Activity

  • Profile picture of Abdulaziz

    Abdulaziz posted an update 5 years, 3 months ago

    Can someone please explain how double entry book keeping facilitated the development of commercial trade and fiat? What is it about DEB that makes it more amenable than previous accounting methods?

    • Profile picture of DownunderET
      DownunderET replied 5 years, 3 months ago

      Read the “Vipers of Venice” book.

      • Profile picture of FiatLux
        FiatLux replied 5 years, 3 months ago

        I don’t know if there’s a direct connection between DEB and the bullion market, but there’s probably an indirect one. You’d need a widespread physical presence, and a widespread intelligence network, to successfully rig the bullion market. DEB would have facilitated this, by allowing banks to set up and manage multiple branches that handled a huge number of transactions for lots of clients. There’s no way to keep track of thousands of letters of credit, deposit accounts, loans, etc., without a system like DEB, which separates out and keeps an up-to-date record of what you owe, what is owed to you, and–crucially–the difference between the two.

        It’s been a while since I read Financial Vipers of Venice, but I remember it mentions the banchi di scritti–i.e., banks that “deposited” and “withdrew” money virtually, by making debits and credits in clients’ account books. That type of bank couldn’t exist without DEB. By affecting the supply of credit, these banks would have been affecting the money supply; I’m not sure if that was part of the bullion market rigging, though.

          • Profile picture of Abdulaziz
            Abdulaziz replied 5 years, 3 months ago

            Thank you for your response.
            This is where I am confused. In the absence of a double entry ledger, could deposits still not be administrated “virtually”? Using the goldsmith analogy, if I deposited gold with the goldsmith could he then not “transfer” ownership of that “gold” elsewhere?

            Perhaps the ubiquitous nature of double entry ledgers has made it difficult to imagine a world without them.

              • Profile picture of FiatLux
                FiatLux replied 5 years, 3 months ago

                The goldsmith could, but if he started to do it for thousands of clients in multiple countries, he’d soon lose track of where he stood, if he didn’t have an accurate accounting system. That’s just too hard to keep track of with a single-entry ledger.