Paper Money on This Day in History

This Day in History: The colony of Massachusetts issued the first paper money in the Americas on this date in 1690. The earliest paper money originated in China, and even they succumbed to the dangers of over-printing and inflation. In fact, the Chinese suspended the use of paper money for hundreds of years until paper money was printed again in 1890. Andrew Jackson in his farewell address warned of the dangers of paper money:

"The Constitution of the United States unquestionably intended that gold and silver would be the nation's currency. But the establishment by Congress of a National Bank, a similar legislation in the states, has driven silver and gold from circulation, and substituted a paper currency in its place...Because paper currency has no value in and of itself, but rather is a system which is based upon public confidence, it is susceptible to large and sudden fluctuations, which results in a risky property market and unstable and uncertain wages for workers. The entities which create the paper money cannot be relied upon to keep the right amount of currency in circulation."

Paper money used to be backed by gold, but Nixon stopped that back in 1971 and since then all government paper money (fiat money) is backed only by your faith in that money...much like bitcoin.