion and potentially counterfeiters as well. It's a 0:12:54.360 --> 0:12:59.520 recipe for both of those, because imagine that you live 0:12:59.520 --> 0:13:01.520 in a small town in the north of France and 0:13:01.559 --> 0:13:06.000 there are these locally issued, very small denomination bills that 0:13:06.040 --> 0:13:11.000 have been signed by the mayor and um some other 0:13:11.040 --> 0:13:16.120 patriotic officials, and maybe even you know your cousin and 0:13:16.200 --> 0:13:20.319 you know what it is. But then somebody who's traveling 0:13:20.360 --> 0:13:24.800 across the country, a merchant or by s a soldier, 0:13:25.440 --> 0:13:28.240 comes with a small bill issued in a different part 0:13:28.280 --> 0:13:32.000 of the country, signed by different people. Well, you don't 0:13:32.040 --> 0:13:34.240 know who those people are. You don't know if that 0:13:34.280 --> 0:13:36.480 bill is legitimate. It could just have been made up 0:13:36.720 --> 0:13:43.280 on the spot. So there's enormous increase in the information 0:13:43.440 --> 0:13:47.839 costs of any transaction because people have to verify these 0:13:48.000 --> 0:13:50.600 many different bills they see in front of them. Now, 0:13:51.080 --> 0:13:53.840 there were some people who thought there was a benefit 0:13:53.960 --> 0:13:58.080 to the skepticism around this money in the sense there 0:13:58.120 --> 0:14:01.640 you know, if you silver and old, you can export those, 0:14:01.720 --> 0:14:03.960 you can take those out of the country. But if 0:14:04.000 --> 0:14:06.600 there's some sort of paperback money, or it's and it's 0:14:06.640 --> 0:14:09.520 only local credibility, you can at least be sure that 0:14:09.520 --> 0:14:12.360 that will stay in France and only circulate in France. 0:14:13.000 --> 0:14:17.600 That's right, That is the argument for a national money. 0:14:17.640 --> 0:14:21.320 And remember that throughout the medieval and early modern period 0:14:21.680 --> 0:14:25.000 a lot of the currency in circulation um it's gold, 0:14:25.120 --> 0:14:28.080 it's silver, and it circulates by weight, so it's not 0:14:28.480 --> 0:14:32.960 national money. We're talking about the era in which money 0:14:33.200 --> 0:14:37.560 really begins to be identified with the nation. And so 0:14:37.720 --> 0:14:40.400 one argument for that, and this goes back to sort 0:14:40.400 --> 0:14:44.440 of Rousseau's ideas about self sufficiency, is if we issue 0:14:44.440 --> 0:14:48.240 a paper that nobody else wants because they don't believe 0:14:48.280 --> 0:14:51.440 in our politics, well that's great because it stays in 0:14:51.520 --> 0:14:56.240 the country. It's a sort of by American venture. That 0:14:56.320 --> 0:15:01.240 sounds familiar, Yes it does. So. So it's the ultimate 0:15:01.400 --> 0:15:05.160 argument that the assignat that they failed because they were 0:15:05.400 --> 0:15:09.160 politically controversial forms of money, or is it that they 0:15:09.200 --> 0:15:13.960 failed because they were poorly designed forms of money? Good question. 0:15:14.600 --> 0:15:16.960 I think it's a little bit of both. They were 0:15:17.040 --> 0:15:23.840 politically controversial, and for nearly all of the seventeen nineties, 0:15:23.920 --> 0:15:28.680 with an exception of a few months, French revolutionaries really 0:15:29.400 --> 0:15:33.240 endorsed the idea of free trade to the point of 0:15:33.280 --> 0:15:37.960 allowing the free trade in money. So while this paper 0:15:38.080 --> 0:15:41.800 is being issued, except for a few months, they never 0:15:41.840 --> 0:15:45.239 say that you have