Brendan Greeley on the Real 500-Year History of the Dollar

We love talking about money. And of course, we love talking about the dollar, in all its varieties — from bank deposits to eurodollars to stablecoins. But what fundamentally is a dollar and who actually controls it? To understand these questions, you really need to understand how the dollar was born. Journalist (and current Ph. D. candidate in financial history) Brendan Greeley argues not only that the dollar is older than you might suspect, but that the dollar long precedes the United States itself. In fact, the word is derived from German, referring to a Spanish currency made from silver found in Mexico. In this episode, we discuss Brendan's new book, The Almighty Dollar: 500 Years of the World's Most Powerful Money. He explains not only the dollar's surprising history, but also what actually backs the US dollar and gives it purchasing power. See omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tracy Alloway?

  There are some market stories where you want every detail. Joe and I have made quite a few podcasts on that basis. But sometimes you've only got 10 minutes and just want to know what's moving markets fast. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and Research get you up to speed on what's happening and what to watch next. Concise, focused, and brief. Search Barclays Brief wherever you get your podcasts.

• 0:26Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 1:08Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:52Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 2:07Tracy Alloway?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

• 2:11Joe Weisenthal?

  And I'm Joe Weisenthal.

• 2:13Tracy Alloway?

  Joe, we enjoy talking about money.

• 2:15Joe Weisenthal?

  Yeah.

• 2:15Tracy Alloway?

  In all its flavors.

• 2:17Joe Weisenthal?

  I love money.

• 2:18Tracy Alloway?

  We all love money.

• 2:19Joe Weisenthal?

  Someone's gonna clip that.

• 2:20Tracy Alloway?

  That's it. That's the podcast.

• 2:21Joe Weisenthal?

  Someone's gonna clip that out, Joe, saying, "I love money." You know, I love money, talking about it in particular. Having it's good, too. Talking about it's nice.

• 2:31Tracy Alloway?

  Finding it is even better.

• 2:33Joe Weisenthal?

  What you can do with it, where you can allocate it to, all very interesting questions. But I have to admit, I am a sucker for like a, where does, a good old fashioned, 2:00 in the morning, where does money come from discussion. You know what I'm saying?

• 2:47Tracy Alloway?

  I have never been invited to any of your 2:00 AM in the morning, where does money come from discussions.

• 2:52Joe Weisenthal?

  Like, which came first, the money, you know, I love like, I love philosophy of money, that sort of like history of money.

• 2:58Tracy Alloway?

  Yeah.

• 2:58Joe Weisenthal?

  Where, you know, all that stuff. It's a great topic.

• 3:01Tracy Alloway?

  There are a lot of social implications tied up with the idea of money, which I think, you know, have been explored at various times. But they're always so interesting to me because I think even today, if you think about money, and if you think about the dollar specifically, you know, we're used to talking about like, oh, the dollar is doing this, the dollar is doing that. But there's more than one flavor of the dollar, right? So there's clearly cash at a simplistic level. So the stuff that we keep in our wallets or whatever, there are bank dollars.

• 3:30Joe Weisenthal?

  Yeah.

• 3:31Tracy Alloway?

  That are created by a bank and live in the bank and which you never tangibly see, but you can do a lot of stuff with if you have them.

• 3:39Joe Weisenthal?

  You can convert them to cash dollars at a one-to-one ratio.

• 3:42Tracy Alloway?

  That's right.

• 3:43Joe Weisenthal?

  They trade at a one-to-one ratio to the other dollar.

• 3:45Tracy Alloway?

  That's the important thing. But there are also things like Eurodollars, which you and I will never see being a non-foreign depository institution.

• 3:54Joe Weisenthal?

  And there are reserves held at the central bank, which is arguably, it's its own thing, right? There are also stable coins, which are dollar, also often aspire to trade at a one-to-one ratio to the dollar, et cetera. What is the dollar? Is a, you know, what's an Interesting question. So one of the topics that comes up a lot is like the future of the dollar, etc.

• 4:16Tracy Alloway?

  Right.

• 4:17Joe Weisenthal?

  We don't talk as much about like, well, where did it come from in the beginning? And like, what was like, you know, if we're going to talk about the future of the dollar, don't we need to know how we got here and how the dollar was born and all that stuff? That seems like an important question to answer before we talk about the future.

• 4:30Tracy Alloway?

  Yes, and also just in terms of social and political economy terms, like who actually controls the dollar?

• 4:36Joe Weisenthal?

  Yeah.

• 4:36Tracy Alloway?

  Right? Because there's this idea that it belongs to the US Treasury.

• 4:40Joe Weisenthal?

  Yeah, right.

• 4:40Tracy Alloway?

  And they can, they control the supply and all of that. But as I just mentioned, there are all these flavors of dollars that kind of sit outside the US's direct control.

• 4:50Joe Weisenthal?

  Yeah.

• 4:51Tracy Alloway?

  And so if you think about the dollar being, you know, the, both an exorbitant privilege of America.

• 4:58Joe Weisenthal?

  Yeah.

• 4:59Tracy Alloway?

  It's also in many respects a burden, right?

• 5:01Joe Weisenthal?

  Yeah, so they say. I mean, I don't know, it seems pretty good as a, as a currency. But I've heard that and it is very interesting to think about, like, you know. You know, there's this interesting, I think it was, um, I think it was Mark Carney, when he was Bank of England governor.

• 5:15Tracy Alloway?

  Mm-hmm.

• 5:16Joe Weisenthal?

  Well, he gave a Jackson Hole speech talking about America's declining role as a share of global GDP and the dollar's increasing role as the currency of trade of this weird missing.

• 5:27Tracy Alloway?

  Right.

• 5:27Joe Weisenthal?

  And, you know, there's the, all this stuff where it's like, the central bank, the Fed sets rates based on American conditions and so forth. But then that transmits globally because so many entities use the dollar. You know, we could go on and on.

• 5:40Tracy Alloway?

  This, this intro is just going to be a Forrest Gump style list of all the different types of dollars. But no, I mean, we should talk about all the different types of dollars, but also where they all came from and what all their different purposes actually are and what the upsides are for each of them and the downsides. And we do in fact have the perfect guest.

• 5:57Joe Weisenthal?

  Yes.

• 5:57Tracy Alloway?

  Um, someone who's been one of our colleagues at very, at various places. Uh, we're going to be speaking with Brendan Greeley. He's the author of the new book, The Almighty Dollar, 500 Years of the World's Most Powerful Money. And you might have a question immediately about that 500 years subtitle.

• 6:14Joe Weisenthal?

  I do.

• 6:15Tracy Alloway?

  He's also contributing editor of the Financial Times and, uh, we're very excited to have him on Odd Lots. So Brendan, welcome to the show.

• 6:21Joe Weisenthal?

  Thanks.

• 6:22Speaker 03

  Thank you. I've been waiting so long to be the perfect guest.

• 6:24Tracy Alloway?

  Oh, did I say you were? I did.

• 6:26Speaker 03

  You did, in fact, say I was the perfect guest. I was waiting. I was hoping. I'm sitting here.

• 6:30Tracy Alloway?

  I get so paranoid that I'm not going to say it, and people read into it like, oh, why wasn't this person the perfect guest?

• 6:35Speaker 03

  Just a run-of-the-mill guest. How embarrassing.

• 6:38Tracy Alloway?

  You are truly the perfect guest. Why don't I jump in with that subtitle? So a lot of people are going to see 500 years of the dollar, the world's most powerful currency, and our most powerful money, and they're going to go, what? What do you mean by 500 years?

