The “I Owe You” Note

As we all know, greater things come with greater responsibilities. In this chapter the birth of paper money has begun to arise which made a lot easier for people to use. The good attributes of money also brought chaos among those who lack control creating centralized and imbalance wealth distribution.

Chapter 2.

The economy has evolved in continental trading that people will thrive long-distance travel only to cause men in exhaustion dragging large bags of coins that were heavy to carry. It delayed most of their transactions causing them to fail wealth distribution and lost important settlements.

Skyscraper in the City
Skyscraper in the City

To avoid economic delays the Chinese rulers created a better way to produce a much lighter object. They call “paper money”, with this piece of paper a written promise is made by the ruler stating the amount owed to whom the paper money is given. In which we now know the “I owe you note” (IOU) a paper certificate that comes with a stamp of the authority that guarantees ownership to whom it is given. Traders can always go back to the capital to get the number of assets stated on the IOU note by the Rulers.

Hong Kong Local Currency
Hong Kong Local Currency

If you like this article, read and find out how Bitcoin protects you from Inflation: What is Sound Money and Why it Matters?  By Kenny Fowler 

In the use of paper money people noticed that these paper slips were always good to use for trading for other goods. They turned to exchange paper money than to carry piles of coins. Traders absorbed trust in using paper money relied on the value of what is written on the paper.


Paper money became a medium of exchange circulating everywhere. Which made rulers think to print more paper money as they realized that by doing this they can manipulate trade and gain control over their people. This lasted until the 7th century of the Tang Dynasty to the 11th Century of Song Dynasty. This paper money circulated everywhere and was spread outside China. Ghaykhatu, the 5th Ikhanite ruler in Iran, printed his own paper money after splurging the royal money and strangled himself with a bowstring.

Italy, the economic dynamos of Europe influenced by China, also issued promissory notes, like there own version of “IOU”.

Italy's Promissory Note
Italy’s Promissory Note

In the next chapter, we would meet the economic gurus of England, the forefathers of our modern financial system on how their clever minds facilitated the banking system.

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