Why Learning The History Of Forex Can Help You Today
Back in the days when kings thought they had a divine right to rule, they often wanted more money than their parliaments granted them. But most parliamentary bodies didnt consist of fools; they certainly knew better than to leave the powerful tool of taxation solely in the kings hands.
Without being able to tax to his hearts content, the kings other financial weapon was to devalue his countrys currency: recall all gold and silver coinage, melt it down, then reissue it in a lighter weight or with base metals mixed in, pumping up the royal treasury with the extra. Because the currency was backed more by the citizens confidence in the stability of their country than with anything else, many people never even noticed, and the king got his way in the end.
But sometimes people did notice, and sometimes they werent all that confident of the stability of their country, say, if a powerful enemy was threatening to invade. When that happened, often merchants refused to accept the devalued coinage in trade, demanding real gold or silver instead and rendering the kings currency valueless. Such undermining of the...
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