• 6:52Speaker 03

  So this book was a rabbit hole. An editor suggested I write a book about the history of the dollar. And as you know, as a journalist, when somebody asks you to do something, you just say, yeah, I'll figure that out.

• 7:00Tracy Alloway?

  What's the deadline?

• 7:01Speaker 03

  Yeah, I've got a phone. I can call people. And I thought I would start it in 1971. We closed the gold window. And then I sort of started unraveling the sweater a little bit, pulling on the thread. And I got to 1913 with the chartering of the Fed. And then you end up with a problem when you chase the history of the dollar back to 1789 or 1776, which is, there's this assumption when we talk about money of monetary sovereignty. It's just the ability. It's very poorly defined. It's super hand-wavy, by the way, monetary sovereignty. But generally, it's the ability to the country that a country has to control its own currency. So under that assumption, we had political independence, political sovereignty in 1776, 1789, however you want to define it.

• 7:42Speaker 03

  We should have also had monetary sovereignty, under the assumptions that we use about money. Unfortunately, we're stuck with this problem, which is that our currency is called the dollar. That is a name that's derived from the German, and it referred to a Spanish coin that came from Bolivian silver or Mexican silver.

• 8:00Joe Weisenthal?

  Really? I didn't know this.

• 8:02Speaker 03

  So this is complicated, right? We did not have this moment of sovereignty. We did not have a new country. We did not call our currency the Washington. We called it the dollar, which means we're borrowing something else. We're basing our, we are pegging our currency as Americans at the origin of the country to an existing currency. You know, it's hard for Americans to sort of conceive of how insignificant the colonies were at the founding. And so we didn't have any domestic source of gold. We didn't have any domestic source of silver. We're taking a global currency that's circulating between the Andes and China and through Europe. And sometimes it washes up on the shores of the colonies. We're so desperate to get it that we then peg our currency to this silver coin with a

• 8:45Speaker 03

  German name that comes from Spain's empire. That's really problematic if you believe in monetary sovereignty and if you believe that the country creates the denominator. So now you have a problem, or at least I had a problem, which is I had to explain, what was this coin? Why was it universal? Why was it called the taller, the dollar? Why was Spain in charge? And why were the colonies powerless to do anything about this coin? Then you end up with a different story. Alexander Hamilton called that coin the ancient dollar. It was already something that he knew existed, that he took for granted, as 250 years old at the time. That's when I fell down the rabbit hole. And that's when I ended up literally at one point at the bottom of a Czech silver mine. Because what we think of as the dollar starts

• 9:29Speaker 03

  in 1520. And this ends up being a problem, because all of the, the way economists talk about money, there's this break between metal and paper. So it's very difficult to talk about this metal coin when we live in a paper and digital money world now. I think there's a connection. And I think the moment of transition between that coin and American bank money is really important. The details matter. The coin circulated in America as currency until the 1850s, the silver coin from the Spanish empire. And so, to tell the story of the dollar, what I realized is, you cannot tell the story of the country. This is not the story of the Treasury Department, or the Fed, or of Alexander Hamilton, or of America. This is the story of the currency, which is only sometimes a part of America.

• 10:13Joe Weisenthal?

  I'm already riveted by this. I already have a million questions. Just to back up a little bit, or contextualize this, that was just last summer, we were at Princeton, you're getting your PhD there, and you invited us to be on a panel. And we actually turned it into a podcast episode, where we talked to a few other academics and so forth. And I think the conference, that little mini conference was about writing the biography of the dollar, which you have, I guess you've done it now.

• 10:40Speaker 03

  I hope so.

• 10:41Joe Weisenthal?

  But, um, tell us a little bit about like, what you've been up to. You're, this is, you're getting a PhD. I, like, it's so cool. Like, when, sometimes in my mind, I'm If I could have done something else, maybe it would have been go get a history PhD. And you actually did it.

• 10:54Speaker 03

  I actually did it. Yeah, so you know, I got this offer to write the book about the dollar. As a journalist, I said, yes. And then I kind of got into trouble because I started doing archival work and I didn't really feel like I knew how to do archival work. And I started reading a lot of secondary sources and then I began to have ideas. That's a problem because when you are a person alone in an office, behind your garage with a dog for years and you start to have ideas.

• 11:18Tracy Alloway?

  What kind of dog?

• 11:19Speaker 03

  Oh, he's.

• 11:20Tracy Alloway?

  These are the important questions.

• 11:21Speaker 03

  He's an awful dog. But we'll, we'll talk about it later. He's famous on the internet.

• 11:26Tracy Alloway?

  Oh, really?

• 11:26Speaker 03

  Yes.

• 11:27Tracy Alloway?

  I had no idea.

• 11:27Speaker 03

  An internet mob made me get a dog because my daughter did something cute. She was begging for a dog. And then I woke up the next morning and I put it on Twitter. I made the mistake of putting this on Twitter seven years ago. I woke up the next morning and J K Rowling had retweeted it.

• 11:36Tracy Alloway?

  Yeah, now you have a dog. Oh, my God.

• 11:38Speaker 03

  Yeah, so the dog's name is J K Growling. So I'm in this room alone with J K Growling, the dog, sitting on the floor. And I begin to have ideas. The problem is if you have ideas alone in a room, one of two things is true. You're on to something or you're insane. And I got worried that I didn't know what I was doing. And around the same time, I got invited by Seth Rockman. He's a historian of early America at Brown to a conference about the history of money. I literally did not know that there were historians who studied money. And I loved what they did. They were reading all the same things that I was reading. They were worried and they were curious about all the same things that I was curious about. They were dealing with the same questions and, and I told a bunch of PhDs, this is amazing. I want to go get a PhD in the history of money.

• 12:21Speaker 03

  And they all said, no, do not do that. That's a terrible idea, as PhDs generally do. But I, I applied to the program at Princeton because Harold James is there. This is legendary financial historian and I love the way he works because he takes finance seriously. And sometimes it's difficult to study the history of money because it does end up sounding like this 2 a.m. dorm conversation. That frustrates me. I, I actually don't think money is that hard to understand. It's just, it's just finance. And so Harold James takes the finance of money seriously. And I was able to, you know, while I was taking classes there, think about this book and also make myself feel a little more comfortable. That the book is in fact, it rests on solid. Ground. The people that I found as secondary sources, they are known to other people.

• 13:03Speaker 03

  Right. And I am, this book is written within a tradition of thinking about money as credit and that. But also to your point, like, yeah, it's great. I love going back and getting a PhD. Yeah, that sounds cool. There was a moment early on where I was doing a project with another grad student and they're all in their twenties and I make no sense to them because I was like forty seven when I started it and I had four children and everything about me was a mystery. They had a pool going for a while and whether or not I was on Instagram.

• 13:28Speaker 03

  But one of the graduate students said, can you believe you're doing homework? And I said, I can't believe I get to do homework. This is amazing. I've had jobs. Jobs are the worst.

• 13:37Tracy Alloway?

  I'm sorry, I've gone down a rabbit hole of just looking at pictures of JK growling. But you're absolutely right. It went viral. There's like Fox News articles about it and everything. Okay, a serious question now. We're not just going to talk about dogs, although I did learn from your book that there were in fact dog dollars.

• 13:56Speaker 03

  Dog dollars, yes.

• 13:56Tracy Alloway?

  Yes.

• 13:56Speaker 03

  From the Netherlands.

