“After 1914, the gold standard was given up and in the 1920s countries unabashedly resorted to unbridled fiat money resulting in hyper-inflation in a number of European countries. World War II resulted in the virtual demise of the sterling as a reserve currency, and since then the US dollar has held sway as the dominant international reserve currency.
August 1971 is a watershed in the international monetary system when President Nixon de-linked the US dollar from gold. A reserve currency which is not linked to gold necessarily has to become weak. For the next 40 years international monetary pundits felt that somehow the system of a reserve currency would remain stable through so-called international monetary co-operation. Economist Wilhelm Röpke, 60 years ago, said that the more countries talk about international co-operation, the less countries co-operate with one another!” Read more.
“Drifting Back to Gold Standard”
The Hindu Business Line, May 20, 2011.
H/T to Judy Shelton.
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