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The Rise and Fall of Monetary Empires


EXAMINING MONETARY EMPIRES (RAY DALIO)The legendary hedge fund manager Ray Dalio offers an insight into the dynamics that he saw when studying the rises and declines of the last three reserve currency empires (the Dutch, the British, and the American) and the six other significant empires (Germany, France, Russia, India, Japan, and China) over the last 500 years.



After studying these past cases, he has identified clear patterns that occurred for logical reasons:

1. Behind the success and failure of great monetary empires, over time, there are giant cycles

2. There are 17 forces that affect the big cyclical swings in wealth and power (check below)

3. Of the 17 forces, the debt cycle, the money and credit cycle, the wealth gap cycle, and the global geopolitical cycle are most important to understand

4. Almost all debt busts, including the one we are now in, come about for basically the same reason of over-borrowing

5. There are also ripple-effect patterns in all dimensions of life including culture, arts, etc

6. Human productivity is the most important factor driving wealth, power, and living standards to improve over time

Understanding the Economic Cycles

Most cycles in history happened for basically the same reasons.  For example, the 1907-19 period began with the Panic of 1907, which, like the 1929-32 money and credit crisis following the Roaring ‘20s, was the result of boom periods becoming debt-financed bubbles that led to economic and market declines. Economic declines also happened when there were large wealth gaps that led to big wealth redistributions and a world war. The wealth redistributions, like those in the 1930-45 period, came about through large increases in taxes and government spending, big deficits, and big changes in monetary policies that monetized the deficits. This stress test and global economic and geopolitical restructuring led to a new world order in 1919, which was expressed in the Treaty of Versailles. That ushered in the 1920s debt-financed boom, which led to the 1930-45 period and the same things happening again.

Read more: The Rise and Fall of Monetary Empires

World's Currency Names and their History

World's Currencies and their History


Currency names vary from country to country based on domestic culture and linguistic factors. Many monetary units got their name by the domestic word for ‘weight’ or the word for ‘golden’. This was happening probably because these domestic currencies had an equal value of their weight in gold.


  • Gold

The name of Gold has Gothic / German roots (gulþa). This word Gulþa later evolved in the Old English language into Geolu, which means "yellow". The word Gold came into existence in the twelfth century.

-Gold was first smelted in ancient Egypt in 3600 BC

-The first gold coins were created in Lydia, Asia Minor in 600 BC


  • Dollars

According to OxfordWords, the German word "joachimsthal" referred to Joachim's valley where silver was once mined. Coins minted from this mine became "joachimsthaler," which was later shortened to "thaler" and eventually morphed into "dollar."

-The dollar was chosen to become the monetary unit for the United States of America in 1785

-Australia, New Zealand, Canada, Fiji, and Singapore also use their own dollars


  • Euros

European Euro is named after Europa (Europe). Europa in Greek mythology was a Cretan queen. The etymology of the name Euro in Greek means wide {εὐρύς / eurys}."

-The eurozone consists of 19 countries: Germany, France, Italy, Spain, Greece, Netherlands, Austria, Belgium, Portugal, Ireland, Cyprus, Estonia, Finland, Latvia, Lithuania, Malta,  Slovakia, Slovenia, and Luxembourg

-The European Union introduced the euro on January 1, 1999 


  • British Pound Sterling

The British pound is derived from the Latin word "Poundus" meaning weight.

-The pound is the official currency of the United Kingdom, the Isle of Man, Gibraltar, Jersey, Guernsey, South Georgia and the South Sandwich Islands, the British Antarctic Territory, and Tristan da Cunha

-The British Sterling is the fourth most-traded currency in the Forex market

-Egypt, Lebanon, South Sudan, Sudan, and Syria all call also their currency pounds


  • Chinese Yuan, Japanese Yen, and Korean Won

The Chinese Yuan means "round" or "round coin". This word is found in the names of many Asian currencies such as the Chinese Yuan, Japanese Yen, and the Korean Won.

-The Japanese Yen is the third most-traded currency in the Forex market





  • Mexican Pesos

The peso means "weight" in Spanish.


  • Italian and Turkish Liras

The Italian and Turkish "lira" name is derived from the Latin word "libra" which means "pound."


  • German Marks

The Deutsche mark and the Finnish markka took their names from units of weight.


  • Iranian Rials

The Latin word "regalis" meaning "royal," is the origin for the Omani and Iranian "rial."

Similarly, Qatar, Saudi Arabia, and Yemen all use a currency called the"riyal." Before the euro, Spain used "reals" as well.


  • Russian Rubles

Russia and Belarus' ruble are named after a measure of weight for silver.


  • South African Rands

South Africa's rand comes from the Dutch name for the South African city "Witwatersrand," an area rich in gold mining.


  • Scandinavian Crowns

Many Scandinavian countries use a currency that derives from the Latin word "corona" meaning "crown."


  • Dinars

Jordan, Algeria, Serbia, and Kuwaiti all call their currency the "dinar."

Dinar comes from the Latin word "denarius," which was a Roman silver coin (check below)


  • India’s and Pakistan’s Rupees

The Sanskrit word for wrought silver is "rupya," which named the Indian and Pakistani rupee, and Indonesia's rupiah.


  • Dutch Guilder

The Dutch name gulden was a Middle Dutch adjective meaning "golden", and the name indicates a coin that was originally made of gold.


  • Polish Zloty

"Zloty" is the Polish word meaning "golden."


  • Hungarian Forint

The Hungarian forint comes from the Italian "fiorino," a gold coin from Florence.




Short History of International-Accepted Currencies


Gold was the global currency since the dawn of time. The Athenian silver drachma, coined in the 5th century B.C. is probably the first currency that became widely accepted, outside its issuing state. After Alexander the Great's conquests, the name drachma was used in many of the Hellenistic kingdoms in the Middle East. The Greek Drachma was followed by the Roman Gold Aureus and Silver Denarius. The Athenian Drachma and the Roman Denarius circulated simultaneously for some time. The dominance of Roman currency was brought to an end because of the extreme inflation during the early 4th century A.D.. As the Western Roman Empire was falling, the Byzantine currency (named Gold Solidus) became the dominant currency worldwide in the 6th century A.D., and afterward. The Islamic Dinar became the next global currency during the next couple of centuries, although the Solidus and Islamic Dinar continued to circulate simultaneously for some time.

By the 13th century, the Florence Fiorino became dominant in the Mediterranean, and by the 15th century the Venice Ducato. In the 17th and in the early 18th centuries, the dominant international currency was the Dutch Guilder issued by the Netherlands. In the 19th century and until World War 2 the British Pound Sterling became the world’s dominant currency. In early 1900, 60% of the total global trade was invoiced in British Sterling. After WW2, and ever since the US Dollar is the global dominant monetary unit.



Sources: OxfordWords, BusinessInsider, Wikipedia


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