I recently came across an article written last July by Phillip Judge, Anglo Far East Bullion Company.  He discusses his observation of the life cycle of money:

Life Cycle of Money, a cycle that has played out time and time again throughout most of the history of man walking the earth.

Stage 1) A Free Market naturally develops as men and women apply their labour to the natural resources around them.

Stage 2) Next, money that represents fairly the stored value of man’s past labour naturally develops in the free market, what we like to call ‘Free Market Money’.

Stage 3) Soon governments and rulers emerge and eventually become deeply involved in the free market, regulating trade and imposing taxes.

Stage 4) In our last Daily Dig on this theme, we observed that the cycle moves quickly to the next stage where government monopolizes money supply.  In history, they have achieved this by taking control of the sources of issuance, the mints and private treasuries of the goldsmiths.
They begin to dictate what is now to be acceptable as money in the market place, its weight and measures, and appearance and look (emperors and kings have always enjoyed seeing their faces appear on the money of the realm).  Read More