We were out of commission yesterday...partly because we were traveling...and partly because we were sick...partly because we were giving a speech in New Orleans. We begin today with a few thoughts from Addison Wiggin on the Crescent City; a city whose origins stem from one of the greatest financial bubbles of all time:

"At the height of "the bubble," just when the wheels started to come off, Mississippi John Law came up with a brilliant plan to save his company and the Banque Royale. The year was 1720. Paris, over the previous three years and by virtue of Law's financial innovations, had become the largest and richest city in Europe.

"Law's "innovation" was paper money. Apart from a several-hundred-year stretch in China ending in 910, the world had never seen or used paper money. At the outset of The Mississippi Scheme, Law had demanded, on the pain of death, that his banker's not print more money than could be redeemed in gold from their own reserves. The strict backing of the currency - what was essentially the world's first gold standard - gave investors of the day such confidence that the currency actually traded at a premium.

"But there was a problem. Law's bank existed by virtue of a deal with the Regent of France, the Duc d'Orleans. The finances of the government in France following the reign of Louis XIV, his wars and the building of Versaille, were a mess. Seeing how much value was being placed in the new bank notes of the Banque Royale, the Regent set another precedent modern readers will recognize: he decided to print his way out of debt. He suggested Law issue currency up to 80 times what the bank held in redeemable gold reserves. Law, being rather preoccupied with the power and prestige the scheme had bestowed on him, ignored his previous warnings, and let the printing begin.

"The new notes flooded into the market and for a while held the value they had gained with solid gold backing. So many people got rich, the Aristocracy of the time coined a new term to describe them: "millionaires." Stories of commoners making so much money fired the imaginations of thousands and thousands more investors and the frenzy got out of hand.

"New Orleans, the site of this week's investment conference, was founded at that time, named after the Regent, and meant to become the Paris of the New World - the jumping off point for those who would mine all the gold and silver soon to be discovered in Mississippi (sic).

"When people started getting wind of the fact that there was nothing backing Law's currency but rumors of future profits to be reaped in the New World, they started losing confidence in the new currency. Law, trying to keep up appearances just a little longer, rounded up all the beggars, bums and thieves in Paris, furnished them with picks and shovels, and marched them through Paris ostensibly on their way to New Orleans...and the mines of Mississippi. The quiet hiss of air leaking out of the bubble accelerated into a screeching "whoosh!" when the same old dirty faces began appearing in the same old dirty doorways and alleys.

"In 1971, our own currency, the almighty dollar, was the last modern currency to be officially removed from the gold standard. Ironically, or not, the move was precipitated by the French government.

"At the time, de Gaulle realized that the United States had built up immense debts to governments around the world. If the United States wanted to pay the debts back, all we had to do was fire up the printing press, and the world was forced to accept our paper in lieu of these debts. De Gaulle thought he'd redeem his paper for gold...a move that was still legal at the time.

"Nixon thought better of it, said no way, and closed the "gold window." Since that day, no one - not you, or me or the president of France - can redeem his paper money for gold. And the value of the dollar is largely determined by the confidence investors around the world foresee in future success of the U.S. economy."

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.