23 February 2013

Academically proven Facts about the History of Money


Many of you that bought the ‘Goldbook’ know I'm a fan of monetary history as it shows clearly the cycles and how much we can learn from the past to protect and increase our wealth in today’s climate. It’s quite a statement to say: Every man-made currency failed. Gold has never failed.

A couple of years ago the correct info wasn’t spread throughout the internet and it took me two years to research information. Most of the information needed to be researched from books and specialised history books on one decade for a specific country to extract this one monetary info of what happened to the currency say.

And when you come across a book that contains 800 years of financial history over 80 countries that proofs the above statement, I think, wow, this is very cool – good to have this info.

The following book, written by two economic professors Carmen M. Reinhart and Kenneth Rogoff is considered to be one out of the five most influential books about money and it is called:

This time it’s different – Eight centuries of financial folly.

I love the fact that the book is written in a normal language that the interested reader understands. I highly recommend reading this book. Let’s look at a few immovable facts:

Crises happen over the time in every country worldwide and hits emerging markets as well as industrial countries. Therefore are three main criteria:

  • • Crises occur despite guarantees by governments and bank
  • • Way out of crisis always: Continued economic recession
  • • The greater the crisis, or sum, the longer and more difficult


A crisis occurs usually through a bubble in different markets, most likely the housing market. The value of mortgages was in the beginning of 2008 approx. 90% from the US GDP. The current drop in house prices is as double high as in 1929. 28% compared to 14% in the year 1929. Crises are “normal” in paper-money systems.


The five after-effects of crises:

1. Real estate prices: - 35% on average and require six years to recover
2. Shares: - 56% on average and require 3.5 years to recover
3. Economic slump: - 9% for an average of three years
4. Unemployment rate: +9% for an average of four years
5. Public debt rise on average by 86%

In the time from 1800 – 2009 occurred: 250 Foreigndebtcrises and 68 Domesticdebtcrises From 1945 to 2007 happened 138 banking crises Conclusion: Historically all crises follow the same pattern over and over again. And the only times when there was no crises was a time when gold and silver were used as money and not being counterfeited.

You find more information on the book with links to video interviews here:
http://press.princeton.edu/titles/8973.html

Author: celticgold.eu

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