Critics of gold-standard money point to the fiasco that occurred between 1926 and 1931 when the pound was re-established after the War (1914-1918). It certainly was a fiasco. As a result, this country — leading the way with 40 others excluding America — went off the gold standard for good.
The fiasco was due to one simple mistake. During the War there had been massive inflation to printing nine banknotes for every four that had been printed before the War. In 1931, should the value of the pound be re-established at a rate of nine to the price of one ounce of gold, or should it be four? Common sense and John Maynard Keynes said, “Let’s stay real and make it nine to one.”
However, the City of London pressured the Bank of England not to lose face — as they saw it — in order to restore their former dominance and prosperity. The Treasury didn’t object and so, from 1931, we have had nothing but depression after depression. Each has been deeper and more complex than the last — that of 2008 being the worst yet, and still not understood, never mind resolved.
At least four of the most eminent ex-central bankers have said that they fear a worse mometary catastrophe is coming. Is it not time we had a world trading currency that is totally out of the hands of governments’ printing machines — digitally or on paper?