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Updated: 21:40 25/09/21

England abandon the gold standard 85 years to the day

By Duncan Richardson, News Editor

21 Sep 2016

85 years to the day Bank of England officially abandoned the gold standard. The gold standard was the corner stone of the global economy and when the UK removed the link between gold and the British pound the whole monetary system unraveled.

Canada, Japan, Denmark, Finland and Sweden soon followed suit and within 10 years France, Holland and Belgium followed our lead.

Following the aftermath of World War II, 44 countries met in the plush resort town of Bretton Woods to reshape the global economy and ensure post war prosperity. World War II had decimated the global economy and America took full advantage. By 1931 the U.S accounted for over 50% of the world’s manufacturing output and owned over half of the world’s gold. America was dominant and unsurprisingly the leaders present agreed to tie their currencies to the dollar, which, in turn would be convertible into bullion at $35 per oz.

The Bretton Woods system remained until President Nixon cut the link between the gold and the U.S dollar in August 1971. For the first time in history the value of all the world’s major currencies depended on Central Bank’s ability to maintain our confidence in fiat currency.

Abandoning the gold standard was a seminal moment in history and allowed governments to borrow without restriction. This power has been abused and now 64% of all families in the UK receive some sort of state benefit. By allowing government to run deficit after deficit we have allowed them to take greater control over our lives.

The gold standard had its problems, but with global debt now exceeding $230 trillion and the 0.1% getting richer and richer at the expense of the middle classes is it time to rethink our monetary system?

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