Pure Gold for Economic Freedom: A Supranational Medium of Exchange to End American Monetary Hegemony as the World’s Main Reserve Currency
39 Pages Posted: 30 Apr 2019
Date Written: April 25, 2019
Before the invention of money (coin, paper, or digital) there was barter trading, a form of exchange without the use of a monetary medium. The evolution of money has kept pace with the evolution of humans. Money was not invented solely for transaction purposes; it was created to quantify wealth (i.e. bookkeeping of resources by bureaucrats) and functioned as a sign of power (i.e. aristocrats used it in social contracts between royals and servants). Throughout the human history, money has served as an important link (social relationship) between lenders and borrowers, contractors and workers. Facilitating exchange has evolved from barter to bimetallism (silver and gold), monometallic (gold), and paper (fiat) to gold as the basis of currencies. The emergence of fiat money was not to replace barter even though Adam Smith (1776) described barter trade as primitive in his seminal book titled in short “The Wealth of Nations”. The classical gold standard emerged as a true global standard in the late 19th century but lasted only about three decades, it collapsed bouts of unprecedented shocks of World War I. The interwar gold exchange standard was very brief which suffered similar flaws known as the Triffin dilemma. The inherent flaws of the gold standard and Bretton Woods made the U.S. more susceptible to the inevitable convertibility crisis; in reaction, the U.S. policies accelerated inflation, this in turn caused the system’s demise. The current ailing international monetary system is going to face the same predicament of the last generation regimes unless serious reforms are made.
Keywords: Pure Gold Standard; Economic Freedom; Dollar Hegemony; Bretton Woods; Fiat Money
JEL Classification: E41, E42, E44, E58, G10, G21, G28
Suggested Citation: Suggested Citation