Gold Hoarding, Financial Crises, and the Future of Money

The debate over the gold standard’s impact remains relevant as we navigate the complexities of modern monetary policy. The Great Depression taught us that rigidly linking currency to gold can lead to catastrophic outcomes in times of crisis. As we look to 2025 and beyond, understanding this history is crucial for shaping a more resilient economic future.

The gold standard, first adopted by Britain in 1816, expanded globally by the late 19th century, offering price stability through fixed exchange rates. However, its rigid link to gold also imposed severe constraints, which became apparent during the economic turmoil of the 1930s (Kettell, 1982). Tying currency issuance to a finite resource aimed to prevent reckless monetary policies (Schwartz, 1987), but it also left governments powerless against economic shocks (Bordo, 1981). What appeared stabilizing quickly became a straitjacket.

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