From 1271 to 1295, Marco Polo went around China and saw a bunch of things. Kublai Khan was running the place. (Coleridge tells us that Kublai decreed that a stately pleasure dome be built in Xanadu, but I think he made that up.) Anyway, among the strange things that MP saw was paper money that was being printed in vast quantities. He thought this was a brilliant idea, because it cost Kublai nothing to produce it. MP thought that printing paper money was akin to alchemy.
Later on, he saw the results of China's experiment with paper money. He observed thusly:
"Population and trade had greatly increased, but the emissions of paper notes were suffered to largely outrun both... All the beneficial effects of a currency that is allowed to expand with a growth of population and trade were now turned into those evil effects that flow from a currency emitted in excess of such growth. These effects were not slow to develop themselves... The best families in the empire were ruined, a new set of men came into the control of public affairs, and the country became the scene of internecine warfare and confusion."
Note to Obama, Geithner, and Bernanke: This is Peoria, not Peking!
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