Colonial scrip wasn't backed by anything other than a promise. It was created not as a currency for the populace as much as a means to pay for the revolutionary war. The first federal money was issued with same backing,my a central issuer, the government. While an interesting video of how we've supposedly become what we were supposedly never meant to become, there are a lot of misappropriated fact bending based on myth.
You're right...the first specie backed paper currency was issued by the Bank of North America. However, the Bank of North America was a private company chartered by the Continental Congress. It was later replaced by the First Bank of the United States in 1791. The colonial script, although a fiat currency, was accepted as payment for taxes so it wasn't completely without value...early on. Later, more money was printed than taxes to be paid. When inflation ensued, British merchants got upset that the payment they received became worthless (sound familiar China?). Other than our "promise" to redeem our fiat currency with some future, depreciated money, how is money today any different than in Colonial times?
I think the federal reserve system is brilliant. Although not perfect, it does act as a check to congressional spending. If congress, through the treasury department, could tag printing orders to every bill and good idea they came up with, then the situation would be truly out of control. I am tired of hearing the BS line of "creating money out of thin air" nonsense. Printing money requires a bond to be issued by congress or recently as part of Quantitative Easing, handing over real assets to the Fed. In order for GM to get X dollars, they had to turn over X dollars. worth of GM stock (ownership). Can anyone in their right mind state that a manufacturing plant is worth nothing? If you sell a house and receive FRN, are you trading nothing for nothing, or worst something of nothing. Is the worth of your house backing the FRN in your pocket. Can't you not go across the street and obtain ownership of a similar house with the FRNs. Gold was used because it was difficult to fake or reproduce, paper money was. Thing have changed, so paper (actually linen) is difficult to fake or reproduce. You can't run a state economy, much less the worlds, on all the gold that exist. This explains the glassy eyed stares I get when I ask exactly how their little gold money plan is going to work.
