Smarty_Pants

Can We Really Guide the Economy?

"but there's a very high chance that they will be better than if we did nothing"

Perhaps for the short run, but what about after that? If history is any guide, we may wish we had done nothing instead:



[The] adventure in paper money ended badly for France in general and the monarchy in particular. On September 29, 1790, another 800 million [paper] assignats were authorized. By 1791 another 600 million were run off.

In 1791, mobs stormed the Paris food shops looking for bread. The government imposed price controls with the threat of the guillotine for any merchant not in compliance. The French state decreed that any person selling gold or silver coins, or making a difference in a transaction between paper and gold, would be imprisoned in iron for six years.

By May 1794, any person who even asked if payment was to be made in gold or paper was subject to the death penalty.

By 1796 the situation was in such chaos that the French burned all their paper money and the means of [its] production:

“on February 18th, 1796, at nine o’clock in the morning, in the presence of a great crowd, the machinery, plates and paper for printing assignats were brought to the Place Vendome and there, on the spot where the Napoleon Column know stands, these were solemnly broken and burned.” (Andrew Dickson White, Fiat Money Inflation in France.)