Money Timeline

Year Event Short-term Results Long-term Outcomes
1500
|
1914
Classical Gold Standard Even though Spain and later Britain enjoyed monetary hegemony at the peak of their empires, the commodity standard (gold and/or silver) kept prices relatively stable and commerce flowing.
1914
|
1926
World War I and After "It was not gold that failed; it was the folly of trusting govern- ment to keep its promises. To wage the catastrophic war of World War I, each government had to inflate its own supply of paper and bank currency." - Rothbard[1]" The ravages of war include the debasement of the combatants' currencies.
1926
|
1931
Gold Exchange Standard "a pyramiding of United States on gold, of British pounds on dollars, and of other European currencies on pounds." - Rothbard[1] Kludgy and unsustainable, but it set the precedent for the Bretton Woods agreement.
1931
|
1945
Fluctuating Fiat Currencies "... the chaos of clean and dirty floating exchange rates, competing devaluations, exchange controls, and trade barriers. ... International trade and investment came to a virtual standstill." - Rothbard[1] The Great Depression followed by the destruction of WWII debased combatants' currencies.
1945
|
1971
Bretton Woods Agreement US becomes world monetary hegemon as victor of WWII; the US dollar replaced the British pound as world reserve currency. Also, the agreement created the International Monetary Fund (IMF) and the World Bank. US rulers overspend to maintain "world police" status. As a result, the US spends too much and no longer has the gold to redeem for dollars, per the Bretton Woods Agreement. The IMF and World Bank became permanent cartels of States.
1971 US Defaults on Gold Redemption The Bretton Woods System collapses. The world moves to a Fiat Standard for the first time in history. The IMF cartel disuades competitive devaluation. US rulers overspend to maintain world superpower status - sole remaining empire. Eventually, US rulers over-inflate and the unsustainablity of a fiat standard becomes obvious.
1971
|
2021
World Fiat Standard The US is not only world monetary hegemon, but can unilaterally create currency out of thin air now that commodity backing is unnecessary. US rulers spend trillions of fiat dollars on military and social programs without raising taxes. Rising States like China recognize the "exhorbitant privilege" the US enjoys, and considers remedies.

1. What Has Government Done to Our Money, Murray Rothbard.