• 13:58Tracy Alloway?

  So, a serious question though, like, why does it matter how we think about money? Is it the case that like, if you, if you think of money as like inevitably this like fiat currency that's issued by a state? That you're always going to think that the state is about to do something terrible with it or like something nefarious? Versus if you think about it as a social construct, it implies something different about the world and human behavior. Why does this matter?

• 14:23Speaker 03

  I get really frustrated with the philosophy of money and I get really frustrated with the phrase fiat or the idea of fiat money. Because fiat to me is a veil. It just says it's magic. The state says poof, that's money. And they wave their hands, they say fiat, and then you have something and that's money and how it worked doesn't really matter. I think it really matters how we manufacture money. Banks manufacture our money. The Fed manufactures a different kind of money. I love that list you guys came up with of all the dollars. I keep trying to list all the dollars I can come up with. I have not completed the list yet.

• 14:55Tracy Alloway?

  I was gonna ask you, how, you mentioned this in the book, like, how long is your list?

• 14:59Speaker 03

  I think once, man, I'm gonna embarrass myself if I try to recreate it, but I got up to like fifteen different kinds of dollars.

• 15:03Tracy Alloway?

  Wow.

• 15:04Speaker 03

  Uh, you know, you've got money market dollars. Now you've got stable coins, euro dollars, of course, you know, if you, if you. Get a check from your employer, you don't have a bank account, you gotta go to a check cashier. All of a sudden, that's a different kind of dollar because it doesn't clear at par because you gotta do a dis- you gotta take a discount at the check cashier. Okay, but my frustration with this idea of fiat is that it robs us of the power of analysis. We can understand money. We really can. For almost all of our money sits, as you guys already pointed out, on the ledger of a commercial bank. It has value for two reasons. One, the assets on the other side of that ledger have value as well. And we can look at them. We can tell, you know, are those good assets? Are those bad assets?

• 15:43Speaker 03

  And the reason we know what the assets are is because America has this 250-year tradition of bank failure. And after every systemic bank failure, we introduce new regulations, new way of reporting what's on the bank ledgers. The idea of a control of the currency followed the panic of 1837. We slowly figured out how to make sure that banks don't blow up. The FDIC after the panic of 1932, you know, I really honestly believe that of the great things that America has produced, it's, you know, the great American songbook, country music, barbecue, and a vast pool of federally insured dollars. We had several, look at, look at Joe. Yeah, Joe's on board.

• 16:22Tracy Alloway?

  We need to put the federally insured dollars on that mug.

• 16:25Speaker 03

  We need an FDIC. I need an FDIC mug.

• 16:28Joe Weisenthal?

  Country music, barbecue, federally insured dollars. Man, that's good.

• 16:32Tracy Alloway?

  That would be a good name for a song, actually.

• 16:36Speaker 03

  The problem with saying that it's fiat means that we fail to understand how important all these regulations are. Before federally insured, federal deposit insurance in the 1920s, there were about 200 bank failures a year. After that, there are usually no bank failures a year. And if there are bank failures, we're so surprised by them that it becomes a thing in the financial media that we gotta talk about, how did this happen? That used to be normal. Banks used to just fail. And the reason they don't fail, and the reason your dollars don't fail, is because we have slowly figured out what the best practices are for making sure that banks don't blow up. If we wave our hands and say, doesn't matter, it's fiat, probably comes from the Fed, doesn't really matter, then we lose the ability to say, our dollars have meaning because there's assets on the other side of that balance sheet, we can look at those assets.

• 17:20Speaker 03

  And if we start to deregulate, we run into trouble because all of a sudden, we run the risk that our dollars might not have meaning anymore.

• 17:43Tracy Alloway?

  There are some market stories where you want every detail. Joe and I have made quite a few podcasts on that basis. But sometimes you've only got 10 minutes and just want to know what's moving markets fast. That's the Barclays Brief podcast. Every week, experts from Barclays Markets and Research get you up to speed on what's happening and what to watch next. Concise, focused, and brief. Search Barclays Brief wherever you get your podcasts.

• 18:10Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 18:52Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 19:33Joe Weisenthal?

  I want to get into how we can establish the why a dollar has value in the first place and the balance sheet liabilities of the bank and so forth. Before we get into that, let's just do a little bit more history. What were the conditions such that in 1791 or whatever? Alexander Hamilton was talking about something called an ancient dollar that was sort of something Spanish and German at the same time. Like, give us like, give us those 250 years prior to the founding of America or whatever, however many years, such that a global dollar had, was already long emerging.

• 20:07Speaker 03

  All right, let's see if I can do this in a way that I don't run out of time. Okay, the dollar wasn't supposed to be money.

• 20:11Joe Weisenthal?

  Okay.

• 20:12Speaker 03

  There is a story, it is told in histories of the dollar, that there was a count in Bohemia. His name was Stefan Schlick. He had a lot of silver. Because he had a lot of silver, his money became global money. None of that is true. I mean, it's all true, but that's not how any of it worked. So Stefan Schlick was a count. The problem is, he didn't actually hold any of the territory that he claimed in Bohemia. He sort of held it in entirety with all of his cousins and all of his brothers. Somebody discovered silver in this valley in Bohemia. The problem with silver in the ground is that you need a lot of money and a lot of expertise. It takes a lot of capital, even in the 1520s, to mine silver. Very complex machines already, getting silver out of the ground, draining water out of the mines. And so, he realized that just having the silver didn't mean anything. So, first thing he did was, he said, "This is mine."

• 20:57Speaker 03

  Breathtakingly illegal. Then he went over the border to Saxen, and he got Saxen mining investors and Saxen miners. And they started pulling silver out of the ground. So, this is already outside of a long-established process of what you do with silver and how it becomes money. In the rest of Europe and in the rest of Bohemia, if you found silver, first of all, you had to pay a tax to the king. After that, it had to go to a centralized mint. That mint had an understanding that they had to create money for everybody. So, not just big coins for merchants, but the whole range of big and little coins that worked for wholesale purchases and retail purchases. This is really crucial. I think this distinction still exists today, but it definitely existed in early modern Europe, which is that Carlo Chapola, as an Italian historian, wrote this beautiful book

• 21:41Speaker 03

  where he drew a distinction between big money and little money. Big money are large, high-value coins, and they're for international trade and merchants and the wealthy. Little money is for low value trade and it's for purchases of meat and bread and labor.

• 21:56Tracy Alloway?

  So like little copper coins?

• 21:57Speaker 03

  Yeah, little copper coins.

• 21:58Tracy Alloway?

  Okay.

• 21:59Speaker 03

  The challenge of big money and little money, I think we still have it today with banks, is that, you're gonna love this, Joe, the brassage on small coins is higher. What that means is to make a coin is an industrial process. You've got to put one dye on a stump and then the metal goes in the middle and then another dye on top of it. And then you whack the whole thing with a hammer. I've seen it done. It's very loud. It's an industrial process. It takes one whack of the hammer to make every coin, whether it's a Bitcoin or a little coin, which means that per unit of value, the labor costs, the brassage, the production costs are much higher for little coins. So this is a consistent problem throughout the history of coinage. Constant complaints that Mints, which are actually private companies, prefer to make the Bitcoins,

• 22:42Speaker 03

  because the profit is high, the margins are better on the Bitcoins, they're smaller on the small coins.

• 22:46Tracy Alloway?

  This is partly why the US phased out the penny recently, right?

