Our valued sponsor

The Origin of Flying Money & What It Means for Today’s Society

Flying Money

If you think about it for a second, paper money holds incredible value without being something valuable – nothing but actual paper. The idea is definitely exciting, but also hard to believe how it came to life in a world where people had access to more valuable things.

Paper currency is interesting from more points of view, though. For example, printing technologies are quite advanced to prevent fake money. Then, what makes it stand out is the fact that a commodity with no value is used to trade.

Flying money has no intrinsic value – always taken for granted by those who own it, though.

For hundreds of years, humanity used valuable objects for trade and not only. It was like an unwritten rule. Things like silver and gold were the norm back then. Sure, they still hold value today, but most people would rather focus on cash.

Then, coins came to life. While they did represent a form of money, they were actually made of valuable metals. They were based on silver and gold, so they actually held some value. At some point, coin trading became more common than barter trading.

But then, coins caused issues when it came to large transactions. Carrying plenty of coins was just not working. Therefore, man invented the so-called flying money – what we know today as a banknote. The concept was invented in China. There is no actual proof, but most clues lead to China.

Paper money was referred to as flying money because unlike other types of money, it could fly.

How flying money persisted overtime – The evolution of paper money​

For thousands of years, the Chinese only relied on precious metals in terms of trading, whether it came to handling dept or perhaps buying something in bulk. They also used silk for many transactions. As for day by day expenses, they usually relied on bronze – heavy, but alright in small amounts.

Flying money came to life around the ninth century. While similar to what we have today, the concept was a bit different. Back then – just like today, the economy in China was facing incredible growth. Trade markets skyrocketed, so everyone was running some sort of a business to support them.

The farming industry, in particular boomed because of the new methods to boost yields.

All in all, China was living the dream.
However, too much business also led to too many transactions. As a direct consequence, the government needed more money to support the economy, but there was simply not enough metal around. In order to increase the amount of coins, the government started adding lead to coins.

Within a couple of decades, China had seven times more coins – problem solved.

Things moved on, and tea became a trend. At that point, traders brought in the first paper money. They were backed by nothing but the confidence they had in each other. It was some sort of a banking system – the first central bank ever recorded in history.

Now, while these papers had a bit of value for those involved in the system, the average Chinese individual had no confidence in them. After all, these were the flying money – the papers that could come and go.

When governments seize opportunities​

Things went smoothly, and the so-called flying money had no issues at all. It was a private circle that started gaining notoriety. However, just like in today’s society, the government saw an opportunity and decided to seize it. Officials got their nose into this market and took it over.

This shows that the failure to trust a government or the constant idea to get the government out of your life is not new at all. Back in the day, people had the exact same problems – the government is a coalition trying to take over anything that works.

More than a millennium ago, different communities had different types of paper money. Take the Sichuan province, for example. Sichuan has always struggled with copper back in the day, meaning the amounts of bronze were quite limited.

In other words, it was hard to get money going in the area.

Local merchants aimed to find a solution to these shortages, so they moved on to plain iron. But then, iron had some issues. Not only was it heavy, but it was also inconvenient to carry in large amounts – it was alright for everyday activities, though.

Paper money was seen as an extraordinary solution to the weight problem. With the government aiming to take over the iron industry and the paper money, people started losing confidence in who was leading them.

For about 500 years, the so-called flying money was used occasionally.

But then, the Song dynasty came into power and redefined the system from scratch. That is when the actual fiat currency kicked in. Obviously, during its early stages, this currency was made in small amounts.

This quick lesson of history teaches the world how governments work. They never get involved if there is no potential whatsoever. They are afraid of losing power, so they stay away from major changes until they are 100% confident, they will work.

The Song government issued money with rules. For instance, once you got some paper money, you were supposed to use them straight away – there was an expiry date. After three years, the money became completely useless.

However, you could get over this issue and exchange old money for new money. You would have to go to a local office, but this service has never been free – you had to pay 3% for the exchange. What does this tell us?

The government has managed to find a method to grab even more money from its people. The so called expiration was a trick to fool people. At the same time, it was a way to debase the monetary policy of China.

It sounds stupid. Sure, it works with currencies, and it still happens today – when old money is turned into new money, you can exchange them. But imagine facing this issue with gold or other precious metals.

Things changed when Kublai Khan ended up in charge of the money. This was when paper money gained notoriety all over China. The concept was to come up with methods that would increase the credibility of flying money, which was widely avoided throughout China.

The solution was simple – whoever refused paper money was killed. That was the official sentence.

