Why It's Really Hard to Create a New Currency in a Revolution

Joe Weisenthal (0:09)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:14)

And I'm Tracy Alloway.

Joe Weisenthal (0:15)

How are you doing, Tracy?

Tracy Alloway (0:18)

I think I'm like dying of consumption or something. Consumption is a thing, right?

Joe Weisenthal (0:24)

Yeah, I think it used to be a thing, and now there's probably another name for it anyway. Sorry to hear that.

So we've had a lot of bleak episodes lately. We just finished a sequence of episodes on money and crime and terrorism and the black market and stuff like that. And I think today's is also kind of going to be pretty bleak because we're going to be talking about the French Revolution.

Tracy Alloway (0:51)

People died of consumption in the French Revolution, right?

Joe Weisenthal (0:55)

They probably did, yeah. It's a good way to connect our episode to your current ailment.

Tracy Alloway (1:01)

Okay, Joe, in all seriousness, that is very bleak. We seem to be on something of a very dark, thematic pathway for 2017

Joe Weisenthal (1:11)

Yeah, maybe it says something about our times. But of course, we're taking an angle that is relevant to past episodes that we've done. And I think it's one of my favorite questions and one of your favorite questions, which is, what is money exactly?

Tracy Alloway (1:29)

Oh, and the French Revolution will tell us something about what money is?

Joe Weisenthal (1:33)

Right, because every time in history the subject of coming up with a monetary system is important. And economists and historians and people on financial markets tend to, I think, sort of abstract away the question of money. And they just sort of come up with these models that take it for a given.

And it often seems to be the case that people should go the other way. Start by looking at the form of money and seeing what it says about the time.

Tracy Alloway (2:06)

Right. Well, also people forget that money is intricately linked with power and therefore with politics. And sometimes money can be, I guess, either a reinforcing force of the existing social structure or an instrument of change, right?

Joe Weisenthal (2:25)

Right. And people...

Money makes people do things that seem irrational. I mean, in theory, people should just want to increase their wealth and material wealth. But sometimes people just want to run up the score, so to speak.

Tracy Alloway (2:38)

OK, so I'm intrigued. So who is going to be connecting the idea of money with the French Revolution for us?

Joe Weisenthal (2:46)

Well, there's the perfect guest. We're going to be talking to Rebecca Spang. She is a professor of history at Indiana University.

And she actually wrote a book called Stuff and Money in the Time of the French Revolution, which is essentially a monetary history of the French Revolution, looking specifically at how they dealt with what is money and how that really shed some interesting light on this period in history.

Tracy Alloway (3:12)

Very cool. OK, so I have a feeling, in addition to asking about the French Revolution and money during that era of time, we're going to have a whole bunch of questions about money now as well, right? Like things like Bitcoin, the euro.

Joe Weisenthal (3:26)

What it could teach us now.

Tracy Alloway (3:27)

Yeah, Trump's relationship with gold, all sorts of current event stuff, too.

Joe Weisenthal (3:33)

So much, so much we can take from the past to apply the present. So without further ado, Rebecca, thank you very much for joining us.

Rebecca Spang (3:51)

Oh, thank you for inviting me. I'm delighted to be here.

Joe Weisenthal (3:53)

So let's start with the question of why this angle on studying the French Revolution. No doubt there have been numerous books, much academic study about this period of time.

Why explore it through the monetary system?

Rebecca Spang (4:13)

There's a well-established way of thinking about the relation of money and the French Revolution, which is to say that the French revolutionaries were utopian philosophers who had little understanding of the practicality of government. And so one of the ill-advised things they are caricatured as having done was to issue paper currency in great quantities.

It was issued in such quantities that so-called hyperinflation resulted, and the whole system collapsed. And that is something that historians, economists, and policymakers, ever since the debate on the greenback in the aftermath of the American Civil War, that is a story that people know and are familiar with and cite as true.

Joe Weisenthal (5:07)

Everyone just takes it for granted.

Rebecca Spang (5:10)

Everybody takes it for granted, exactly.