• 22:48Speaker 03

  Yes, absolutely. What you have then in this Bohemian Valley is Saxon investors coming south, Saxon miners coming south, Bohemian Count, who doesn't really have a title. And what they do is they start getting silver out of the ground. All of the silver goes into a single form, which is what the Saxon investors would have expected to get, a large silver dividend coin. This was not local money. This was not money for a valley in Bohemia. This was paying back silver investors. It went straight-

• 23:17Tracy Alloway?

  A dividend in silver form.

• 23:18Speaker 03

  A dividend in silver form, what they expected. So this is an early form of a joint stock company. Friedrich Engels actually believed that this was the origin of the joint stock company. These silver mines are just really expensive to get money out of the ground. So Saxon investors would put together in this forum and what they got out of this was a big silver coin. It wasn't money, it was a dividend. It was a stamped pure form of silver. So you have this exception where because the mine is illegal, what's coming out of it is big, high value silver coins. No pennies, no little money, nothing, just big money. So all of this work, by the way, I should credit Peter Voral as a Trek historian, who sort of pulled all of this out of the archives. But what you then end up with is this exceptional circumstance where it's not that there was a lot of silver in the valley.

• 24:01Speaker 03

  It was a big silver mine, but you know, it wasn't wildly out of proportion with other silver mines in Europe. It's that it was only producing Bitcoins. And it was so hell bent on producing just the big dividend coins for Saxon silver investors that- The miners revolted, actually, so they struck twice and then they finally sacked the town. And their chief complaint was that they weren't getting paid in the same quality money that was leaving for Saxony. You have this big money, little money problem, right? So eventually, to make the miners happy, they have to solve this and sort of make sure that they're minting little pennies as well. Anyway, this coin then becomes a standard for trade in the Baltic. And you start to see copies of the coin. This is, in a sovereign story, you create your own money to your own standards.

• 24:43Speaker 03

  What actually happened is, you get little city-states and kingdoms all over the Baltic, in northern Germany, creating copies of copies of copies of this original coin from Jochamstall. All these coins come to be referred to as Jochamstaller, coins from Jochamstall.

• 24:58Tracy Alloway?

  Doesn't exactly roll off the tongue, does it?

• 25:00Speaker 03

  Doesn't. So that gets shortened to taller. And then in Dutch, they also start copying. Sounds like visentaller. Yes. Yes. You were from some tall.

• 25:08Tracy Alloway?

  I'm watching Joe's head is exploding in real time.

• 25:13Speaker 03

  Listen, we should mint visentaller. Yes. See what happens. Yeah, tall is German for valley, right? So then you get taller all over northern Europe. So this then becomes an English dollar. There's a mention of dollar in Shakespeare, in The Tempest and again in the Scottish play, they talk about dollars. It's not in the domestic British currency system of pounds, shilling, pence. To them, they know exactly what it is, the big silver coin that comes from the Low Countries in exchange for British wool and British cloth. So already, this story of sovereignty and this story of the fungibility of money starts to break apart. You've got this coin that's copied again and again. Okay, so the Spanish have silver in what is now Bolivia and Mexico. They figure out this unbelievable brutal regime, the mete, using forced labor to actually

• 25:58Speaker 03

  get this silver out of the ground. They've got the mercury from somewhere else to do the amalgamation process that actually then turns the silver, turns ore into silver. The thing is, Charles V of Castile, Holy Roman Emperor, Lord of all he surveys.

• 26:13Speaker 03

  Has to follow the pattern of silver production that already exists in northern Germany. He's selling his silver into the same silver markets in Antwerp as everybody else, which means that he does not have the sovereign right or the sovereign ability to create his own silver. So they sort of hack an existing coin in the Spanish currency system, the real. If you multiply it by eight, there's a happy accident, which is that it's almost exactly the same weight and size as the Yachim's taller. So Spain starts.

• 26:40Joe Weisenthal?

  Is this why a quarter is two bits?

• 26:42Speaker 03

  Yes, that's exactly why. Yeah. So pieces of eight that we know from pirate movies, right? That's what that was. The pirate movies piece of eight is named because the Yachim's taller with the dominant form of silver, and Spain had to copy it. So you have this global flow of silver already. The Spanish in the late 1570s develop a way to send galleons straight from the Mexican coast to Manila. So you've got this flow of silver that's going straight to China. It's going through Seville and into Europe. It's also making its way to China. China is sort of absorbing all the silver in the world eventually. It all takes the form of this dollar. In English, it's known as the dollar, unambiguous, very clear what it is. So the colonies are also stuck on the edge of this flow.

• 27:24Speaker 03

  And what you get is actually weird currency devaluations among the colonies. So to get to the Alexander Hamilton point, I think I'm going to wrap this up. I think I maybe did it in seven minutes.

• 27:35Speaker 03

  You end up with, the colonies have got their own forms of shilling-based book credits. They're separate currencies from what the British have. It's not sterling. It's Pennsylvania shillings or Maryland shillings. What starts to happen is they start to devalue their own shillings. So to attract silver, sometimes literally from Pirates of the Caribbean into their own ports, because that makes, if the silver then can buy more in that port, which means the port can attract more silver. This is a problem the British Empire eventually recognizes. But this coin, you see it in newspapers referred to as dollars. People were awful rewards and one ads for dollars. Colonies are fighting each other with currency devaluations to try and attract the dollar onto their shores. So this is by far the dominant form of money, not just in the colonies, but globally.

• 28:18Joe Weisenthal?

  That was great.

• 28:18Tracy Alloway?

  That was fantastic. If I could fast forward a few decades at least.

• 28:25Joe Weisenthal?

  2026.

• 28:26Tracy Alloway?

  No, no, no, not that far. I asked this question partly out of personal interest because as Joe knows, for some reason, my dad keeps giving me parts of his collection of silver coins.

• 28:37Speaker 03

  Oh, yeah, that's what dads do.

• 28:38Tracy Alloway?

  Yeah, I know. It's the most dad thing ever. And every, every birthday, I'm like, thank you for my silver coin. But it's, it's lost some of the surprise value. But anyway, how did we get from the dollars slash dollars to the silver dollar that became, I guess, dominant in, I want to say, the 1800s?

• 28:57Speaker 03

  It's just a copy. We didn't get to. It's the same thing. So you have copies of copies of copies. Anybody who has silver or can get some through trade is turning them into something that looks like a dollar and is immediately recognized as a dollar. So when you look at colonial legislation, you've got catalogs of different kinds of dollars. You've got a Seville dollar, which meant it was minted, minted at very high quality in Seville. You've got what they called a rick's dollar, which is produced by the Holy Roman Empire, exact same thing. They were weighted the same way. And then it goes all the way down to, as you mentioned, dog dollars. So there's this Dutch dollar.

• 29:28Tracy Alloway?

  Love dog dollars.

• 29:29Speaker 03

  Dog dollars. So there's this Dutch dollar with a recumbent lion on the obverse. The recumbent lion, once it gets worn down, looks like a dog begging for scraps.

• 29:38Tracy Alloway?

  Yeah, he's sort of sitting up and like begging, right?

• 29:41Speaker 03

  Exactly. So, so the dog dollar, when Benjamin Franklin arrived in Philadelphia, wet and exhausted as a teenager, he had in his pocket a few shillings and a dog dollar. So there were different types of dollars, but it was always, it was always very clear what a dollar was. It was, so in the 19, in the 18th century and even into the 19th century. So these silver dollars, again, I'm going to say this again and again, I, I'm sort of very skeptical of the idea of monetary sovereignty. I think it, you cannot assume that it happens. It has to be fought for over time. It's always fraught and you're going to lose it if you don't pay attention to it. But just to finish that thought, the, the silver dollar that comes from Mexico is current in America as money until the 1850s.

