Newnan resident Lawrence W. Reed is Chairman Emeritus of the Foundation for Economic Education. His most recent book is “Was Jesus a Socialist?” He can be contacted at [email protected]
The greatest “Renaissance man” of the 15th century is unquestionably Leonardo da Vinci (1452-1519).
His interests encompassed painting, engineering, architecture, anatomy, sculpture and more.
Two decades after Leonardo’s birth, another polymath was born who could rightfully claim the “Renaissance man” of the 16th century. His name was Nicolas Copernicus (1473-1543). His interests included astronomy, mathematics, theology, medicine, and politics.
Copernicus correctly postulated that the Sun was at the heart of the solar system, not the Earth. Confirmed a century later by another “Renaissance Man”, Galileo Galilei, Copernicus’ heliocentrism transformed astronomical science forever. He is also believed to have been the first to assert that the Earth rotates on its axis once every 24 hours.
You might remember it from your high school science class. But did you know that Copernic also made astute contributions to the field of economics?
Copernicus is the author of several treatises on economic issues. He opened his most famous with this remarkable paragraph:
Although there are innumerable plagues which generally weaken kingdoms, principalities and republics, the four most important (in my opinion) are dissension, mortality, sterility and debasement of currency. The fourth is undermining states, not with a single all-out attack, but gradually and in some covert way.
Soaring prices resulting from the debasement of money caught the attention of Copernicus in the early 1500s. Governments that usurp the market function of providing a medium of exchange (and then ruining it) are a problem secular. Even the ancient prophet Isaiah condemned him when he chastened the Israelites with these words: “Your silver has become foam, your wine mixed with water” (Isaiah 1:22). Throughout war-torn Europe in the 16th century, governments cheated their people by reducing the precious metal content of their currencies. Our government is essentially doing the same thing today, both with our currency and with our paper money (removing the precious metal from one and printing too much from the other).
“Money loses its value especially by excess of abundance”, wrote Copernicus. “The dearness of everything is the result of the cheapness of silver, for prices rise and fall according to the state of silver.”
What economists today call “Gresham’s Law” was predicted by Nicolaus Copernicus decades before it was identified by Sir Thomas Gresham. It is commonly expressed as “bad money drives out good money”.
Older Americans should know this law of economics from personal experience. Our dimes, quarters and half dollars were 90% silver until 1965 when the silver content was removed from dimes and quarters and reduced to only 40% in half dollars (then abolished entirely in 1969). Coins minted in 1964 and earlier were hoarded or melted down while we spent the downgrade coins. If you have two quarters in your pocket, one 90% silver dated 1964 and the other dated 1974 containing no silver at all, which one will you put in the vending machine?
Copernicus understood that sound money requires limitations as to its quantity. Degrading money (or printing more paper money) drives prices up. The culprit for the erosion of the value of money is invariably a dishonest government.
And the more things change, the more they stay the same.
Newnan resident Lawrence W. Reed is Chairman Emeritus of the Foundation for Economic Education. His most recent book is “Was Jesus a Socialist?” He can be reached at [email protected].