Mongols & Their Monetary History
QUESTION:
Dear Martin,
Attached please find a review of a book on the achievements of Khan (1162- 1227). Despite his image, this visionary leader adopted some very ‘modern’ values (meritocracy, freedom of religion, universal laws (shepherds = princes), emancipation of women, taxation, free trade, etc.). This extra-ordinary man created an empire larger than the Roman one.
To my knowledge, this world empire does not really feature in your writings on economic history of the world. I am curious about your views on this era (and what we can learn from it), which eventually forced the Chinese to build their wall.
I am a great fan of you and your mission and have followed your writings going back to Princeton Economics.
Kind regards,
BdG
Australia
ANSWER: The reason Genghis Khan does not feature a lot in our work of monetary systems is largely due to the fact that the Mongols really did not issue coins of their own. Here is a coin of Genghis Khan which is an ISLAMIC imitation.This coin is inscribed Great Khans. temp. Chingiz (Genghis) to Möngke. AH 602-624 / AD 1226-1227. It is an Islamic Gold (AV) Dinar (34mm, 4.63 g, 9h) of an uncertain (possibly Dihistan) mint. This demonstrates that his issue of coinage was not for domestic use but for trade. Silk was money – hence the Silk Road. It was often used in trade.
The Mongols conquered China and maintained their monetary system. They honored the paper money in circulation and used that as the monetary base rather than coins. They also destroyed the Rus (Russians) in Kiev, Ukraine and when they rose again it was from Moscow. They attempted to invade Japan twice but their fleet was destroyed in storms and that became known as the Divine Wind that protected Japan – hence the Kamikaze (神風) pilots (Divine Wind) of World War II.
The reason the Mongols do not feature in monetary history is the lack of their own monetary system. It was largely barter and after the conquest of China, it simply merges with that of China. I do deal extensively with this subject in a forthcoming monetary history of the world publication I am trying to finish.
Germany & France Still Demand Repayment
German Chancellor Angela Merkel and her French counterpart Francois Hollande have called on Greece to make “serious” proposals. There is no such thing as debt forgiveness as the German’s received in 1953. Merkel has sold the Euro under the pretense there would be no bailout for southern Europe. Any money lent must be repaid. So it does not matter that the underlying structure cannot support that expectation. Her personal career now depends upon that event no matter how unreasonable.
Greek PM Alexis Tsipras is due to address a summit of Eurozone leaders on Tuesday. However, he is ignoring his own mandate – end austerity. Why he continues to try to even negotiate with the EU when it is clear the same line of thinking that has created the crisis will not provide a solution. This entire Euro Crisis will spread between not and October and things are going to get worse before they get better. So do not expect the Euro or the markets to understand this instantly. They do not comprehend just yet the depth of this crisis.
What if NAFTA Became a Monetary Union?
OK. Le’s try to explain Europe a different way. What if the USA adopted a policy that said NAFTA should move from a trade union of Canada, Mexico & USA, to a monetary union. Both Canada and Mexico abandon their currencies and adopt the dollar. Canada would find things go up in price a bit, but the concept would not be that foreign. Mexico swaps peso for dollars and has the right to print dollars as does Canada. Since the dollar is more expensive than either, their previous debts would then be re-denominated in US dollars. Their debts would no longer depreciate with inflation of their currencies but appreciate with capital inflows into the dollar. This would reverse the trend from depreciation with inflation to appreciate with deflation.
Mexican labor would suddenly cost more than it did before so there will be less of a tendency to use Mexican labor for any savings would be diminished. Mexicans would then be unable to compete in the higher qualified jobs lacking training and the lower level jobs have been priced too high driving unemployment higher.
It was a serious mistake to assume that a single currency was what made the USA rise to the dominant position of the Financial Capitol of the World. It was a melting pot with a single language that fostered a single culture plus it was the arms dealer to Europe who decided to fight each other for king of Europe. Moreover, you cannot travel Europe with same electric plugs or even the same phone company without huge taxes and roaming fees. The single currency did not create a single economy nor a melting pot for Europe. People never say they are “European” but that they are French, German, Greek, Dutch, or whatever. The Euro has provided the excuse for the conquest of Europe by pen, but it did not create a single economy that works in total harmony. Make no mistake about it – this is the Conquest of Europe to dominate the people with a pen of oppression rather than using bullets.
Margaret Thatcher Was the ONLY Head of State Who Saw the Risk of the Euro
Let’s face reality. Margaret Thatcher was a polarizing figure for most in Britain failed to understand what she really was trying to accomplish. Her whole idea of a poll tax was not to benefit the rich; it was to force everyone to pay attention to government as a check and balance. Then there are the false claims that our banking crisis was caused by her deregulation. That is entirely false. She deregulated to take Britain away from socialism/communism, which was restraining its economic growth. It was Bill Clinton who deregulated the banks, yet stupid Americans are treating Hillary’s Democratic campaign as a coronation simply because she is a woman, just as they did with Obama because he is black. Neither are qualifications worthy of public office without substance. Many Irish still hate her for her hardline policies of no negotiation, and the Russian’s called her the Iron Lady. But no matter if you honor her tenacity or hate her, anyone who cannot admit that she saved Britain is just biased. She foresaw the drive for a political union rather than an economic one, disagreeing with the one European government idea. She was absolutely spot on about why the euro would be such a disaster.
We had arguments which might persuade both the Germans – who would be worried about the weakening of anti-inflation policies – and the poorer countries – who must be told that they would not be bailed out of the consequences of a single currency, which would therefore devastate their inefficient economics. (“The Downing Street Years” 1993)
The economic union proposed with a single currency would obviously be oppressive to Southern Europe, whose currencies would now convert to the euro and appreciate past obligations akin to if you suddenly adopted a gold standard today and decree all past debt must be paid in gold valued at the time the debt was made. Southern European governments would no longer benefit from inflation reducing their national debts. On top of that, production would no longer be cheaper based upon their currency, and would have to suddenly be competitive with Northern European production skills. This too would add to the trend toward extracting manufacturing from the southern regions.
None of these issues, among many others, could be understood by anyone other than Thatcher. I say that not because we were friends, but we were friends because of that. I have known many politicians and world leaders. Suffice it to say, she impressed me more than the whole lot put together.
The quality of people who want to rule others has diminished tremendously for they are blinded by their own power and assume they can right all wrongs with the signing of a pen. There is a lot more to trying to merge different cultures into one European government.
Who Prints Euro Notes?
QUESTION:
Mr. Armstrong
Who prints euro notes? Could Greece just flood the market is euro banknotes?
Thanks you for your guidance
PK
REPLY: Legally, both the European Central Bank and the National Central Banks (NCBs) of the Eurozone countries have the right to issue the seven different euro banknotes. In practice, only the NCBs of the zone physically issues and withdraws euro notes. The European Central Bank does not have a cash office and is not involved in any cash operations. So yes, the Greek central bank could print more euro notes. The ECB governs electronic transfers and book entries. Thus, the European Central Bank is responsible for overseeing the activities of National Central Banks in order to harmonize cash services in the Eurozone.
The Central Bank has the facilities to print new currency ASAP. It should do so for the Troika has made it very clear – they will not compromise. The line of thinking will remain a bailout and repayment through raising taxes. That is just not a viable way to restore the economy, just as we saw with Germany following World War I. This is no solution and there is really no alternative but to exit the euro before the Greek economy is totally crushed into the ground.
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