Fiat money inflation in France - Part 1: John Law

Max Keiser, of maxkeiser.com, James Turk, Director of The GoldMoney Foundation and Pierre Jovanovic, jovanovic.com, tell the story of the introduction of Fiat Money to France.

They discuss John Law and how his money printing fix was seen by the French Regent as a way out of the kingdom's debt troubles -- accumulated by past wars and royal extravegence -- a way to avoid the harsh spending cuts that were unavoidable given the difference between income and spending.

Keiser, Turk and Jovanovic talk about the Mississippi Bubble and how speculation in stocks became rampant as banknotes were printed to drive up the value of paper assets, how the French public was caught up in the speculative mania with dreams of untold riches from Louisiana.

They explain how John Law's success and the riches that he brought the crown ensured his promotion to Minister of Finance.

The trio also discuss how the bubble popped, how all manner of coercive and increasingly desperate steps were taken to prop up the value of shares in the Mississippi Company, including the printing of increasing amount of banknotes. When the banknotes themselves started to depreciate, gold and silver coin were outlawed in an attempt to force the French to use only paper money. The consequences were disastrous, with commerce paralysed and the economy brought to its knees.

Further reading:

La Banqueroute De Law, Edgar Faure

Early Speculative Bubbles and Increases in the Supply of Money, Douglas E. French

Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay

Category:

Education

Tags:

• fiat money
• inflation
• GM series
• John Law
• France
• Mississippi bubble
• monetary history
• currency collapse

[TheSilverWatch]

That made me laugh so hard I almost fell off my chair....If you really wanted to Insult some one in France hundreds of years ago...you would call them a BANKER ! LMFAO !!!

[frankknopers]

History is awesome :P

[buzz60016]

Hey Max - How did CRASH JPM, work out for ya ? Yeah, fiat currencies have unique problems, gold will go higher, but not to $10,000. Keep crying wolf.

[attractionlaw1]

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[Lengarces]

We need to dust off the guillotines in America.

[lkrattarkl]

There are excellent books about John Law available on newtonpage [dot] com.

[MrKhelkun]

Intéressant. Sans vouloir manquer de respect à qui que ce soit, je tiens à rectifier le propos du directeur de la GoldMoney Foundation. Compte tenu de son curriculum vitae, je ne pense pas qu'on puisse qualifier M. Jovanovic d'historien réputé.

Interesting. Without any intent to insult the speakers I want to correct what is said by the GoldMoney Foundation's Director. Considering Mr. Jovanovic's curriculum vitae I don't think we can call him a noted historian.