From the 1830s to the 1930s, almost all the important currencies were on the gold standard and were backed by gold. The sovereign had a gold content of .2355, and was minted in seven countries including Australia, Britain, South Africa and Canada. In other words, the whole world was on the gold standard. This was a period of extraordinary stability among world currencies.
But war is the great destroyer of currencies. When nations wanted to spend more than the discipline of gold would allow, they turned to fiat currencies and printed what they needed out of a computer and thin air. Germany was a famous offender when it printed marks by the barrelful, during which time hyperinflation destroyed the purchasing power of the German mark. Today we have a comparable example in the US, which has not only left the gold standard, but to cover up its inflation, is depressing the ... Log in or subscribe to continue reading.
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