by Murray N. Rothbard

Posted May 3, 2004. Reprinted from The Gold Standard: Perspectives in the Austrian School. Edited with an Introduction by Llewellyn H. Rockwell, Jr. Copyright © 1992. The Ludwig von Mises Institute. Auburn, Ala. Pp. 116-130; The Gold Standard: An Austrian Perspective. Lexington, MA: D.C. Heath, 1985, pp. 1-17; Reprinted in The Logic of Action One: Method, Money, and the Austrian School. Glos, UK: Edward Elgar Publishing Ltd., 1997, pp. 364-383. See also the PDF edition of this article.

For nearly a half-century the United States and the rest of the world have experienced an unprecedented continuous and severe inflation. It has dawned on an increasing number of economists that the fact that over the same half-century the world has been on an equally unprecedented fiat paper standard is no mere coincidence. Never have the world's moneys been so long cut off from their metallic roots. During the century of the gold standard from the end of the Napoleonic wars until World War I, on the other hand, prices generally fell year after year, except for such brief wartime interludes as the Civil War.[1] During wartime, the central governments engaged in massive expansion of the money supply to finance the war effort. In peacetime, on the other hand, monetary expansion was small compared to the outpouring of goods and services attendant upon rapid industrial and economic development. Prices, therefore, were normally allowed to fall. The enormous expenditures of World War I forced all the warring governments to go off the gold standard,[2] and unwillingness to return to a genuine gold standard eventually led to a radical shift to fiat paper money during the financial crisis of 1931-33...........

LINK 1. CLICK HERE for Rest of Story found at this internet address:
http://www.mises.org/fullstory.aspx?control=1503&id;=71

Email this Website to my Friend. CLICK HERE