In 1973, not long after the United States abandoned the gold standard, I opened a coin store in Berkeley, California. Business was active, especially the buying and selling of gold and silver coins and ingots. Every day, new customers from all over the world walked into my store and provided me a remarkable education from their experiences. I became fascinated as to the reasons that prompted their purchase or sale of gold and silver.

Being situated next to a university campus brought me in contact with vastly different viewpoints on money. The first week of business, a graduate student in economics chastised me for buying and selling gold coins: a barbaric relic. Others followed, with much the same derision for this "gold standard thing." What gold standard? What were they talking about? All I was doing was making a living, no theory or rhetoric here. I was not a teacher, or a student trying to get an A. My occupation was something they never encountered in their studies and textbooks: an actual market force. Using my own money, I determined what I bought and sold, and how much I was willing to pay. Dealing in precious metals is simple arithmetic. The coin shop is the place where people take possession of ounces of hard money.

I wanted to know more about the unique function I was performing. Coin shops were a stark contrast to the new world of fiat paper money. Fortunately, one of the world's greatest libraries was within walking distance of my business. I signed up for a library card. In my ignorance of the subject I tried to find the term "fiat paper money" in the indexes of books on finance, history, economics, political theory and social theory. It was only when I read the books for their content that I found stray references to paper money and its effects on the people who depended on it. Such references form the backbone of this book and the reason it was written.

I have walked through the great financial centers of my time: New York, London, Paris, Berlin, Zurich, Hong Kong, Tokyo, and San Francisco. My thoughts have often turned to the forgotten the legacy of Khanbalik, Kaifeng, Hangchow, Zaitun, Venice, and Amsterdam. Many generations have passed since men of finance made monumental decisions in these places. But one thing is for sure: old mistakes will reappear, often in a different guise, again and again as though they are a new answer to age-old problems. The only difference today is that the stakes have never been higher.

Copyright © 2004 by Ralph T. Foster