MONEY & BANKING. CURRENCY = Paper Money + Coins. COINS = disks of precious metal - usually gold or silver (specie) Since ‘65, U.S. doesn’t have any coins…now they are merely tokens.
Paper Money + Coins
clad, they were made of
900 (90% pure) silver.
Age old problem of government -- they spend money, they tax to raise additional $, but overtaxing leads to revolution so….
COUNTERFEITINGbecomes the new solution:
* Gov’t began clipping coins (clipped off edges-used
the shavings to make more coins)
* People noticed & began to use reeding to tell the
* Reeding made clipping obvious so gov’t then came
up with debasingof coins (melted down, base
metal added so could make more coins)
GRESHAM’S LAWeventually develops …. Bad money drives good money out of circulation