Category: Currency

Florentine Florin: A Symbolic Reminder of Gold’s Global Appeal

Since the dawn of civilization, precious meals like gold and silver
Statue of Michelangelo's David in front of the Palazzo Vecchiohave been used for currency and wealth accumulation, starting with the first coin dating back to around 550 BC.

Italy’s Florence has a storied history concerning money and coinage which spans thousands of years, a trend which started in 1252 with the creation of the Florentine florin (3.5 grams and 54 grains of fine gold), this being the first European gold coin minted in sufficient quantities for European commerce since the 7th Century.

With its name of fleur-de-lys deriving from the flowering iris – the badge of Florence – the florin was destined to make a mark on the international currency market, since many Florentine banks had European branches. Its staying power as a dominant currency of commerce was tied to the outgrowth of the Florentine economy and its major stakeholders, which included money-changers, silk manufacturers, furriers and guilds.

Gold Florin, FlorenceThe weight of the original 1252 florin equaled the value of one lira in the local Florentine money. Interestingly, while the florin’s gold content stayed the same, the lira experienced such inflation that by 1500, the value of one florin was seven lira.

The florin did experience competition from European rivals in terms of its economic presence. Although their coins never attained the success of the florin, the Italian city of Genoa – its most prominent competitor – also began gold coinage in 1252.

The florin’s ascendancy led to wide acceptance across Europe, serving as an engine for international commerce throughout the continent. Its role at the time in fostering global economic growth held great significance; a level of status that no doubt led to its mention in Dante’s Divine Comedy, a perennial classic that was completed in 1320.

In recognition of its growing prominence, the British government released a 2-shilling version of the florin in 1849, valued at 1/10th of a Pound Sterling. This coin remained in circulation in the British currency system until the country’s foray into decimalization in 1971. Additionally, the Dutch florin – known as the guilder – endured until The Netherland’s currency disappeared in 2002 with the advent the Euro. This signaled the end of the florin’s long and illustrious reign as the world’s practical ‘gold standard’ of currency.

Nevertheless, the florin’s endurance throughout the ages is a symbolic reminder of gold’s continuing global appeal and its impact on world economies. 

At Anthem Vault, we have long championed the spirit and staying-power of gold, ensuing from legacy currencies like the florin. Over time, gold has continually demonstrated its dominance as a transactional asset that protects and enhances wealth. This track record underscores our commitment to making gold an easy-to-buy, safe, secure and affordable element of your savings, investment and wealth-protection strategy for you, your family and for future generations.  

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Top 9 Reasons To Read Books On Money

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Whether it’s the debt crisis in Greece, navigating our personal finances, bootstrapping revenues for our small business, or the emergence of alternative forms of financial transaction…. money is constantly at the forefront of our minds. Here are a few great books that offer a wide swath of perspectives to boost our financial understanding and keep us grounded in the midst of unprecedented domestic and global change.

1. Breaking Banks: The Innovators, Rogues, and Strategists Rebooting Banking by Brett King

The banking and financial services industries are facing tumultuous disruption amid evolving consumer demand. With insights from many of the world’s leading innovators in financial technology,

Zimbabwe Ditches Hyperinflated Currency

Zimbabwe is infamous for its hyperinflated currency, with its citizens carting wheelbarrows full of money to the market just to buy a loaf of bread. The country’s hyperinflation hit a peak in 2008, reaching 5 billion percent, making the Zimbabwean dollar virtually worthless. After that, citizens began using foreign currencies, such as the U.S. dollar and the South African rand.

640px-Flag_of_Zimbabwe.svgNow, the Zimbabwean government is finally ditching the currency, offering a deal to citizens in which they can convert their bank account balances to USD. Accounts with balances up to 175 quadrillion Zimbabwean dollars will receive USD$5; accounts in excess of 175 quadrillion Zimbabwean dollars can convert their money to USD at an exchange rate of USD$1 for 35 quadrillion Zimbabwean dollars. People who still hold old Zimbabwean dollar notes can exchange 250 trillion old notes for USD$1.

Zimbabwe’s disastrous hyperinflation is a textbook example of the dangers involved with using fiat currency. Granted, Zimbabwe’s monetary horror story occurred because of extremely irresponsible policies that are not present in the developed world. However, strong currencies like the US dollar are not very different from the Zimbabwe dollar in terms of fundamentals. Both currencies are managed by a central bank and can be printed at will, with no restriction on supply. The only real differences between the two currencies are that the Federal Reserve is better at managing its money supply, and the political climate in the U.S. is much more stable than in Zimbabwe. But those two things could change at any time, placing the U.S. in a similar situation to Zimbabwe.

The only way to guarantee a reliable currency is to completely get rid of central control over money. Arguably, the best way to accomplish this goal is by adopting a currency with a limited supply, as well as preventing banks from issuing money substitutes in excess of real cash. That way, the money supply cannot grow beyond the amount of cash the banks have in reserves. Under such a system, not only would it be impossible for banks and government to create destructive inflation, but volatile business cycles would likely be prevented as well.

Historically, “sound money” has been synonymous with gold. However, as modern technology progresses, the market has produced potential alternatives to gold. Zimbabwe’s move to the United States dollar will undoubtedly be a welcome change for the country’s economy. However, Zimbabweans should understand that the USD is not fundamentally different from their own failed experiment with fiat currency. In the future, they should seriously consider a sound money alternative to fiat currency.

 

Privacy in a Cashless Society

Denmark is quickly approaching the point where cash might no longer be necessary. Legislators recently proposed a law Mobile paymentthat would allow some retailers to only accept digital payments via a credit card or mobile device. If it passes, it’s likely that many brick-and-mortar shops will gladly free themselves from the burden of paper and metal money. Some citizens, on the other hand, are worried about the trackability of non-cash transactions.

This trend is not especially new. Already a third of Danes use MobilePay, an app created by the nation’s largest bank, for making transactions. One report even said that in 2012, 84% of Danish transactions took place with credit cards. Several other European countries have also expressed a desire to do away with cash. For example, in Sweden’s larger cities, the bus systems already restrict payments to digital forms like credit cards and prepaid passes.

Some people are worried about how their privacy will hold up in a cashless society. Right now, paper money is often used as a way to avoid tracking. Records are not essential for cash transactions because they involve the transfer of physical objects. With relative certainty, we can always know who owns the money because we can see who holds the actual paper bills.

Digital money, however, has to be treated differently. Banks and payment processors almost always attach an identity to artificial transactions. In our legacy financial system, that’s the only way to ensure that money doesn’t get lost, duplicated, or misdirected. Many argue that the authorities would have a field day with this kind of information. Electronic databases are extremely easy to search, analyze, and preserve, so the government could theoretically watch where all of our money goes.

Privacy is definitely a legitimate concern, but it’s important to remember that digital transactions do have some serious benefits for businesses.

close up of man counting money and making notesPhysical money is notoriously difficult and expensive (and even unhealthy) to handle, which I can illustrate with a personal anecdote. Like many others, I spent a decent portion of my teenage years working in a fast food restaurant and I remember muttering all the time about how annoying cash was. Without exaggerating, I can say that it often took five to ten times longer to sort bills and count change than it did to swipe a card. That’s a huge factor when you’re trying to serve 120 cars in an hour and it’s only a fraction of the full cost. The owner of the restaurant also had to pay the managers to count money drawers (and the entire safe) several times a day. Then there’s the cost of having bills and heavy change delivered and picked up by armored trucks, and how about touching dirty paper while serving food!

Daniel Brown is the editor-in-chief of You, Me, and BTC.  He’s also the “Everything Elf” at Liberty.me.