Andrew Dickerson White's book Fiat money inflation in France is a fantastic case study of hyper inflation and fiat money. During the 18th century we learned a lot about money and its role in the economy. Most of these lessons also apply to us today. France tried a fiat currency system at the end of the 18th century. With this system the only backing was confiscated lands from the church. these lands were originally supposed to be paid out in interest bearing bonds but regular currency was choosen instead. This currency entering the money system created a temporary boost to the economy and allowed the government to pay off its debt. The economey quickly got used to the new money supply and people were back to having the same problems as before. People began asking for another issuance of notes and a boom bust cycle was formed. as the hyper inflation got worse price controls were implemented and force had to be used to ensure farmers and shopkeepers honored the price controls. unfortunately this ended up stifling production and create a disincentive for the very people who were trying to feed people. Unfortunately the issuance of money could not solve the root problem of the government being unable to have a balanced budget. All the examples in fiat money and inflation in France can relate to our current conversation about economics in the US today.
Fiat Money Inflation in France
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