part 1, the fed, bitcoins, and inflation
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THE FED, BITCOINS, AND
INFLATION1. A BRIEF HISTORY OF MONEY
Dale R. DeBoer, PhDDepartment of Economics, UCCS
Why not go without money?
Avoidance of barter trade
Why not go without money?
Avoidance of barter trade
What should be used?
Medium of exchange
Unit of account
Store of value
Standard of deferred payment
What have we used?
Colonial period
http://www.philadelphiafed.org/educati
on/teachers/resources/money-in-
colonial-times/
http://www.frbsf.org/education/teacher
-resources/american-currency-
exhibit/independence
What have we used?
Colonial period
Shortage of coinage
Spanish Dollar
Specie
Bills of credit
Private representative money
What have we used?
Colonial period
The first central banks
First Bank of the United States
1791-1811
Conversion of fiat “Continentals” to
convertible currency
What have we used?
Colonial period
The first central banks
First Bank of the United States
Second Bank of the United States
1816-1836
Stabilize/expand fractional reserve
banking
What have we used?
Colonial period
The first central banks
Bi-metallic standard
Coinage Act of 1834
$1 at 1.50g gold
Silver to gold ratio: 16 to 1
What have we used?
The first central banks
Bi-metallic standard
United States Notes
1862-1971
Fiat money
What have we used?
The first central banks
Bi-metallic standard
United States Notes
1862-1971
Fiat money
What have we used?
Bi-metallic standard
United States Notes
Silver Certificates
1878-1964
What have we used?
United States Notes
Silver Certificates
Gold Standard Act (1900)
Suspended during WWI and
terminated in 1933
What have we used?
Silver Certificates
Gold Standard Act (1900)
Federal Reserve Act (1913)
Federal Reserve Notes
What have we used?
Gold Standard Act (1900)
Federal Reserve Act (1913)
Bretton Woods System (1944)
$35 per 1 oz. gold
$1 at 0.81g gold
What have we used?
Federal Reserve Act (1913)
Bretton Woods System (1944)
Nixon Shock and the end of Bretton
Woods (1971 to 1973)
Pure floating fiat currency
What have we used?
Bretton Woods System (1944)
Nixon Shock and the end of Bretton
Woods (1971 to 1973)
The Fed’s dual mandate (1978)
How well did they work?
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980
Nominal GDP Growth,
Historical Statistics
How well did they work?
0
5
10
15
20
25
30
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980
Unemployment Rate,
Historical Statistics
How well did they work?
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1800 1820 1840 1860 1880 1900 1920
Retail Inflation,
Historical Statistics
How well did they work?
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