Paper Burns

C12　—　Chain of people

When a banknote becomes worthless paper, it is not the paper that is burning.

Supervised by: Mitsuru Hayama　／　Reading time (main text): About 8 min (3,983 characters of text at 500 chars/min; exercises and readings not included)　／　Beyond the text: 11 exercises · 5 coins · 15 readings · 1 references

What this course teaches you to do

• You can explain what was actually lost when paper money lost its value.
• You can explain the mechanism of over-printing from the government's own circumstances.
• You can explain why the Rentenmark worked, separating the collateral from the promise.
• You can say why the same shape recurred over seven hundred years.
• Can explain the failure of the Mandats territoriaux as a "second piece of paper" structure.
• Can compare the post-war currency reforms (Lieftinck, Shin-en) as a "prescription of drastic medicine".

Lessons (8)

1. The first to burn was ChinaThe notes worked a hundred years before they burned. Paper burns not by its material but when the printer's circumstances change.
2. The second time was ParisPrint beyond what can be redeemed and it collapses. And the memory of collapse does not prevent the next one.
3. The year the press became a weaponOver-printing is not the cause but the middle. Without asking why they had to print, you cannot see how to stop.
4. How to put out the fire — not with goods, with a promiseWhat holds paper up is not goods but a promise. And what burns is not the paper but the promise.
5. The Ceremony of Burning the Tools — Failure of the Second PaperEven after burning the printing plates in public, the second paper currency plummeted from day one. A ceremony cannot create credit.
6. A Drastic Prescription — Lieftinck and the New YenInvalidation of all banknotes and freezing of deposits. One week on a single ten-guilder note. The post-war settlement was carried out in a person's name.
7. The Astronomical Country — Zimbabwe and the Return of the FireAn annual rate of a hundred million trillion. A thousand years after the first fire, these conflagrations are still not a thing of the past.
8. Preventing the Fire — The Firewall of IndependenceSeparate issuance from the government and set a target for prices. This is the current fire prevention design, a lesson humanity learned from fires.

Readings (15)

• The monetary civilisation of the East　Overview: 2,700 years of the world　AD 1270　Yuan · Dadu
  §1. The scene where an economy of paper alone appears.
• The monetary civilisation of the East　Overview: 2,700 years of the world　the 14th century　The Runaway Jiaochao
  §1. Its end. ⚠ Do not read it as "because it was paper."
• John Law's bubble　France　1716–1719　Rue Vivienne, Paris
  §2. The scene where Law founds his bank.
• John Law's bubble　France　1720　The Banque Royale, Paris
  §2. The logic of the collapse is set down in a single line.
• John Law's bubble　France　1720–1789　France under Louis XV
  §2. The long distrust of paper that remained after the collapse.
• The occupation of the Ruhr　Germany　1923　Berlin, the banknote printing works
  §3. The centre of this course. It is written why they printed.
• The autumn of 1923　Germany　the autumn of 1923　A street corner, the way to the shops
  §3. The photograph of the handcart. ⚠ Consider also what the photograph does not show.
• The miracle of the Rentenmark　Germany　15 November 1923　The farmland and factories of Germany
  §4. The strangeness of the collateral being land.
• The miracle of the Rentenmark　Germany　1923–1924　The morning market, the new paper
  §4. The revelation: it was not goods but a promise.
• Three thousand years of inflation　Overview: 2,700 years of the world　AD 1946　The Pengő, the Worst in History
  §4. The worst record in history. The names for the numbers run out.
• The paper they printed too much of　France　1796–1797　Place Vendôme, Paris
  Section 5. Trust Cannot Be Created by Ritual. The Record on the Second Sheet of Paper.
• The week of the ten-guilder note　Netherlands　September 1945　A liberated town, the ration counter
  Section 6. A Week with a Single Ten-Gulden Note. The Name Left on the Drastic Remedy.
• Three thousand years of inflation　Overview: 2,700 years of the world　AD 2008　The Hundred-Trillion-Dollar Note
  Section 7. Fire Is Not Yet a Thing of the Past.
• Three thousand years of inflation　Overview: 2,700 years of the world　the present day　Vaccination
  Section 8. The Blueprint Humanity Learned from a Thousand Years of Fires.
• Only gold coins are the yardstick　Greece　October 1944　A laboratory for posterity
  This stop re-measures the magnitude of the "fire" using three yardsticks: speed, position in the classics, and duration. After seeing how the rankings change with each yardstick, please re-read the "worst in history" sections of other stops.

Assessment

11 exercises in this course (7 check, 1 compare, 3 written). Progress is recorded by self-assessment.

References

• Inflation – lessons learnt from history — Deutsche Bundesbank　The hyperinflation of 1923. The currency ceased to function as a means of payment and store of value, and was replaced by the Rentenmark in November 1923.

Only works and primary sources whose existence has been verified are listed.