Money in America: a historical narrative

The Spanish silver dollar was the first real money generally used by the settlers in the new world. Soon, colonies experimented with fiat currency and that always ended poorly.

With the U.S. Constitution, a sound money basis, albeit based on gold and silver coinage was codified. Bimetallism proved a trap later. More than one de facto central bank was attempted. Fractional-reserve banking often brought on panics as over-issue of currency proved time after time that greed doesn't pay.

The story of money cannot be told in the abstract -- political economy is inevitable. Debased bank notes, cries for 'an elastic currency' and an ongoing chorus praising inflation, all were part and parcel of the times.

Intertwined with money are the political factors and factions that brought about the income tax, direct election of senators, and cries for banking reform that ended early in the 20th century with entrenched systemic inflation.

That barbarous relic was cast aside. The reserve world currency became the petrodollar. And where we are today was shaped by our past history of money.