Pleb Economist #10: Copernicus would have been a Bitcoiner

He just like me, fr fr.

In case it wasn't well known, a lot of economists have a background in physics. It probably stems from an attraction to mathematical models of systems behavior. @Undisciplined has a background in physics, and so do I. And so does Copernicus, though I suppose most would think of him as a physicist and not an economist, but like me and @Undisciplined, Copernicus studied physics before he studied economics. And in terms of influence and readership as an economist, he's got me and @Undisciplined beat by a mile, having actually been read by the King of Poland and thereby having influenced the monetary policy of a nation.

You see, Copernicus wasn't just the dude who advanced the heliocentric theory of the solar system. He was also the dude who was asked by the King of Poland in 1526 to write a treatise on the theory of money. Because at the time, there were multiple coins circulating within Royal Prussian territory, with varying amounts of precious metal content, and some were also being debased by their issuers, leading to a situation of monetary chaos and widespread inflation. Copernicus was asked to bring his analytical mind to bear on this issue, and in 1526 it led to the publication of Monetae Cudendae Ratio, which is Latin for On the Minting of Coin.

Gresham's Law before GreshamGresham's Law before Gresham

One of the things Copernicus discovered, independently of and before Gresham (but not before Oresme), is that bad money drives out good. Here's Copernicus in his own words (emphases added by me):^[1]

Since it is by no means fitting to introduce new and good money while the old and inferior remains, how much greater was the error here, when, with the better old money still remaining, they introduced a new, inferior kind, which not only infected the old, but, so to speak, drove it out.

Copernicus observed that when debased money was introduced into circulation, people began hoarding the pristine older coin and using the debased coins for economic transactions. The historical staying power of Gresham's Law should make Bitcoin-as-MOE advocates pause and consider whether widespread MOE adoption is realistic while fiat is still being actively debased.

Glimmers of CantillonGlimmers of Cantillon

Copernicus also recognized that monetary debasement leads to certain groups profiting differentially from the situation:

only the goldsmiths and those skilled in the quality of metal profit from its miseries. For they gather from the mixed money the old coins, from which they sell the silver that has been melted out, always receiving more silver together with the mixed coin from the unskilled populace. But after those old shillings have completely disappeared, the next better ones are selected, leaving the heap of inferior coins behind.

Although not a full statement of Cantillon's theory of relative inflation from a hundred years later, Copernicus recognized that a select few in society would be well positioned to profit from the debasement, while the majority suffered.

Endless money printing, 1500s styleEndless money printing, 1500s style

Copernicus's central concern was to highlight the vicious cycle that comes with monetary debasement. As debased money enters into the economy, gradually more and more debasement is needed as people lose trust in the currency.

Later, however, when the condition of the land was changed and the cities were granted the power of minting coin, and they exercised this new privilege, money increased in quantity but not in quality. They began to mix a fifth part of silver with four parts of copper in the old shillings, until twenty marks were exchanged for a pound of silver.
...
The groschen therefore disagreed with the shillings, being worth a fifth or sixth part less than their fixed and deceptive and unjust valuation, and they detracted from the dignity of the shillings. Perhaps the injury had to be avenged in this way, just as the shillings had earlier wronged the groschen and forced them to become scots. But woe to you, Prussia, which, alas, pay the penalty for the ruin of a badly governed state.
...
Thus, while both the valuation and the value of money were everywhere declining, minting nevertheless did not wholly cease; and since there were not sufficient funds to make the later coinage equal to the former, a worse coin was always introduced after the earlier one, which overwhelmed and extinguished the goodness of the preceding, until the valuation of the shillings corresponded proportionally with the value of the groschen, and twenty-four light marks went for one pound of silver.
...
What then remains, if no remedy is provided, except that Prussia hereafter, empty of gold and silver, should have purely copper coinage? From this it follows that the importation of foreign goods and all trade will soon perish. For which foreign merchant would wish to exchange his goods for copper money? And who among our own people will be able, in foreign lands, to purchase foreign wares with the same coin?
...
but in our sluggishness we do not consider that the dearness of all things arises from the debasement of the coinage. For prices also rise and fall according to the condition of the money—especially gold and silver, which we value not in bronze or copper, but in gold and silver. For we say that gold and silver are, as it were, the foundation of money, on which its valuation rests.

MMT: Medieval Monetary TheoryMMT: Medieval Monetary Theory

Copernicus even anticipates the objections of the Modern Monetary Theorists:

But someone will perhaps argue that debased money is more convenient for human use: namely, that it relieves people’s poverty, makes grain cheaper, and supplies the other necessities of mortal life more easily at a low price; whereas, through good money, everything becomes more expensive, and peasants and those burdened with annual rents are weighed down beyond their customary measure.
...
But if they consider the common good, they certainly will not be able to deny that sound money is beneficial not only to the state but also to themselves and to every class of men, whereas debased money is harmful. Although this is sufficiently clear from many arguments, we also declare it to be true from experience itself, the teacher of things. For we see that those lands chiefly flourish which have good money, while those that use worse decline and perish.

And he recognized the deleterious effect that monetary debasement would have on the ethics and morality of society:

It is further evident that the very regions which use good money abound in excellent crafts and artisans, as well as in a plentiful supply of goods; and, on the contrary, where debased money is in use, idleness, sloth, and lazy ease neglect the cultivation both of good arts and of talents, and even the abundance of all things perishes. It has not yet passed from human memory that grain and provisions in Prussia were bought for a smaller number of coins when it still used good money. But now, as the coinage has become debased, we experience the price of all things that pertain to sustenance and human use rising.
...
From this it can be clearly seen that debased money nourishes idleness more than it relieves people’s poverty.

Policy recommendation: BitcoinPolicy recommendation: Bitcoin

Copernicus closes his treatise with a set of policy recommendations. In the end, Copernicus was still a statist when it comes to money, recommending that the government monopolize the issuance of money and to ban all other competing forms. We shouldn't be too hard on him, as he could not have foreseen the emergence of a fully decentralized monetary system.

But a few of his recommendations will resonate with Bitcoiners of today. For one, he recommended that excessive quantity of coinage should be avoided, which clearly resonates with Bitcoin's fixed supply. Second, he recommended that the coinage should not be altered without unanimous consent among the nobles, which sounds a lot like Bitcoin's high bar of consensus for protocol changes.

Given the weight of the evidence, it wouldn't be a stretch to say that Copernicus, if he were alive today, would have been attracted to the merits of Bitcoin as hard money.

Epilogue.

This isn't the first post on SN about Copernicus. Bitcoiners have known about him as a hard money theorist for a long time: #209773, #577690, #735822.

However, this is the first time that I had a chance to read the full text of Monetae Cudendae Ratio in English, thanks to the power of ChatGPT. I published the full text of the translation on my website, which you can read here.

1. All translations were done by ChatGPT working off this Latin text: https://www.intratext.com/IXT/LAT0488/ ↩