It all started as a fair system between traders. Then, the government kicked in and tried to make some profit out of this industry. Later on, people had to use paper money at the point of a gun – there were no other choices.

Such things are less likely to happen today, but they underline how inefficient governments are. And while we live in different times today, nothing has really changed. Sure, no one will talk about Kublai Khan because brutal politics would be unacceptable today.

But in theory, you have pretty much the same thing. Governments lack creativity. They talk about improving things, but they simply aim to seize opportunities. They use the same speeches used in China back then, but they have a modern approach – no other differences.

A brief insight into world history will prove the idea. Dynastic China ended up running the private currency market in China. Then, take Franklin D. Roosevelt’s strategic moves during the 1930s. He had a program that aimed to bring significant change throughout his first 100 days of presidency.

What did he do? He handled the economic depression worse than a student – discounts became a crime back then. To make things even worse, he made gold illegal and confiscated everything he could from hardworking citizens.

Capitalism back then was a serious issue, and high prices were basically enforced.

Has anything changed today?​

The only thing that has changed today is the name. You no longer have the Song dynasty. You no longer have Franklin D. Roosevelt. Instead, you have Donald Trump or Joe Biden, just to name a few and only in the USA. This trend is observed all over the world, though.

The modern politician sees themselves as superior human being once they end up in charge of something. The same goes for economists or secretaries. They end up in charge, and they believe they can run a top-notch monetary system.

The pitfalls of the past will never go away, and there is nothing to learn in the process.

Such issues will come again – it is perfectly normal.

Sure, modern politicians have access to more information and technology – they are probably smarter too, but to a certain point. This is also debatable. They have different views and points of view that may change things, but they fail to do so.

There is, however, one major difference between the past and the present.

Over 1,000 years ago, the Song dynasty came up with flying money as an actual necessity. The monetary policy was needed because commerce skyrocketed over a short period of time, and there were no other options.

Today, monetary policies are reinvented because governments are desperate. While governments back in the day also stepped in, they still managed to benefit from economic prosperity. Today, the world is about to face another financial collapse – and this is why leaders back then might have been smarter.

Now, the question is – what caused all these issues? The answer is pretty simple – the government's involvement in the industry. The government believed – and still believes – it can participate in any transaction out there, and this is what ruins everything.

If you believe governments today are more efficient, you should think twice. There are no differences whatsoever – apart from the names of politicians. There is no such thing as a quick solution to this problem, and just like before, an economic collapse will hit soon enough.

No matter where you come from or how efficient your government seems to be, no one can turn back this tide. With these thoughts in mind, if someone tells you that a currency is backed by new research or ideas, you need to look elsewhere.

What does the world learn from all these?

History is crucial in the process because it can teach us things. When it comes to paper money, there is one thing you can learn – governments fail. In other words, you need to focus your business, savings and investments in places that understand that government intervention leads to failure.

Talking about modern politicians feeling smarter than ancient politicians, there is a new trend these days. It is widely embraced by the modern world and aims to simplify things even more – the elimination of physical cash. Instead of plenty of paper money in your wallets or under the mattress, you have a card.

The beginning of cash elimination​

If you live in the European Union or you deal with euros, you probably know already that 2016 brought in a major change. The ECB has decided to stop printing €500 banknotes. The decision was based on some research that claimed these notes fuel money laundering and other types of fraud.

It was one of the largest denominations around, but it was also the most common option among criminals.

The official goal was stopping crime – obviously, nothing happened. You could have a €500 note or five €100 notes. You might as well have 25 €20 notes. You will get the same amount, and it will make no difference at all. While there is more paper involved, you will find a place for it – no problems at all.

With these thoughts in mind, the change was most likely an attack on cash. If you observe what is going on today, it looks like governments aim to eliminate cash. In other words, paper money could become history – less than a few thousand years after it came out.

The concept is not just weakening currencies, but also economies. Now, before digging deeper, it is important to know that electronic money is not digital money. Digital currencies like Bitcoin are different. Electronic money is practically a fiat currency stored in a bank account – nothing but an entry.

Fueling the war on cash​

When the ECB announced the idea to give up on €500 notes, there were over €300B in circulation – about 30% of all the euro cash out there. Now, hoarding cash will lead to negative interest rates, and this is exactly what banks try to avoid.

Those who hoard cash would rather store €500 bills than €10 bills – easier to store. Now, getting rid of these notes will most likely help banks. Avoiding the negative interest rate policy would be almost impossible then.

But on the other hand, losing high domination currency will most likely make a currency weaker – not necessarily in internal markets, but over foreign exchange markets. The point was to help banks by preventing people from hoarding cash, but does it really work?

