Subject: Re: 1623 currency crisis & Federal Reserve
During mankind's Bronze Age, it was recognized that metal was both useful, hard to acquire and when purified, relatively rare. To this day, military heroes are awarded "medals" which at one point was essentially a cash reward. While iron was useful, it was easily damaged by rusting, so most European and Middle Eastern currency systems were based on gold, silver and bronze coins in value ratios associated with their comparative rarity. In order to facilitate trade, agreed weight of each metal were common across cultures.

In the Roman Empire, gold coins were worth 12X their weight in silver coins.

Early-14th century: In places like Venice, the ratio reached 14:1 in 1305 before falling to 10:1 by 1330.
Mid-14th century: A low point for gold's value (or high point for silver's if you prefer) saw the ratio drop to 9.4:1 around 1350.

Mid-15th century: The ratio rebounded to 12:1 in the 1450s, restoring the traditional Roman-era standard.

After 1492, the discovery of vast silver deposits in the Americas flooded Europe with the metal, significantly changing the dynamics of the market. This led to a relative devaluation of silver and pushed the ratio higher in the 16th century. This influx caused a significant drop in silver's value, leading to a period of widespread inflation known as the Price Revolution. For centuries, the silver-to-gold ratio remained relatively stable at about 15:1, before becoming more volatile in the 20th century.

A common technique of currency theft was to file or clip small portions of coins (especially poorly minted ones) which allowed the adulterer to collect lots of small pieces of precious metal while each of those coins was worth a little less (if weighed by the recipient). To counteract this process, the edge of modern coins were "milled" (those grooves around the edge of US silver and gold coinage) which would make a filed or clipped coin immediately detectable (and therefore not easily used afterwards). Despite the metals being relatively worthless, modern US coins (other than the penny and nickel) are still traditionally milled.

Due to problems with British gold coins minted by hammering a die being "clipped" and therefore underweight, most international trade demanded using foreign gold coins whose weight was more consistent and trustworthy. The guinea was a coin, minted in Great Britain between 1663 and 1814, that contained approximately one-quarter of an ounce of gold (0.247191011 troy ounces fine gold) which was the same as the most common European coins (Dutch, Spanish, French etc.) used for trade. It was named after Guinea, the British colony where the gold was mined.

While originally worth the same as the Pound Sterling, over the years the price of silver dropped and, while the value of a guinea varied compared to silver coinage, eventually it was set at a pound and a shilling (21 shillings).

Despite all these gyrations, the currency of countries was related to their ownership of precious metals. In the US, this connection went out of style generations ago. Despite that we, as well as most countries, keep substantial quantities of gold "just in case".

Jeff