INTRODUCTION TO THE NEW SERIES: UNCOMMON “COMMON SENSE”

Abstract

The common sense of modern times was not always “common” in the past. For example, if it is true that inflation is caused by an oversupply of money, a short supply of money must cause deflation. However logical that sounds, though, it has not been so uncommon in history that rising prices were recognized as being caused by a scarcity of currency. Even in the same period, a common idea prevailing in one historical area was not always common in another; rather, it sometimes appeared in quite the opposite direction. It is likely that the idea that a government gains from bad currencies, while traders appreciate good ones, is popular throughout the world. In the case of China, however, its dynasties sometimes intentionally issued high-quality coins without regard to their losses. East Asia shared the idea that cheap currency harms the state, while an expensive currency harms the people. This is in considerable contrast with a common image in other regions that authorities gained profits from seigniorage.