to take the paper and coins 0:15:45.600 --> 0:15:48.640 at a one to one exchange value. So what you 0:15:48.760 --> 0:15:53.440 end up getting our situations in which a merchant might say, sure, 0:15:53.840 --> 0:15:58.840 you can have that for two in coins or two 0:15:58.960 --> 0:16:04.520 hundred in paper. So over and over again, there are 0:16:04.560 --> 0:16:10.640 these controversies about how the money backed by land relates 0:16:10.680 --> 0:16:13.800 to the money that was already in circulation. Could they 0:16:13.840 --> 0:16:16.720 have just taken a stronger stance on it, and would 0:16:16.720 --> 0:16:19.960 that have been effective. We say this is absolutely money. 0:16:20.040 --> 0:16:23.240 It is illegal to trade them at a different price 0:16:23.280 --> 0:16:26.360 than any other money with the same denomination, and you 0:16:26.400 --> 0:16:30.760 have to accept this. Would that have worked, that's interesting question. 0:16:31.280 --> 0:16:37.360 If they had done that from seventeen, there would have 0:16:37.640 --> 0:16:41.600 been immediate objections, as I said, on the part of 0:16:41.600 --> 0:16:45.040 the Catholics who see this as not all Catholics, but 0:16:45.040 --> 0:16:49.480 those Catholics that did see it um as sacrilegious. On 0:16:49.560 --> 0:16:51.920 the other hand, I think it would have made for 0:16:52.000 --> 0:16:57.800 a much more coherent policy. UM. A lot of what 0:16:57.960 --> 0:17:01.240 radicalizes the French Revolution, and we see this in other 0:17:01.320 --> 0:17:06.320 historical episodes as well, is policymakers thinking oh, well, that 0:17:06.359 --> 0:17:09.560 didn't work, why don't we try this, and then they 0:17:09.600 --> 0:17:11.680 try something for a couple of months and that doesn't work, 0:17:11.720 --> 0:17:14.320 and they say, Okay, let's try this, And that's a 0:17:14.520 --> 0:17:21.359 really bad way to build trust in a monetary or 0:17:21.400 --> 0:17:24.879 a political system. So this gives to something that you know, 0:17:24.960 --> 0:17:28.119 you hear echoes of this in current politics, which is 0:17:28.480 --> 0:17:32.800 the idea of monetary innovation, or the idea that the 0:17:32.840 --> 0:17:36.679 price of money could fluctuate. Even though our money system 0:17:36.760 --> 0:17:38.560 is pretty stable in the US and has been for 0:17:38.600 --> 0:17:40.880 a while, it's still there are a lot of people 0:17:40.880 --> 0:17:44.040 who get very concerned. They get really inflation. The idea 0:17:44.040 --> 0:17:47.679 of inflation sets people off. The idea of quantitative easing 0:17:47.760 --> 0:17:52.680 makes people nervous. What is it due to society when 0:17:52.800 --> 0:17:56.439 the money itself is perceived to be traded on a 0:17:56.520 --> 0:17:59.679 market and volatile, so that beyond just the price of 0:17:59.720 --> 0:18:02.239 good going up and down, they don't feel that the 0:18:02.320 --> 0:18:06.359 money is a stable store of value. Very good question. Um. 0:18:06.400 --> 0:18:11.159 I was fascinated to discover that through the nineteen thirties 0:18:11.400 --> 0:18:15.240 it was possible for political figures in the United States 0:18:15.320 --> 0:18:20.880 to be pro inflation. You could be pro inflation because 0:18:20.960 --> 0:18:23.479 you were thinking of yourself and the people around you 0:18:23.560 --> 0:18:26.760 as producers. You wanted prices to go up it's when 0:18:26.760 --> 0:18:29.760 we all start thinking of ourselves as consumers and only 0:18:29.880 --> 0:18:33.200 consumers that inflate, which goes back, of course to Tracy's 0:18:33.280 --> 