Nominal and Real

B04　—　Cross-cutting theme

A silver coin with “two shu” written on its face.

Supervised by: Mitsuru Hayama　／　Reading time (main text): About 8 min (3,827 characters of text at 500 chars/min; exercises and readings not included)　／　Beyond the text: 10 exercises · 6 coins · 11 readings

What this course teaches you to do

• You can explain the gap between nominal and real value using one concrete coin.
• You can say what becomes possible when face value parts from the quantity of metal.
• You can explain the aim and the side effects of moving face value by decree.
• You can judge from the movement of money whether creditor or debtor gains.
• Can explain examples of "face value inflation" (Tōhyaku-sen, Tenpō Tsūhō), including their consequences.
• Can interpret redenomination, demonetization, and the establishment of legal tender in a unified way, as manipulations of the gap between nominal and real value.

Lessons (8)

1. Face value and content drift apartReal and nominal value can part. Because they can, small change is possible. The trouble is parting too far.
2. One decree, and the face value movesA rise in face value usually comes paired with a cut in content. See through the good news that wraps it.
3. Those who live on the real, and on the nominalWhen money thins, debtors gain and creditors lose. Debates about the system are debates about position.
4. The state itself moves between nominal and realNominal victory and real profit do not coincide. When you read "they won," go check the ledger.
5. A Hundredfold Face Value — Two Large Coins of East AsiaA face value can be increased a hundredfold by decree, but its intrinsic value cannot. The market will later charge for this discrepancy.
6. Erasing Zeros — The Surgical Procedure of RedenominationRedenomination does not change value, only the nominal scale. It is a surgical procedure to clean up after the scale has run out of control.
7. The Nominal Border — The Loophole in Article 5 of the TreatyThe single phrase "as equal kinds at equal weight" struck the fault line between the world of nominal value and the world of weight.
8. The Thousand-Year Victory of the NominalFrom merchants' paper to legal tender, and then to the closing of the gold window. The victory of nominal value was a long campaign that took a thousand years.

Readings (11)

• The century of recoinage　Japan　1772　Edo
  §1. A gold unit written on a silver coin. A design in which face value leaves the content.
• The gold of the Sun King melts　France　1683–1715　The Paris mint
  §2. The two-stage manoeuvre is written out plainly.
• Kipper und Wipper　Germany　1619–1623　A town of soaring prices
  §3. The scene where those paid in money collapse in real terms.
• 1914　Britain　1914–1918　Both shores of the Atlantic
  §4. The victor becomes a debtor. The gap between nominal and real opens at the scale of a state.
• Korea　Overview: 2,700 years of the world　AD 1866　The Failure of the Dangbaekjeon
  Section 5. Face value 100 times, intrinsic value five or six times. A paragraph that most concisely describes the arithmetic of this disparity.
• The heavy franc and the hold of gold　France　1960　A French shop
  Section 6. The day two zeros were removed. The practical and symbolic aspects of redenomination.
• The black ships and the outflow of gold　Japan　1858　Shimoda, the American consulate
  Section 7. "If you reduce the story to one person's malice, you won't see anything"—a model for a structural reading approach.
• The Civil War　United States　1862　Washington, the federal Congress
  Section 8. The article marking the second victory for the principle of enforcing circulation by the power of law.
• A Recoinage　India　Circa 1329–1330　The King's Decision
  This is a scene where a state that issued token money redeemed even privately made counterfeits with gold and silver, depleting the national treasury. Please read up to the line that says, 'The state decides the face value, but it is not the state that makes people believe in it.'
• The invention of never changing　Italy　the 14th–15th centuries　The counting desk of a trading house
  The gold coin in hand and the florin on the books begin to follow different paths. This explains the circumstances that required an ideal coin, rather than a physical one, to average out the difference between a piece used for twenty years and one struck yesterday.
• The silver flows out　China　1820–1850　A shopfront counting copper coins
  This is about a society where taxes were calculated in silver, but daily life was paid for with copper coins. Please grasp the mechanism by which the burden grew heavier without a single line of law being changed, through the sentence, 'the exchange rate itself becomes a tax.'

Assessment

10 exercises in this course (7 check, 0 compare, 3 written). Progress is recorded by self-assessment.