If someone used to hoard €500 notes, they would stick to a different currency instead – just as big. For instance, you could save cash in 1,000 Swiss franc notes instead, and this is exactly what lots of people do instead, weakening the affected currency even more.

But then, what if central banks have different goals? What if they actually want to weaken currencies? While it may look like a bad idea, the truth is that weakening a currency can boost international business – such as exports.

From a different point of view, flying money also makes it simple for people to withdraw high amounts of cash. This was one of the consequences of the 2008 financial crisis. The same issue occurred in Greece years ago, as well as Russia recently.

People are then restricted from withdrawing large amounts of money – another government move.

When regular banks end up paying negative interest rates to central banks on a consistent basis, chances are this extra cost will be transferred to the customers. Basically, if you lose money for storing it in a bank, why would you do it anyway? Instead, you will withdraw everything and store it yourself.

This relatively recent war on high domination banknotes targets more and more economies. The European Central Bank is not the only one involved. There are calls to ban £50 notes in the UK in order to prevent terrorism – indeed, finding a connection between these two is a real challenge.

Some call for the $100 notes to be scrapped as well.

In the UK, for example, the £50 notes are slowly becoming unpopular because more and more stores refuse to take them. There are all sorts of reasons, but chances are you will struggle spending this note. You are less likely to get it from an ATM either.

All in all, despite all these fake claims about reducing crime and terrorism, eliminating cash will not help. No criminal will get a nine to five job just because they cannot find high denomination notes anymore – common sense.

Cutting cash will also push criminal organizations forward. They will be forced to innovate, and they can come up with some brilliant ideas. Digital currency, for example, is hard to track and makes an excellent alternative.

What the future holds for flying money​

The next years will definitely see a decline in cash payments. The card has become the most popular payment option in many western countries. Digital payment solutions will be even more popular in the future.

With all these, people will still use cash for a plethora of reasons.

Cash represents a quick way to make a payment for a simple purchase. It is convenient, and you know precisely what you have, rather than facing connectivity problems, checking apps and so on. It is simple and straightforward.

At the same time, cash is widely accepted, while cards are not. There are many countries – even in the EU – that have failed to implement card payments. Go to eastern Europe, and apart from supermarkets and shopping malls, you are less likely to pay by card in a small local shop.

Finally, cash can help families with budget management. If you have kids, you do not want to give them a card and tell them they can only spend a particular amount a day. They will buy whatever they want and finish the budget within days only.

You do not feel like transferring money to a prepaid card on a daily basis either.

Instead, you choose to give your kids a bit of cash, so they can have for their everyday expenses.

As if all these were not enough, lots of people prefer cash payments because they are fully anonymous. There will be no transactions shown on a card statement that could get you in trouble with your partner if you have something to hide.

Besides, cash is easy to access with cash machines everywhere.

The fact that cash will not go away too soon is obvious by the constant improvement of banknotes. For example, the UK has used paper money for about three centuries. In 2016, paper money was replaced by polymer money.

The design is similar, but polymer notes are difficult to counterfeit or get dirty.

Such constant updates in different countries every now and then show that governments are not trying to phase out cash completely. Plus, in some parts of the world – such as developing countries, it is not even possible.


As a short final conclusion, flying money has been an interesting idea when it first came out, but it became a controversial issue as soon as the Chinese government stepped in. The problem is that despite all these problems from the past, modern governments make the exact same mistakes.

The government still wants to be part of every transaction and get a part – even if it does not do anything. Perhaps this is also the reason why people avoid governments and banks – as well as the reason for the growing popularity of digital currencies.

Only time can tell what the future holds, but chances are governments will not stop.

In fact, some of them have even stepped into the crypto market – by banning or regulating it.
Last edited:
So governments indeed seized peoples wealth in the past. Now we are just waiting for history to repeat as someone already said around here.

What would we do to avoid it or at least reduce the opportunity for nasty fingers in our hard earned money and assets?
Soon it will be over with paper money. As the above said, we are living in a world where all governments want to control every single human on earth, they don't need paper money any longer. What they need, is people using electronic devices that can be monitored.
So governments indeed seized peoples wealth in the past. Now we are just waiting for history to repeat as someone already said around here.

What would we do to avoid it or at least reduce the opportunity for nasty fingers in our hard earned money and assets?

convert your hard earned money to something that cannot be seized, if only there is something like that, oh wait...
  • Like
Reactions: jafo and EliasIT
convert your hard earned money to something that cannot be seized, if only there is something like that, oh wait...
exactly what would that be... soon we can't even convert to crypto paper wallet.