0:18:38.080 terrible affliction with consumption. Uh. That's the point at which 0:18:38.119 --> 0:18:43.240 inflation becomes this awful, terrible bug bear. Now in societies 0:18:43.240 --> 0:18:48.560 that experience dramatic inflation, so of course we think about Vimar, Germany, 0:18:48.680 --> 0:18:52.920 or Hungary after the Second World War, um, many other 0:18:53.160 --> 0:18:57.359 historic examples. What happens is that people tend to think 0:18:57.440 --> 0:19:01.439 that they need to get their wealth of money and 0:19:01.640 --> 0:19:07.080 into something that will last, so they might buy land. Uh, 0:19:07.119 --> 0:19:10.760 they try to buy any sort of physical object that 0:19:10.840 --> 0:19:13.640 they think will hold its value. It's a point which 0:19:13.680 --> 0:19:17.000 money is no longer believed to be a store of value. 0:19:17.040 --> 0:19:19.560 It doesn't serve that function. Rebecca, I want to go 0:19:19.600 --> 0:19:25.120 back to the politically controversial aspect of this discussion and 0:19:25.320 --> 0:19:29.159 ask you to connect what happened in the French Revolution 0:19:29.240 --> 0:19:33.639 with the assignat to potentially what might happen today with 0:19:33.720 --> 0:19:36.240 the Eurozone and the euro which is of course a 0:19:36.320 --> 0:19:40.200 currency um which seems to even though it's stable in 0:19:40.320 --> 0:19:43.280 terms of the actual market, at least for now, it 0:19:43.440 --> 0:19:47.160 seems to be becoming ever more controversial UM in its 0:19:47.200 --> 0:19:50.760 basic ideals. I guess what do you think will happen there? 0:19:51.520 --> 0:19:56.200 What's fascinating about the euro is that I don't think 0:19:56.560 --> 0:20:05.640 it's the political ideals that it was want to embody cooperation, UM, 0:20:05.640 --> 0:20:13.520 the movement of people. UH. Europe as not divided by 0:20:13.560 --> 0:20:17.639 the sort of nationalism and xenophobia that destroyed it in 0:20:17.680 --> 0:20:22.600 the Two World Wars. Those political ideals, while they're under 0:20:22.640 --> 0:20:26.320 attack from the extreme right, I don't think those are 0:20:26.400 --> 0:20:30.840 things that people generally disagree with. What's happened is that 0:20:30.880 --> 0:20:39.600 those political ideals got yoked to certain fiscal monetary criteria 0:20:40.520 --> 0:20:48.240 about debt, about taxation. UH. That meant that those political 0:20:48.280 --> 0:20:53.399 ideals really could not be achieved with the euro UM. 0:20:53.480 --> 0:20:56.760 So it's hard to say what's going to happen. So 0:20:56.960 --> 0:21:00.000 the takeaway, the big takeaway that I got from your book, 0:21:00.040 --> 0:21:02.640 and it's it touches on a theme that we've discussed 0:21:02.680 --> 0:21:05.560 a lot of times on this podcast, which is that 0:21:05.680 --> 0:21:11.000 like money is essentially a social network, and it it 0:21:11.160 --> 0:21:15.360 establishes its value once we essentially all accept that it 0:21:15.720 --> 0:21:18.760 establishes its value once we all accept that dollars are 0:21:18.760 --> 0:21:22.000 worth something. Dollars are worth something, but that it's really 0:21:22.080 --> 0:21:26.840 hard to just sort of manufacture that social acceptance x niolo. 