Monetary systems in Middle Ages Europe also learned, just like the Chinese, that the money supply required a certain element of elasticity (NOT the same as divisibility) or a secondary money partnered with it, else increasing demand would force deflation and hurt the economy. Read: "Moreover, during the Middle Ages, the overall supply of precious metals proved to be extremely inelastic in face of a continually growing demand for them for monetary and industrial purposes. Such states as might have maintained complete stability…of the money which was also the base of their price system would have been struck by a deflation appalling for its duration century after century. On the other hand, for the Italian trading states…it was extremely important to maintain the stability and fineness of their pieces of gold money. If those states managed to do this…while at the same time escaping a great deflation, it was only because they had, for purposes of internal circulation, another series of coins which were continually being debased and a system of prices which rested upon these coins. In other words, the progressive debasement of the petty coins was, in the Mediterranean states, the economic safety valve which made possible the secular stability of the gold international currencies of the time.” "Money, Prices, and Civilization in the Mediterranean World" by Carlo Cipolla — Keep in mind, this was while the Italian mints were cranking out 100% pure gold coins and circulating them as the most prized currency in Mediterranean Europe. They WERE the international dollars of the time. And they STILL required a secondary money which had flexibility to absorb increasing demand without up-ending their entire economy. This is the argument I repeatedly make against Bitcoin being the sole money in an economy (see RT for example). Deflation is not desirable unless it comes from technological progress. Period. And hard money necessitates keeping a softer, flexible monetary layer atop it to function without forced price busts.