Lecture 2 - Lecture 2 M&I 1: Why bother with Money?...

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Lecture 2 • M&I 1: Why bother with Money? • M&B 3: History of US Monetary Standard
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History of US Monetary Standard M&B ch. 3 • Colonial Silver Standard • Bimetallic Standard, 1792-1861 • De Facto Silver, 1792-1834 • De Facto Gold, 1834-1861 • Civil War Greenback Standard, 1862-1879 • Monometallic Gold Standard, 1879-1933 • Bimetallism Movement 1896, 1900 • Fiat Money Standard, 1933-present Lecture 2 part b
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Colonial Silver Standard Colonists used Spanish Dollar (aka peso) = 8 reales (8 “bits”) Originated as Hapsburg Thaler, first minted in St. Joachims thal , now Czech Rep. Ps = $ = peso sign Ps →→ $ US Dollar designed to have same silver content as circulating Spanish dollars
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Historical Silver Dollars Austria Spain US US 1486 1754 1794 1921
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Original Bimetallic Standard, 1792-1834 • Silver coinage: 1 US Dollar contained 1/1.293 troy oz pure silver $1.293 / troy oz = mint price of silver Free and Unlimited coinage : Mint gave 1293 silver dollars for 1000 oz silver metal, without charge or limit. No seigniorage (profit) from minting. Worn coins only legal tender at actual weight Half $, Quarter $, Dime, Half Dime with proportionate silver . Alloy 90% silver , 10% copper to make more durable = Spanish standard. (UK sterling was 92.5% silver.)
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Original Bimetallic Standard, 1792-1834 (cont’d.) • Gold coinage: 1 gold Eagle contained 1/1.939 troy oz pure gold Free and Unlimited coinage Double, Half, Quarter eagle coins with proportionate gold Alloy 22 karat: 22/24 (91.67%) gold + silver & copper for durability
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Lecture 2 - Lecture 2 M&I 1: Why bother with Money?...

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