| "FEI QIAN" |
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| KUBLAI KHAN |
This slide of hand is called - currency.
The Emperor introduced the concept of "Fei Qian" - the flying money, perhaps because it was easily blown out of your hands. A picture of 5 copper coins, authenticated by the Royal Imperial Seal block printed on one side of the bark paper was issued. The seal gave this paper its intrinsic value equivalent to the number of coins pictured on the paper. Holders of this paper could redeem their paper money for the real 5 copper coins from any Imperial representative office. Holders could also use this piece of paper as an instrument of payment. The rudimentary central bank and IOU was thus created.
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| COPPER COINS |
Unfortunately the 'lao bai xing' or citizens did not understand nor trust this printed bark representing their hard earned copper coins. The paper's fragility and ease of being stolen further prevented its universal acceptance.
Widespread use and acceptance of "Fei Qian" only happened during the Yuan Dynasty when the Mongol prince, Kublai Khan, the grandson of Genghis Khan issued an edict that all traders must accept his paper money ON PAIN OF DEATH.
With this the first legal tender law, which underpins the currencies of today's sovereign governments, was created. For a currency to achieve widespread usage, acceptance must be universal and Kublai Khan's edict did precisely that.
Sovereign governments today have similarly enacted laws (an edict, that everyone must accept the paper note issued by the Central Bank (Emperor) or you go to jail (on the pain of death). This 'edict' is clearly printed on notes today: the US dollar “this note is legal tender for all debts, public and private”; Canadian dollar “this note is legal tender”; and Australian dollar reads, “This Australian note is legal tender throughout Australia and its territories.”
So where is the confidence trick?
It all started with Kublai Khan, the Mongol Emperor of the Yuan Dynasty immediately after the fall of Song Dynasty.
Kublai Khan needed to replenish his severely depleted treasury after the 10-year war waged against the Song Dynasty.
Noticing that most of the paper money issued by the previous Song Emperor was never redeemed for copper coins he decided to pay his Imperial staff with his own version of paper notes instead of physical copper coins. He then embarked on what would be regarded as the world's first Monetary Policy, he 'bought back' copper coins firstly from his staff and later from the public or 'lao bai xing' by issuing them with paper money. Within 2 short years Kublai Khan collected all and more of the copper he used to wage his war against the Chinese Song Emperor.
His edict "acceptance on pain of death" guaranteed widespread acceptance. Holders of the "Yuan" paper note knew that a recipient must accept payment and if they wished they could redeem physical copper coins from the Imperial representative equivalent to the number of copper coins printed on the note. With this confidence and universal acceptance, demand for paper notes exploded, as it became the preferred means of payment. Kublai Khan's treasury issued even more notes as a result and within a short period the aggregated printed value on all the issued notes far exceeded the value of physical copper coins in Kublai Khan's treasury. Despite this the demand and use of paper notes did not abate.
Just like any of the Governors of the Central Banks of today, Kublai Khan realised the confidence and thus validity of a country's currency was not reliant on the backing of the value of physical commodity behind it. The confidence trick was finally created.
Kublai Khan started this trick and is today used by every country in the world issuing currency.
Today's currency has NO asset backing behind it except the mutual trust depicted by the sovereign government. Even the Gold Standard that supposedly backed every note was abandoned in early 1971 - leaving nothing accept trust of acceptance to back the note. In short we accept currencies simply because we were told to accept it under law even though there is now nothing to back the issue, similar to Kublai Khan's excessive paper money.
The trick simply works this way. John accepts it because he thinks Mary will accept it and she
accepts it because she thinks Macdonald's and Kmart will take it. In short the only thing that is backing money is the "greater fool" theory of money - "I accept a dollar note because I think I can pass it along to some dude or idiot"
Little did the Song Emperor realise his "Fei Qian" was to be one of China's most prominent export - a slide of hand accepted and practiced by all Central Bankers in the world today.
Widespread use and acceptance of "Fei Qian" only happened during the Yuan Dynasty when the Mongol prince, Kublai Khan, the grandson of Genghis Khan issued an edict that all traders must accept his paper money ON PAIN OF DEATH.
With this the first legal tender law, which underpins the currencies of today's sovereign governments, was created. For a currency to achieve widespread usage, acceptance must be universal and Kublai Khan's edict did precisely that.
Sovereign governments today have similarly enacted laws (an edict, that everyone must accept the paper note issued by the Central Bank (Emperor) or you go to jail (on the pain of death). This 'edict' is clearly printed on notes today: the US dollar “this note is legal tender for all debts, public and private”; Canadian dollar “this note is legal tender”; and Australian dollar reads, “This Australian note is legal tender throughout Australia and its territories.”
So where is the confidence trick?
It all started with Kublai Khan, the Mongol Emperor of the Yuan Dynasty immediately after the fall of Song Dynasty.
Kublai Khan needed to replenish his severely depleted treasury after the 10-year war waged against the Song Dynasty.
Noticing that most of the paper money issued by the previous Song Emperor was never redeemed for copper coins he decided to pay his Imperial staff with his own version of paper notes instead of physical copper coins. He then embarked on what would be regarded as the world's first Monetary Policy, he 'bought back' copper coins firstly from his staff and later from the public or 'lao bai xing' by issuing them with paper money. Within 2 short years Kublai Khan collected all and more of the copper he used to wage his war against the Chinese Song Emperor.
His edict "acceptance on pain of death" guaranteed widespread acceptance. Holders of the "Yuan" paper note knew that a recipient must accept payment and if they wished they could redeem physical copper coins from the Imperial representative equivalent to the number of copper coins printed on the note. With this confidence and universal acceptance, demand for paper notes exploded, as it became the preferred means of payment. Kublai Khan's treasury issued even more notes as a result and within a short period the aggregated printed value on all the issued notes far exceeded the value of physical copper coins in Kublai Khan's treasury. Despite this the demand and use of paper notes did not abate.
Just like any of the Governors of the Central Banks of today, Kublai Khan realised the confidence and thus validity of a country's currency was not reliant on the backing of the value of physical commodity behind it. The confidence trick was finally created.
Kublai Khan started this trick and is today used by every country in the world issuing currency.
Today's currency has NO asset backing behind it except the mutual trust depicted by the sovereign government. Even the Gold Standard that supposedly backed every note was abandoned in early 1971 - leaving nothing accept trust of acceptance to back the note. In short we accept currencies simply because we were told to accept it under law even though there is now nothing to back the issue, similar to Kublai Khan's excessive paper money.
The trick simply works this way. John accepts it because he thinks Mary will accept it and she
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| US CENTRAL BANK |
Little did the Song Emperor realise his "Fei Qian" was to be one of China's most prominent export - a slide of hand accepted and practiced by all Central Bankers in the world today.
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