• 30:25Tracy Alloway?

  Okay, this is sort of what I was getting at with the question, but like, how did we get to the point where the silver dollars that we recognize today in the collections that our parents bequeathed to us?

• 30:36Speaker 03

  I think just your parents.

• 30:37Tracy Alloway?

  Okay.

• 30:38Joe Weisenthal?

  No, mine.

• 30:39Tracy Alloway?

  Not yours? Okay.

• 30:40Speaker 03

  My dad gives me life lessons, but not silver.

• 30:42Tracy Alloway?

  Oh, my dad doesn't give me many of those, actually. Okay, but like, the silver dollars become a more dominant form of currency around the world in the 1800s.

• 30:53Speaker 03

  Yes.

• 30:53Tracy Alloway?

  What are the conditions that allow those dollars to start to replace previous or other existing forms of dollars?

• 31:02Speaker 03

  One thing that happens is you get high-quality mints in Mexico City. And in Potosí, this is the, this is the, the mountain where the silver is in what is now Bolivia. And so, early on, the Spanish Empire produced what they called cobs. These are just, it's just little divots of, of silver stamped and weighed. And they circulated as cobs. You could get them in the colonies. There's fraud at the mint. There's a problem with the weight of the silver. And so, this is in the, oh, man, it's in the early 18th century. The Spanish figure this out, and they make sure that colonial mints are as reliable, are producing coins that are as reliable as the mint at Seville. So now, all of a sudden, every piece of silver that leaves those mines is in the form of this dollar.

• 31:44Speaker 03

  This is when you start to see dollars show up in hordes in China. So, cobs had been showing up in China for the, you know, the Chinese, again, are absorbing all the silver in the world, no matter where it's coming from, is headed for China, because it's buying porcelain and silk. This is China, they weren't interested in any products other than silver that came from Europe.

• 32:01Joe Weisenthal?

  Are you saying that China has a history of not buying things from around the world, except accumulating financial assets while the world buys things from China? I'm doing the Trump, I'm hearing this for the first time.

• 32:13Speaker 03

  I'm saying that while writing this book, I anticipated this conversation, and am so happy you took the bait.

• 32:19Joe Weisenthal?

  All right, keep going.

• 32:20Speaker 03

  So now, to Tracy's question, what you start to see in China is, you know, not just cobs showing up in hordes. These are, you know, every once in a while during construction, someone will find a box of coins. That tells us a little bit about what people used at the time. So when you date the coins to the 18th century, you actually start to see these really nice, high-quality, round-milled coins. And this is when, so the word yuan refers to this coin. Yen refers to this coin. The Malaysian ringgit actually means jagged, which refers to the milling on the edge of this coin. This coin becomes a global standard. The Hong Kong dollar is not derived from the American dollar. It's derived from this very specifically shaped and trustworthy piece of silver in the 18th century that began to circulate not just intercontinentally, but domestically within China. It starts to

• 33:05Speaker 03

  move north from the trading ports in the south. So it's the quality of the mints, to answer your question. Sort of Spain, empires are hard to manage. It's very difficult to like, figure out how to get silver out of a hole in the ground on the other side of an ocean, and then turn it into a high-quality coin. Over time, they figure this out. And as they figure this out, you've got one empire, one silver, one coin. It's going everywhere.

• 33:25Joe Weisenthal?

  Super interesting. You say a dollar has some value because there are assets on the other side of the bank that have value. But like, so first of all, I agree with your premise that this idea that there is some like bright line difference between like fiat versus back money or something, that the idea, like that that's sort of nonsense, whatever. I've come around. I used to believe it. Now I think I agree with you. To my mind, if someone asked me, why does a dollar have value? I would say it's because we have a central bank that promises this dollar can be redeemed for a basket of goods and services that will only get 2% more expensive every year. That there is this sort of hard assets backing

• 34:06Joe Weisenthal?

  the US dollar, and you can go look what it is, everything that's in the CPI or PCE basket, and we promise that we're going to keep the ratio so that they only get 2% more expensive every year. We're not going to violate that promise over time. Isn't it that ability to actually extract some share of the national output of America that is why someone would want to hold dollars? And like, if the US like, could no longer produce anything productive? The central bank couldn't uphold that 2% claim and then the dollar.

• 34:41Speaker 03

  Yeah, absolutely.

• 34:42Joe Weisenthal?

  Okay.

• 34:42Speaker 03

  But the mechanics in the detail matter.

• 34:44Joe Weisenthal?

  Okay.

• 34:45Speaker 03

  So Argentina also is blessed with natural resources.

• 34:49Joe Weisenthal?

  Yeah.

• 34:49Speaker 03

  And yet, the details of how it produces money are not working out as well as they are in the United States. So I'm not a big fan of fiat, as I've said. Also, not a big fan of the idea of full faith and credit because that again just says it doesn't really matter how it works. Eventually, the country will back it. Well, how it works is really important. And I think it's important because it allows us to then talk about the mechanics of how the Fed actually works. In the story that we all got in our textbooks, I will not profess to know when you guys went to college. But I went back and looked at my textbook and we had Manku at Tulane University in 1995. It hasn't changed from recent versions of the Manku textbook. And the history of money is just kind of glossed over. It's, there used to be coins and then the paper represented the coins.

• 35:33Speaker 03

  And then now we've got a central bank and it's fiat and the central bank produces M zero. It's really that simple. And then he says, this drives me crazy. Now money is just a social convention. Oh, is it Greg? A social convention? Are we all of a sudden talking about social mores in this economics textbook? Like, the bond market is a social convention and yet we analyze it with some, you know, with some rigor. Your mortgage is a social convention. And somehow, when the subject comes to money, we're back in a dorm room with Joe at 2 o'clock in the morning going, who knows, man?

• 36:00Joe Weisenthal?

  I've come around, like what I'm saying is like, I believe that.

• 36:03Speaker 03

  We might agree.

• 36:03Joe Weisenthal?

  We might agree. I'm saying like, I think it's sort of like, why does a dollar have a value? Because in the United States, there's a lot of productivity of goods and services and I can redeem them at a fairly stable price from this year to the next. I'll hold dollars for 10 years and that basket of goods will get more expensive over 10 years.

• 36:23Speaker 03

  Yeah.

• 36:23Joe Weisenthal?

  But roughly, I'll be able to redeem it again at some point for real physical thing.

• 36:26Speaker 03

  I think we 100% agree.

• 36:28Joe Weisenthal?

  Okay, great.

• 36:28Speaker 03

  But, but the details of that system, I think we should, we should not be scared of those details.

• 36:32Joe Weisenthal?

  Yeah, yeah, okay.

