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.