Wednesday, July 07, 2010

Not quite matching Kublai Khan's example

The fifth Khan of Persia was named "Gaykhatu," which means "amazing" in Mongolian. After recklessly squandering the money left by his predecessors he was in no position to cope with a massive rinderpest epidemic that began devastating his subjects' livestock in 1294. Amazing came up with an amazing solution to his financial problems: paper money.

Invented by his boss, Kublai Khan (see picture), back in China the idea of paper money was a godsend. He would print up certificates just like the Chinese ones, decree death for anyone who refused them, and all his problems would be solved. Amazing! Unfortunately for Amazing he did not fuss too much with technical details like convertibility and capital controls, which Kublai Khan had agonized over, and the result was the total failure of the project. Economic chaos ensued. Amazing was deposed and put to death the next year. ( Source: )