0:21:26.960 --> 0:21:31.680 It takes momentum, it takes good uh governance, it takes laws, 0:21:31.760 --> 0:21:34.880 it takes certain trust, and that in a time of 0:21:34.920 --> 0:21:38.920 extreme sort of social disorder, when the government is weak, 0:21:39.000 --> 0:21:41.359 when a lot of people don't trust each other, the 0:21:41.400 --> 0:21:44.680 monetary system is just going to sort of be a 0:21:44.680 --> 0:21:49.560 mirror to that. That's absolutely very insightful as a reading 0:21:49.600 --> 0:21:51.880 in my book, what I would say is that at 0:21:51.920 --> 0:21:59.200 a time when political legitimacy is in doubt, when people 0:21:59.320 --> 0:22:03.400 wonder if the government really has their interests at heart, 0:22:03.720 --> 0:22:08.080 that is the worst time to attempt any kind of 0:22:08.119 --> 0:22:12.840 monetary innovation, because it then calls the monitor. I mean, 0:22:13.200 --> 0:22:16.240 on that note, we we can't. We have to ask 0:22:16.280 --> 0:22:19.879 you about bitcoin, right because of course bitcoin kind of 0:22:20.000 --> 0:22:23.200 rose um from the ashes of the financial crisis, during 0:22:23.200 --> 0:22:26.800 a period of great upheaval in markets and within the world, 0:22:27.200 --> 0:22:30.400 and the idea was that it could offer something different 0:22:30.600 --> 0:22:35.520 to national currencies. Do you see any prospect of success 0:22:35.560 --> 0:22:39.680 on that front. I'm actually a bit worried about that. 0:22:40.200 --> 0:22:44.320 Only think that what we're seeing in the continued interest 0:22:44.760 --> 0:22:53.200 in bitcoin is one fantasy of money that is completely 0:22:53.359 --> 0:23:01.400 divorced from regulation, policy, government, the state. UM. And while 0:23:01.440 --> 0:23:05.199 that doesn't necessarily mean that it's only going to be 0:23:05.320 --> 0:23:11.280 used for black market or illegal transactions, it does mean 0:23:11.640 --> 0:23:17.080 that those people who are left, perhaps for reasons of poverty, um, 0:23:17.119 --> 0:23:22.000 dependent on the money issued by the state are going 0:23:22.040 --> 0:23:24.359 to be in a worse and worse position. So what 0:23:24.400 --> 0:23:28.240 I worry about is that we see perhaps a growing 0:23:28.800 --> 0:23:36.360 possibility for monetary systems that are really very strongly different 0:23:36.800 --> 0:23:38.439 for the rich and the poor. I mean, they're like 0:23:38.480 --> 0:23:42.840 that today. UM. The example I always use is just 0:23:43.040 --> 0:23:49.000 imagine your homeless person, you've amassed quite a few quarters, 0:23:49.400 --> 0:23:51.800 and you go to try to buy a plane ticket 0:23:51.880 --> 0:23:56.960 with your change. It's almost legally impossible to buy a 0:23:56.960 --> 0:23:59.840 plane ticket with cash these days, Tracy. We should try 0:23:59.880 --> 0:24:04.120 to do that episode by a plane ticket with quarters. Yes, 0:24:04.119 --> 0:24:10.240 you should. Uh. I mean I used to cover fintech, 0:24:10.280 --> 0:24:12.840 and I know a lot of fintech companies that were 0:24:12.880 --> 0:24:15.800 created specifically to try to address this problem. But that's 0:24:15.840 --> 0:24:20.280 probably a topic for a whole another episode. Rebecca Spang, 0:24:20.520 --> 0:24:23.920 the book is Stuff and Money in the French Revolution, 0:24:24.000 --> 0:24:27.320 and the paperback copy is just about to come out right, 0:24:27.680 --> 0:24:30.440 Yes it is next week. Well, it's a fascinating book. 0:24:30.480 --> 0:24:34.320 I highly recommend people read it and really appreciate you 0:24:34.400 --> 0:24:47.199 coming on the episode. Thank you so, Tracy. When we 0:24:47.200 --> 0:24:51.040 were first talking about doing this episode of monetary policy 0:24:51.119 --> 0:24:53.359 during the French Revolution, I was thinking of it as 0:24:53.440 --> 0:24:57.320 sort of this uh, you know, historical curiosity. But it 0:24:57.400 --> 0:25:00.440 definitely seems like