3. The Paper Currency of Virginia (1760s) and Its Lessons

Colonial paper currency regimes like that of Virginia in the 1760s hold many lessons for today. Ehnts shows, based on historical accounts of the time, how paper currency was used by the government to provision itself with resources in order to build and maintain public infrastructure like bridges. The monetary system is shown from the perspective of the government, which provides us with new insights. The government will have to decide the name of the currency, how much it pays for one hour of work, how much to spend, and how much to tax. It also needs to think about what resources to use and what to do with them. The chapter draws attention to questions like how to draft a federal budget and what the nature of the “public debt” is.