• 36:33Speaker 03

  And I think you also run into a problem, you know, I would say this because I'm training as a historian now. But you run into a problem when you think of the Fed as the origin and the protector of dollars, which is that we had dollars in the 19th century before we had a Fed. And they kind of worked. They blew up every once in a while. It's better to have a central bank. But it's not as if dollars were completely valueless. And I think historically, we run into a problem because we're not precise about what backing is. I think we think now that backing is just gold or silver. That's not the way they thought about it at the time. There was backing, which are the assets that sit on the other side of this ledger. And then there's redemption, which is can you redeem it for gold and silver? So when we stopped redeeming financial dollars for gold and silver,

• 37:18Speaker 03

  the backing didn't go away. All of these assets, which to your point, are productive assets in the real economy. They still existed. We just got better at managing the system so that we no longer needed the edge case of occasional redemption for gold and silver. And so what you see over the course of, you know, the 19th century history of American banks is slowly over time getting better at managing what assets are on the bank's balance sheet. How do we make sure the bank has what we says it has? How do we make sure the bank has the right mix of safe assets and risky assets? That took a while to figure out. You know, America had a unique banking system. There were dollars and shillings produced by colonial governments and then state governments right after the revolution

• 38:00Speaker 03

  that were wiped clean by the Constitution. Constitution says states may not issue bills of credit. That expressly took money out of the job of the states. I don't think they had to. By the way, you know, we tend to assume that this was a good thing, that they were a disaster, that they were inflationary. Some were, some weren't consistently in the colonial period. And then again, after the Revolutionary War, the only truly inflationary money was Rhode Island. Rhode Island seems to be the reason why we can't have nice things.

• 38:26Tracy Alloway?

  I knew it.

• 38:29Speaker 03

  Oh, man. You guys are gonna get emails. But we didn't, we didn't have to end that experiment. It kind of worked. Colonies came up with best practices to make sure why financially that colonial paper money had value. What we did was with the Constitution, we took, we wiped all that clean and we handed it to the banks. I was with a group of historians and we're having dinner and we ended up talking about Hamilton, the play.

• 38:50Tracy Alloway?

  As one does.

• 38:51Speaker 03

  As one does. And I said, I was frustrated because I don't think that we should take it for granted that Alexander Hamilton's financial system was the one that had to happen or that it was necessarily the best one for everyone. And one of the historians said, "You're literally the only person I know who finds that problematic because of the financial plan."

• 39:07Tracy Alloway?

  Just going back to the full.

• 39:09Joe Weisenthal?

  You're like a non-crunk hard money guy.

• 39:12Speaker 03

  Oh.

• 39:12Joe Weisenthal?

  No, sorry. No, sorry. I don't want it.

• 39:14Speaker 03

  No, I'm a credit money guy.

• 39:15Joe Weisenthal?

  No, it's all right.

• 39:17Speaker 03

  I'm a credit money guy.

• 39:18Joe Weisenthal?

  All right, all right. Well, okay.

• 39:19Speaker 03

  I like I mean, I, okay.

• 39:21Joe Weisenthal?

  No, I didn't mean I, it was Tracy's turn to ask a question and I threw that.

• 39:24Speaker 03

  Kind of, but I want to come back to that.

• 39:26Joe Weisenthal?

  I just lobbed that grenade in there.

• 39:27Speaker 03

  Because you and I have the same history of like encountering MMT at the same time. And wrestling with it and trying to figure out like, does it make sense? Does it not make sense? And this, where I am right now is at the end of that long process of wrestling with that. We'll get to that.

• 39:57Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 40:39Speaker 01

  and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 41:20Tracy Alloway?

  Just going back to the full faith and credit

• 41:22Speaker 03

  Yeah.

• 41:23Tracy Alloway?

  part of the conversation and the idea of the dollar as both, you know, a source of privilege and at times a potential burden on the US, or at least something that can be mismanaged in various ways. Can I ask something that's going on right now? So just bringing it up to 2026. Talk to us about like, I guess, the impositions that the dollar's role in the global financial system actually put on the central bank, such that we see headlines where it's like, you know, the Federal Reserve has to provide dollar liquidity for allies.

• 41:55Speaker 03

  So, once you let go of the assumption of monetary sovereignty, all of a sudden, you understand what Euro dollars are. It's very hard to explain to people what Euro dollars are. But once you say, look, anybody can create a dollar. This is the old Hyman Minsky quote, like, anybody can make money. Challenge is getting it accepted. Challenge is getting it accepted. Well, it turns out that over the course of the late 20th century, starting quietly in the 50s, and then it becomes this system by the 70s, banks in Europe were marking up their own ledgers with dollars. They were just manufacturing dollars the same way American banks do it. You guys know this story. My point is, once you recognize that the banks just do it on their own and the country's trying to catch up, you end up with this system, I think, far more important than aircraft carriers, are swap lines to the dollar. I don't think that the dollar is a product of Pax Americana.

• 42:40Speaker 03

  I think it is the product of, if you have dollars abroad on your, on your balance sheet, and you're not an American bank, you're not subject to American regulation, you're not subject to American charters, we've got no control over you whatsoever. However, in a panic, you guys know this, I just want to like, make the point clear. The Federal Reserve will step in and swap dollars with your central bank. So your central bank can swap them temporarily for you. So that liquidity is, you know, sitting on your balance sheet and you, you can make your own dollars whole again with, with, with American dollars from the Federal Reserve. That to me doesn't say the Fed is the origin of dollars. That to me says, anybody can create a dollar. And if you're important enough to the Fed, they'll say, you know what? It is a dollar. We're going to make sure that that doesn't blow up.

• 43:23Speaker 03

  And they always say it for domestic reasons, you know, it affects Americans when the, when the global system collapses. But, but yeah, I think the swap lines are the most important diplomacy we do. And you can see that at Jackson Hole. Like every Jackson Hole, you know that picture they take? Where the, the, the, the chair of the Fed and then whichever central banker happens to be there, they go for this walk and the photographers know that it's coming and they're like, like, so.

• 43:44Joe Weisenthal?

  We've seen it, yeah.

• 43:46Speaker 03

  So I think of that as the Badgett Pageant. Right? They like, they're there to prove that they all know each other. The system works, it's stable, and in the next panic, the dollars are coming.

• 43:55Tracy Alloway?

  Um, I should just say, we're recording this on April 22nd. I don't know what's going to happen with various swap lines, but I did see another email come out today from the Council on Foreign Relations, saying that they have both updated and upgraded their swap lines tracker. So take that as you will.

• 44:13Speaker 03

  Wow. I love that map.

• 44:15Joe Weisenthal?

  Okay, but here's like.

• 44:16Speaker 03

  Okay.

• 44:17Joe Weisenthal?

  I guess what I'm trying to understand is like, all right, monetary sovereignty, kind of ambiguous term, dollars, they precede the Fed. I get all that, sure, you've convinced me, et cetera. But when those other banks or countries are in a panic, they come to our Fed for our dollars, right? So what is it about the dollars that we create? What is it about American made dollars that seem to be special? If, you know?

• 44:43Speaker 03

  I, I would take your point from earlier. It is an incredibly productive economy, still.

• 44:47Joe Weisenthal?

  Okay.

• 44:47Speaker 03

  We've got lots of real things in this economy. I also think we've got pretty good bank regulation.

• 44:52Joe Weisenthal?

  Okay.

• 44:53Speaker 03

  I, I could ask for better, but we've got pretty decent, we've got stable banks. Yeah. Nobody else has the pool of federally insured dollars that we have. Europe has got okay banking regulation, but they do not share a common deposit insurance. We have that. So I, I, I think that the, the combination of.

• 45:12Joe Weisenthal?

  Yeah.

• 45:13Speaker 03

  A responsible Fed, reasonable financial regulation, and a massive productive economy means that yes, of course, the dollars we create here are gonna have more meaning.

• 45:23Joe Weisenthal?

