By the mid-1700s, Britain’s debt from European wars led to taxing American colonies to fund interest payments. Lacking precious metals, the colonies issued debt-free paper money, Colonial Scrip, fostering economic growth. Benjamin Franklin praised this system, but the Bank of England, feeling threatened, pushed for the 1764 Currency Act, forcing colonies onto a gold and silver standard. This caused economic depression and contributed to the American Revolution. During the war, over-issuance of Continental currency led to severe inflation, highlighting the strengths and weaknesses of fiat currency versus a gold standard.

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