ONE of the longest and most stable monetary regimes from the 'early modern era' onward was the British pound on the classical gold standard.
It lasted about 250 years, from the mid-17th century up until the outbreak of World War One.
According to the late Ferdinand Lips, in his seminal work Gold Wars, if you index the purchasing power of the British pound vs gold starting at a value of 100 in 1664, the reading would have been 92 by 1914.
In other words, over 250 years, the purchasing power of the British pound was not only stable, it had actually increased a little.
Lips goes on to note: 'By 1900, approximately fifty countries were on a gold standard, including all industrialised nations. The interesting fact is that the modern gold standard was not planned at an international conference, nor was it invented by some genius.
It came by itself, naturally and based on experience.
'The United Kingdom went on a gold standard against the intention of its government.
Only much later did laws turn an operative gold standard into an officially sanctioned gold standard.' Pundits and the financial clerisy inform us that monetary systems must be dictated from above and governed from the centre. But it is not so. In fact, when that happens, society puts itself at the mercy of technocratic central planners, who are largely detached from reality and insulated from the consequences of their actions.
Lips goes on: 'In 1914, at the beginning of World War One, the gold standard was thrown overboard within a few weekends. In order to finance wars, the world resorted to deficit spending and paper money.
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