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A Brief History of World Currency

Here is a brief history of the worlds currency going back to World War 1 and 2. Visit: http://www.golvercard.com/blog/2015/6/24/history-of-currency

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A Brief History of World Currency

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  1. Brief History Of Currency What You Should Know GolverCard.com | @GolverCard

  2. Brief History Of Currency Here is a Brief History of Currency in The World. I want to share the mistakes in the global financial system from the past, and how it reflects many important aspects of today's monetary system.    - In 1921, Germany destroyed its currency.   - In 1925, France, Belgium and others did the same thing. But what was going on at that time prior to World War I in 1914? GolverCard.com | @GolverCard

  3. The Gold Standard For a long time before that, the world had been on what’s called the classical gold standard. If you had a balance of payments, your deficit, you paid for it in gold. And if you had a balance of payment surplus, you acquired gold.  GOLD WAS THE REGULATOR OF EXPANSION OR CONTRACTION OF INDIVIDUAL ECONOMIES. You had to be productive, and pursue your comparative advantage and have a good business environment to actually get some gold in the system or at least avoid losing the gold you had. It was a very stable system that promoted enormous growth and low inflation. GolverCard.com | @GolverCard

  4. System Ends In 1914 That system was torn up in 1914 because countries needed to print money to fight World War I. When World War I was over and the world entered the early 1920s, countries wanted to go back to the gold standard but they didn’t quite know how to do it. Before World War I started with parity, meaning there was a certain amount of gold and a certain amount of paper money backed by gold. GolverCard.com | @GolverCard

  5. Paper Money Was Doubled Then, the paper money supply was doubled. That left only two choices if countries wanted to go back to a gold standard. They could’ve doubled the price of gold — basically cut the value of their currency in half or they could’ve cut the money supply in half. They could’ve done either one but they had to get to the parity either at the new level or the old level. GolverCard.com | @GolverCard

  6. What France Did WHAT FRANCE DID The French said, “This is easy. We’re going to cut the value of the currency in half.” They did that. If you saw the Woody Allen movie Midnight in Paris, it shows U.S. expatriate living a very high lifestyle in France in mid-1920s. That was true because of the hyperinflation of France. It wasn’t as bad as the Weimar hyperinflation in Germany, but it was pretty bad. If you had a modest amount of dollars or gold, you could go to France and live like a king. GolverCard.com | @GolverCard

  7. What The UK Did WHAT THE U.K. DID The U.K. had the same decision to make but they made it differently than France did. There, instead of doubling the price of gold, they cut their money supply in half. They went back to the pre-World War I parity. That was a decision made by Winston Churchill who was Chancellor of Exchequer at that time. However, when you doubled the money supply, regardless if you did not like it, you have to own up to that and recognize that you’ve trashed your currency. Churchill felt duty-bound to live up to the old value. He cut the money supply in half and that threw the U.K. into a depression three years ahead of the rest of the world. GolverCard.com | @GolverCard

  8. World Went Into Depression While the rest of the world ran into the depression in 1929, the U.K. started in 1926. Going back to gold at a much higher price measured in sterling would have been the right way to do it. Choosing the wrong price was a contributor to the great depression. Economists today say, “We could never have a gold standard. Don’t you know that the gold standard caused the great depression?” Well, they are wrong. It was a contributor to the great depression, but it was not because of gold, it was because of the price. Churchill picked the wrong price and that was deflationary. And they continued down that path until, finally, it was unbearable for the U.K., and they devalued in 1931. GolverCard.com | @GolverCard

  9. Worst Depression In History THE RESULT WAS, OF COURSE, ONE OF THE WORST DEPRESSIONS IN WORLD HISTORY. GolverCard.com | @GolverCard

  10. Merging Gold and The Dollar There was skyrocketing unemployment and crushed industrial production that created a long period of very weak to negative growth. And it was not resolved until after World War II, at the Bretton Woods conference where the world was put on a new monetary standard.  Where almost every currency on the planet was backed by the US dollar, and the US dollar backed by gold, for a price of 35 dollar per ounce, giving “confidence” to all currencies, and “stability” to the world economy. This merge of world currencies to each other through the dollar and then gold, make the exchange rate fixed year after year. GolverCard.com | @GolverCard

  11. Lost Money However, when Charles de Gaulle former president of France realized that the US did not have the gold to back all of the dollars in circulation, because they had created and spent more than they should have had in wars, public works and the “great society” programs, he then started asking for their gold back. Not long after France, and other countries started to ask for their gold back. And because the US lost about 50% of its gold from 1959 to 1971, having 12 times more dollars than gold, president Nixon unilaterally terminated the convertibility of the US dollar to gold and the US Dollar Standard started. GolverCard.com | @GolverCard

  12. Unemployment and Inflation He did this to avoid a global economic collapse, to create jobs and promote exports to help the U.S. economy. But what actually happened instead? We had three recessions back to back, in 1974, 1979 and 1980.   - The US stock market crashed in 1974.   - Unemployment skyrocketed, inflation flew out of control 1977 and 1981   - The value of the dollar was cut in half. GolverCard.com | @GolverCard

  13. The Wrap Up Again, whether you see this happening in our economy today or not, the lesson here is that governments and central banks, although well intended, don’t produce the results you expect. Things like increased exports and jobs and some growth. What they produce is extreme deflation, extreme inflation, recession, depression or economic catastrophe. Read full post: http://www.golvercard.com/blog/2015/6/24/history-of-currency GolverCard.com | @GolverCard

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