SNEAKPEEK Chapter 16:
“Money is a token or symbol. No practical reason makes gold or silver more valuable than paper or wampum or conch shells or cows. Rather, any currency’s worth depends on what people agree or imagine is fair to exchange as a signal of trust. Tally sticks, coins, and paper generally represented something of tangible, touchable value, like gold, sterling, or land—at least until fairly recently.
During the Renaissance in Marco Polo’s time, the royalty of Italian city-states and their merchants traded in coins, often stored in the safes of goldsmiths and moneychangers. These men tracked the value of different coins and could exchange, for example, florins for ducats when needed for business. Sometimes they went further and rented out money for a fee, called interest, on the sly.
Weatherford describes how the old limits of those kinds of concrete exchanges were transformed by the Renaissance moneylenders’ bills of exchange. While a royal bag of coins might have sat idle, hidden away for years, bills of exchange enabled moneylenders to loan that money out several times over, so that merchants in several cities exchanged the paper bills—while the king still had his gold florins, untouched, on deposit. When paper bills circulated as money, there was more of it than ever.
This “magic” of bank-created, air-money was eventually named fractional reserve banking, the kind we use now…"
