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Fiat Money Inflation In France

The classic history of the French hyperinflation from 1790 to 1796.

During that time, French politicians inflated the currency supply by issuing paper notes (Assignats), theoretically backed by lands confiscated from the Catholic Church and the fleeing aristocracy, to be used in lieu of gold and silver. At first this stimulated the economy, but eventually it required printing money in ever-increasing amounts in order to maintain momentum. The value of the Assignat plummeted as more and more were printed; French citizens began hoarding gold and the government enacted draconian measures, including the death penalty, to force people to accept the Assignat at par. Ultimately this house of cards collapsed, and the Assignat was wiped out.

This text is a lecture originally given by the author in 1876, and it provides an excellent explanation of why gold retains its value while paper currencies ultimately fail. It is of particular interest today as the US government (among others) aggressively floods the market with dollars in an effort to offset the current financial and economic chaos.

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