there's a lot of relevant events to 0:25:01.080 --> 0:25:03.960 things going on these days. Oh yeah, for sure. I 0:25:03.960 --> 0:25:06.600 mean I think purely on the political front, you could 0:25:06.600 --> 0:25:10.360 probably draw a lot of connections between what's happening now, um, 0:25:10.400 --> 0:25:13.679 certainly in Europe and the French Revolution. Right, like a 0:25:13.720 --> 0:25:16.000 bunch of people, a bunch of rich people like the 0:25:16.080 --> 0:25:19.800 Catholic Church, didn't really want to contribute more into the 0:25:19.840 --> 0:25:23.159 taxation system, and so they hijacked this argument that they 0:25:23.160 --> 0:25:26.440 were going to fight for the good of the people, um, 0:25:26.520 --> 0:25:29.359 in order to fight against paying their fair share. And 0:25:29.400 --> 0:25:32.639 I think there's some who would say maybe that that 0:25:32.720 --> 0:25:36.040 reflects a little bit what Brexit supporters have been doing. 0:25:37.359 --> 0:25:40.359 And also the euro is an interesting example because normally 0:25:40.440 --> 0:25:45.240 when we talk about currency movements or currencies, they tend 0:25:45.240 --> 0:25:47.880 to be driven, at least in the shortened medium term 0:25:47.960 --> 0:25:52.840 by sort of plain vanilla economic data points, so whether 0:25:52.880 --> 0:25:55.880 inflation comes in strong, or whether GDP comes in strong, 0:25:55.960 --> 0:25:58.639 or whether the Fed hyps or cuts rates. But we 0:25:58.760 --> 0:26:03.919 don't really talk much about sort of the existential case 0:26:04.080 --> 0:26:08.040 for this currency or that. But as more stress is 0:26:08.160 --> 0:26:13.240 placed on politics, uh, in one way or another, it's 0:26:13.280 --> 0:26:16.600 you know, you could imagine that we'll start to see 0:26:16.800 --> 0:26:21.560 more stresses placed on different currencies. Yeah, I mean I 0:26:21.600 --> 0:26:26.439 also liked Rebecca's idea of currencies for the rich and 0:26:26.560 --> 0:26:31.040 currencies for the poor. That was really fascinating. It's something 0:26:31.040 --> 0:26:34.159 that we kind of already see playing out thanks to 0:26:34.520 --> 0:26:38.920 technology that basically either gives you access to certain things 0:26:39.040 --> 0:26:42.440 or prevents you from accessing certain things, right right. I mean, 0:26:42.480 --> 0:26:45.119 there was the article in the New York or recently 0:26:45.320 --> 0:26:50.040 about all the rich tech and finance executives all getting 0:26:50.080 --> 0:26:54.840 into becoming preppers with their with their real estate and 0:26:54.920 --> 0:26:59.760 New Zealand and their you know, home home solar and 0:27:00.040 --> 0:27:02.760 telecom networks. And it's sort of this sort of early 0:27:02.880 --> 0:27:06.960 indication of people wanting to have insurance that sort of 0:27:06.960 --> 0:27:11.000 outside the existing financial system in case things really fall apart, 0:27:11.240 --> 0:27:13.800 right right, So maybe they'll come up with like their 0:27:13.840 --> 0:27:16.600 own special currency in which to do that, right or 0:27:16.600 --> 0:27:18.840 would or would everyone just go back to using gold? 0:27:19.000 --> 0:27:24.200 I don't place your bets now, Okay, all right, well 0:27:24.520 --> 0:27:28.119 this has been another episode of the Odd Lots Podcast. 0:27:28.240 --> 0:27:31.040 I'm Joe Wisn't though. You could follow me on Twitter 0:27:31.200 --> 0:27:34.199 at the Stalwarts, and I'm Tracy Alloway. I'm on Twitter 0:27:34.320 --> 0:27:37.600 at Tracy Alloway. And you can find Rebecca Spang on 0:27:37.640 --> 0:27:40.600