A brief history of the gold standard

In this article, I look at lessons from nineteenth century gold standards and the mistakes made. Mostly, they could have been easily avoided.

A brief history of the gold standard

As evidence mounts that the major western economies are heading into a banking and monetary crisis due to contracting credit, we face the consequences of unsound money. The era of fiat is drawing to a close and its death will be painful for the highly indebted advanced economies in North America, Europe, and Japan. History and legal precedent tell us that fiat will die and gold will return to provide an anchor to credit system values.

As always, there are lessons to be learned from monetary history, particularly in the context of credit-dependent post-feudal economies, when a gold standard was expected to support mountains of credit in the forms of bank notes and commercial bank deposits.

In this article, I look at lessons from nineteenth century gold standards and the mistakes made. Mostly, they could have been easily avoided.

The debate over the return of gold backing for credit is becoming urgent, not just because the fiat currency system has run its course, but because it is increasingly in the developing world’s interests to embrace it.