  Got it. So this is the key. So this is, I think, the key thing, which is that what's happening on the most sort of abstract level, when there's a swap or something like that, or currency swap, is that there is a transaction happening from foreign-made dollars to American-made dollars. And the reason that American-made dollars are pretty good.

• 45:45Speaker 03

  Yeah.

• 45:45Joe Weisenthal?

  Or maybe a little bit better than other dollars is because they're what?

• 45:50Speaker 03

  They sit on this regulatory regime, which was still there despite constant attempts to chip it away. I also think that it's impossible to compare any other asset in the world to a treasury.

• 46:00Joe Weisenthal?

  Okay.

• 46:01Speaker 03

  Almost everything that's on the asset side of the Fed's balance sheet is a treasury. And the American economy is productive, and the American federal government is gonna continue to have the ability to take in taxes of in-bank dollars.

• 46:13Joe Weisenthal?

  Yeah.

• 46:13Speaker 03

  Which then give treasuries meaning. There's just like, there's nothing else comparable to the volume of treasuries, and there's almost nothing else comparable to the security of treasuries. I don't, I don't think the Fed is irrelevant. I don't think America is irrelevant. What I'm pointing out is, one of the reasons that the dollar is global is because Americans, over the course of the 60s and 70s, said, "Go ahead, make your own dollars abroad. We're not gonna stop you." They, they sort of allowed this system to bloom all over the world. And then, and only then, was the Fed made responsible for those dollars. I'm, I'm trying to invert the production of money.

• 46:45Joe Weisenthal?

  Yeah.

• 46:45Speaker 03

  The economist started at the Fed. It starts everywhere.

• 46:48Joe Weisenthal?

  Right.

• 46:49Speaker 03

  And I think that central banks, we have central banks because we need them, because banks are so important, we need our own big bank to do a job for us. The original goal, the charter of the Bank of England, its original purpose was to carry on the war against France. That's all it was supposed to do. The central bank is just a big bank that does what we need it to do. And so, in this case, the Federal Reserve is doing a thing that we think is diplomatically important.

• 47:11Joe Weisenthal?

  Do you think, is there anything to the part of the MMT story, in your view, in which taxes help create the demand for a currency and thus give it some element of moneyness?

• 47:24Speaker 03

  Here's where that falls apart for me.

• 47:27Speaker 03

  We have so many forms of dollars that we have to be specific about what we're actually taxing and what we're actually spending. And what the United States is actually spending out of the Treasury General Account is bank dollars. Those dollars were created in commercial banks. They were taxed in or they were they were bought in. I can hear MMTs right now, just the heads exploding everywhere. But I really believe this. And when you look at the accounting, it's very clear. The Treasury, the Treasury General Account of the Fed, you know, takes in money through taxes and it takes in money when it sells treasuries. And then it spends it back out into the economy. So it's specifically bank dollars that have meaning. So, yeah, it has meaning that you have to pay your American taxes in American bank dollars. But those bank dollars don't just have meaning because they're taxing in bank dollars. They have meaning for all the other reasons that we've talked about.

• 48:10Speaker 03

  All the bank regulations, the federal deposit insurance, country music, all of it, like are what give the the the dollar value. So I think this idea that you're just, and this, by the way, so people who believe in this theory of of money really like to point to colonial monies. So, you know, all, most of the colonies, eventually all of them, had their own forms of paper money. And they did, in fact, print them up and they did, in fact, tax them back out. However, they also all had a sinking fund, which was basically, it was a promise to take in silver and gold in tolls and port duties at their various ports. And then, from time to time, sink those dollars, buy them back with silver and gold. There was a coin sitting on the edge of this. This was true in New York, this is true in New Jersey, this is true in Pennsylvania, this is true in Maryland.

• 48:54Speaker 03

  And so to just say, they printed these dollars up and they made sure they were counterfeitable and they they wrote on the back, 'Tis death to counterfeit. That came from the Benjamin Franklin shillings. If I ever get a tattoo, that's the tattoo. And and then tax them back in. You know, there's a lot of work being done. And the dominant theory of that among historians is it was given money, it was given value because you had to tax it back in. The problem is, you, in order to believe that, you have to ignore the infrastructure that they put in place of the sinking fund to make that money have value. And you have to assume they didn't know what they were doing. This is my frustration with economic history. It often assumes that people in the past didn't know what they were doing with money.

• 49:30Tracy Alloway?

  Right, they sort of stumbled into it.

• 49:32Speaker 03

  They knew way more than we know. Like, I've spent a lot of time reading the Maryland Gazette from the 18th century. They were talking about discount rates, they were talking about bills of exchange on London, they were talking about you would regularly get the the value of stock in the Bank of England. Like, it was like reading an analyst, often. They were really sophisticated, they really understood how money works.

• 49:51Tracy Alloway?

  How fun was it to write this book? Because, you know, we sort of touched on it earlier, but like you got to go to all these archives. You got to go in, I think you said a Czechoslovakian cave or something.

• 50:01Speaker 03

  I did. I'm going to tell you how much fun it was, and then I'm going to hope that my wife never hears this because I think I complained constantly over the writing of this book. I love being in archives and I love being in libraries. And one thing that I learned how to do, that I'm going to do for the rest of my career, is read ledgers as history. And they often get ignored. You know, people like to read letters, but people kept their financial documents. And I think that you actually have less of a reliable narrator problem when you're looking at financial records because they had to keep them accurately. You can lie in a letter in a way that you cannot lie on a ledger. And so you can read ledgers from the 19th century. I have this sort of full history of the career of a man who moved from New Jersey in the 1830s to New Orleans, and he sold carriages.

• 50:45Speaker 03

  And sort of, we know how money worked because he sold. And then we sort of know how he, I think he had advance notice of the panic of 1837 because he seems to have cashed in. He pulled a lot of cash out right before the panic, like he knew what was going on. And then, you know, and then you can see how he decided that he wanted to be a sugar planner and how he made that financial transition. And then exactly how money worked for him once he was on a sugar plantation. No cash at all. Everything was on paper. He sold sugar to his factor. You can read all these documents. In New Orleans, the factor kept a running account with him. If he wanted to buy something in New Orleans, he would write a letter to the factor. And the factor would send something back up and just subtract it from his account. He didn't have any physical cash. And when he wanted to do something, actually in St. James Parish where he was, he would write promissory notes. Those promissory notes would circle. We've got all the signatures on the back.

• 51:30Speaker 03

  So for me, the like, what I now love to do weirdly is read old ledgers because it's like watching a movie. It's like running the tape back of exactly what somebody did, sometimes hour by hour by hour during their day. When you get a sense of their commercial life, you also get a sense of their life. And you can see these actions they're taking point by point. That, I mean, and there are amazing stories. I chased a story about this guy. He had a promissory note go bad, so he had to take it to New Orleans notary. And then the notary had to go find the guy who had written the promissory note. It turns out he wasn't at his house anymore because his wife had kicked him out and he was living in a stable. And they tracked him down at the stable. This is all in the notarial records while they're trying to like, and then it turns out that he eventually stole a horse and left New Orleans.

• 52:10Tracy Alloway?

  And then he had to go on a massive road trip and track him down, right?

• 52:14Speaker 03

  No, unfortunately, then that then I'd have a movie script. I unfortunately do not have a movie script.

• 52:19Tracy Alloway?

  That would be amazing. I would, yeah.

• 52:19Joe Weisenthal?

