Editing Deflation (section)

===Scarcity of official money===
The United States had no national paper money until 1862 ([[Greenback (money)|greenbacks]] used to fund the Civil War), but these notes were discounted to gold until 1877. There was also a shortage of U.S. minted coins. Foreign coins, such as Mexican silver, were commonly used.<ref name="David Ginsburg"/> At times banknotes were as much as 80% of currency in circulation before the Civil War. In the financial crises of 1818–19 and 1837–1841, many banks failed, leaving their money to be redeemed below [[par value]] from reserves. Sometimes the notes became worthless, and the notes of weak surviving banks were heavily discounted.<ref name="Taylor 1951"/> The Jackson administration opened branch mints, which over time increased the supply of coins. Following the 1848 finding of gold in the [[Sierra Nevada (U.S.)|Sierra Nevada]], enough gold came to market to devalue gold relative to silver. To equalize the value of the two metals in coinage, the US mint slightly reduced the silver content of new coinage in 1853.<ref name="David Ginsburg"/>

When structural deflation appeared in the years following 1870, a common explanation given by various government inquiry committees was a scarcity of gold and silver, although they usually mentioned the changes in industry and trade we now call productivity. However, [[David Ames Wells|David A. Wells]] (1890) notes that the U.S. money supply during the period 1879-1889 actually rose 60%, the increase being in gold and silver, which rose against the percentage of national bank and legal tender notes. Furthermore, Wells argued that the deflation only lowered the cost of goods that benefited from recent improved methods of manufacturing and transportation. Goods produced by craftsmen did not decrease in price, nor did many services, and the cost of labor actually increased. Also, deflation did not occur in countries that did not have modern manufacturing, transportation and communications.<ref name="Wells1890">{{cite book
|title=Recent Economic Changes and Their Effect on Production and Distribution of Wealth and Well-Being of Society
|last=Wells
|first=David A.
|year=1890 |publisher= D. Appleton and Co.|location= New York|isbn= 0-543-72474-3 |url= https://archive.org/details/recenteconomicc01wellgoog
|chapter=Money supply |page=222}}</ref>

By the end of the 19th century, deflation ended and turned to mild inflation. [[William Stanley Jevons]] predicted rising gold supply would cause inflation decades before it actually did. [[Irving Fisher]] blamed the worldwide inflation of the pre-WWI years on rising gold supply.<ref>
{{cite book |title=The Cost of Living in America: A Political History of Economic Statistics, 1880–2000 |last=Stapleford |first= Thomas |year=2009|publisher=Cambridge University Press |pages=69–73}}
</ref>

In economies with an unstable currency, barter and other alternate currency arrangements such as [[dollarization]] are common, and therefore when the 'official' money becomes scarce (or unusually unreliable), commerce can still continue (e.g., most recently in [[Hyperinflation in Zimbabwe|Zimbabwe]]). Since in such economies the central government is often unable, even if it were willing, to adequately control the internal economy, there is no pressing need for individuals to acquire official currency except to pay for imported goods.