Money has played an important role in human history for over 5,000 years, and its evolution is a fascinating aspect of the history of money. The advent of money was the catalyst to transform society from a rudimentary barter exchange to a prosperous economic system. Throughout the millennia, the types of money used as a medium of exchange varied widely. Certain types of money were more successful in promoting prosperous economies, highlighting the concept of good money vs bad money. This discussion will explore these two kinds of money and their impacts on economic development.
In the extremely prosperous colonial America, the Founding Fathers of the United States believed that the money of their new nation should be specie (coins) made from precious metals, particularly gold and silver. They recognized the weakness of alternative materials, the temptation and inevitability of devaluation, and the resulting hardships of inflation. Everyone universally understood that good money promotes commerce. By the 1700s, the Spanish Dollar, made of silver, was evidence of the preference for precious metals over other currency materials and a perfect representation of good money. Of course, history is also full of repeated examples of failed “bad” money.
In 1375, the Ming Dynasty introduced a fiat currency called the baochao. Although the government insisted on making it the sole currency, they did not widely enforce this mandate. Even government officials refused payment in this paper currency. Eventually, acknowledging the unpopularity and ineffectiveness of this bad money, the government restored silver to full monetary status.
The United States adopted the successful “good money” format by firmly legislating the issuance of the United States Silver Dollar through the U.S. Coin Act of 1792, also known as the Mint Act. From 1792 until 1965, silver dimes, quarters, and half-dollars successfully circulated and were issued in great quantities.
Objectively judging by longevity, stability and widespread use, silver coinage is arguably the best example of good money when maintained in a consistent purity and format. The Spanish Dollar best exemplified the consistent format our Founding Fathers relied on, demonstrating the four essential functions of good money to promote American prosperity.
From 1792 to 1964, the United States circulating silver coinage joined the ranks of good money and is a superb example of Society’s Best Coinage, meaning consistent silver coins. Without a doubt, U.S. 90% silver coins precisely met the four overriding functions of good money: medium, store, measure, and timeless value. These factors, along with its unparalleled widespread recognizability, account for why bags of 90% junk silver are the top choice for owning survival money.
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