  Is this what you learn in school, like, when you study to be a historian? No, but do you learn like the the techniques of archival research? Because I wouldn't know the first thing of like, how to even like, find? I mean, these days I would just try Google or chat GPT. What what archival library might have this information? Maybe I'd start my search there or something like that. But when when they when they talk in the academic setting about training to be a historian? Are these like, sort of like, the the the craft of the trade that you learn? Like, how do you learn how to?

• 52:52Speaker 03

  I thought that I would.

• 52:53Joe Weisenthal?

  Identify the library and get to, you know, know where in the library to look and which stacks to look into.

• 52:59Speaker 03

  So that's a really important question, and the answer is not what you think it is.

• 53:02Joe Weisenthal?

  Okay.

• 53:02Speaker 03

  They do not teach you how to do that.

• 53:04Joe Weisenthal?

  Oh, I just assumed.

• 53:05Speaker 03

  You read a lot of secondary literature, you read a lot of theory, you do a lot of historiography. So, you know, you'll you'll you'll take a course as a graduate student and and you'll sort of you'll look at all the different ways that people have seen the same period. The archives, it's a little weird. It's like, you know, the cliche of some societies where, you know, when a child is ready to be an adult, they send them out into the woods, they got to live on their own, and they just got to figure it out. Good luck to you, kid, try to kill a wolf and come home. That's a little bit what it's like in the archives. I kept on asking, like, how do I do this? And they're like, go figure it out.

• 53:36Joe Weisenthal?

  Really?

• 53:36Speaker 03

  And so you do kind of figure it out. I have a I have ways of going into the archives now and recording things. I'm much better at it than I used to be. There are a couple of things I know, like, I now always bring food in the bag to the archive. Because an archive is often sort of not near a good source of food. So you have to have some sort of protein bar in your bag.

• 53:53Tracy Alloway?

  Wait, but one thing I know about the archives, they don't let you eat in the archives.

• 53:57Speaker 03

  Well, not in the archives.

• 53:58Tracy Alloway?

  Right, okay.

• 53:59Speaker 03

  But you have to figure it out on your own. You know, I looked at a lot of bank records in New Orleans, and the the records of the Citizens Bank in New Orleans were literally underwater during Katrina. Jones Hall at Tulane University flooded, and so they they did this amazing thing where very quickly they recovered them, they got them out of the water, and they irradiated them to kill anything. But I've talked to other people who've looked in those those archives, and you get sick. Flipping through them, you feel gross after two days of doing that because I think there's bad stuff in those pages. Some of the pages are stuck together. So, you know, the archive itself is this living thing, you know, which and also there are lots of theories about the about what gets kept and what doesn't. When you're in an archive, you have this idea that like, this is the record of what happened. Nope. It's the record

• 54:40Joe Weisenthal?

  of what was decided to be kept.

• 54:42Speaker 03

  That's exactly right. And so often, you know, I looked at, I sort of constructed sort of a brief story about an enslaved woman in St. James Parish, based on some promissory notes that sent her around the parish from from one plantation to another. You can sort of, you have to, that nobody kept those records on purpose so that we could get her story. But it's possible to read, they call it, you know, reading between the archives. So you have to do a lot of that work. I really think that I almost don't want to say it out loud. I think that ledgers are an incredibly underused resource. They give us a picture. I was in London last month and I found the complete financial records of John Locke. It wasn't this like big archival discovery. They're there. They're in the catalog, but

• 55:25Speaker 03

  nobody looks at them. I can tell you exactly how he paid for everything. And for a man who didn't believe that credit was a good form of money, he sure seemed to use a lot of credit.

• 55:32Tracy Alloway?

  All right, Brendan Greeley, thank you so much for coming on Off Lots. The book is The Almighty Dollar: 500 Years of the World's Most Powerful Money.

• 55:41Speaker 03

  Thank you.

• 55:54Tracy Alloway?

  Joe, that was a lot of fun.

• 55:55Joe Weisenthal?

  That's such a great conversation.

• 55:56Tracy Alloway?

  Obviously. And the book is really, really interesting and it's full of that like archival detail that really comes through. One thing that stood out for me from that conversation, again, it's sort of going back to that point of like, the dollar is not fully under the US government's control, right? And there are times when there are other entities out there who can create their own dollars, as Brendan was describing, at which point, like, it does become an obligation on the United States to support those dollars. And it can become another political tool, but it's still like a constraint in many ways.

• 56:30Joe Weisenthal?

  Okay, so, you know, I have, because we've done several episodes, including our series on the history of Eurodollars, like, the idea that foreign banks can manufacture dollars, that I sort of can understand.

• 56:42Tracy Alloway?

  Yeah.

• 56:42Joe Weisenthal?

  But it actually really deepens my understanding of it further, to get the idea that, well, actually, long before there was the United States, there was the decentralized manufacturing of dollars.

• 56:55Tracy Alloway?

  Right.

• 56:55Joe Weisenthal?

  Which I hadn't really thought about that, or even, like, really known about that aspect before, but that dollars is this thing that had decentralized manufacturing for a long time. I guess the one thing that, like, I had sort of understood, you know, so William Jennings Bryan gave the famous Cross of Gold speech, in which he argued that we should have bimetal, I think it was a bimetalist, or that we should have silver. And I remember there being, like, you know, my, my, my understanding of historical monetary is not that strong, but I knew this thing that was, like, independent mints could, like, mint silver dollars at times, because there was a lot of silver, the, be more, more inflationary, the farmers wanted it, or something like that.

• 57:36Joe Weisenthal?

  So I guess I sort of did know that the product, the literal production of dollars had always been this sort of decentralized thing.

• 57:44Tracy Alloway?

  Sort of diffused, yeah.

• 57:45Joe Weisenthal?

  But I had not quite appreciated, like, how far that went back.

• 57:48Tracy Alloway?

  Yeah. The urge to, to make dollars is, is inescapably human, I think. Everyone wants to make their own money in some form or another, whether it's, like, just a simple barter system, or like, a ledger of credit that you keep track of.

• 58:03Joe Weisenthal?

  It's just so interesting that there was this thing called dollars, you know, I guess, it's like a standard, right? Like, it's like, it was almost like the dollar was a sort of common standard that anyone could, you know, it's like, anyone could make a CD that fits on a CD player, or something.

• 58:17Tracy Alloway?

  A good user interface and a network effect.

• 58:20Joe Weisenthal?

  And a good, yeah. It could be that one day, like, US global hegemony has, like, long gone, and people talk about America as just like this thing in the history books, this used to be a great power, and blah, blah, blah.

• 58:33Tracy Alloway?

  Yeah.

• 58:33Joe Weisenthal?

  And everyone's still using the dollar.

• 58:34Tracy Alloway?

  The dollar still exists, yeah.

• 58:35Joe Weisenthal?

  Yeah, it could be, it was pretty good.

• 58:36Tracy Alloway?

  Totally.

• 58:36Joe Weisenthal?

  It's a good currency.

• 58:37Tracy Alloway?

  Okay. All right, shall we leave it there?

• 58:39Joe Weisenthal?

  Let's leave it there.

• 58:40Tracy Alloway?

  Okay, this has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 58:45Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the stalwart. Follow our guest Brendan Greeley. He's at BH Greeley. Follow our producers, Carmen Rodriguez at Carmen Armin Dash, Joe Bennett at Dashbot, Cale Brooks at Cale Brooks, and Kevin Lozano at Kevin Lloyd Lozano. And for more Odd Lots content, go to Bloomberg.com/oddlots, where the daily newsletter and all of our episodes. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.

• 59:13Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we talk about what money actually is, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

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