Nach der Finanzkrise 2007/2008 haben die Zentralbanken in den USA und Europa ihre Politik des billigen Geldes verstärkt. Die Geldmengen sind seither drastisch angestiegen und die Gegner des Fiat Money erheben ihre Stimmen immer lauter mit Rufen nach einer Rückkehr zu Goldstandard.
Die Arbeit untersucht, ob und wie eine solche Rückkehr möglich ist und welche Konsequenzen daraus resultieren würden. Als Grundlage dieser Untersuchung wird zunächst die Geschichte des Goldstandard betrachtet und analysiert ob dieses Geldsystem tatsächlich so überragend funktioniert hat, wie von seinen Verfechtern versprochen.
After the financial crisis of 2007/2008, the central banks in the United States and also in Europe strengthened their policy of cheap money. Due to this policy, the money supply increased rapidly and endangered the low inflation rates the central banks were committed to.
The opponents of fiat money raise their voices and urga a return to the gold standard.
The thesis main focus is on the question if and how a return to the gold standard would be possible and which consequences would arise. As foundation to this analysis, the gold standard has been analysed in its historical context, regarding the question if it worked so well as its advocates promise.
Table of Contents
1. Introduction
1.1. Note on quotations
2. History
2.1. The path to the classical gold standard
2.2. The classical gold standard
2.3. The gold exchange standard
2.4. Bretton Woods
2.5. The end of the gold standard
3. Theory & Renaissance
3.1. The price-specie flow mechanism and the balance of trade
3.2. The price-specie flow mechanism under the gold standard
3.3. Flows of gold and gold obligations
3.4. Commodity money supply without central banks
3.5. Costs of a return to a gold standard
3.6. Fractional reserve banking
3.7. Critique on the gold standard
3.8. Alternatives to the gold standard
4. Conclusion
A. Global gold reserve data
B. Global money supply
B.1. United States
B.2. United Kingdom
B.3. Euro zone
B.4. Japan
B.5. India
B.6. China
C. Monetary stability
Research Objectives and Key Topics
This thesis examines the theoretical and historical foundations of the gold standard, particularly in the context of calls for a return to commodity money following the global financial crisis of 2007/2008. It investigates whether a gold-backed monetary system remains a viable or desirable alternative to the existing fiat money framework by evaluating historical performance and the economic challenges inherent in a potential transition.
- Historical evolution of various gold standard variants (classical, gold exchange, Bretton Woods).
- Theoretical underpinnings of the price-specie flow mechanism and its application.
- Economic costs and inflationary risks associated with implementing a 100% gold reserve system.
- Comparative analysis of fiat money versus commodity-backed systems and the limitations of "Free Banking" models.
Excerpt from the Book
3.1. The price-specie flow mechanism and the balance of trade
The most fundamental theory of gold-backed money is the price-specie flow mechanism described by Hume (1752). He claims, that the economical evolution of a country is not supported, but suppressed by the Mercantilists ideology of prohibited exports. The foundation of Hume’s idea is the quantity theory of money that describes a direct proportional relationship between the supply of money and the price level.
The price-specie flow mechanism ensures that in the long run no country will experience an infinite import or export surplus. If a country exports commodities to another country, there will be a gold outflow from the importing country to the exporting country. The increased amount of gold in the exporting country leads to an inflation and therefore an increase in prices. As the exporting country’s commodities become more expensive while the importing country simultaneously experiences a deflation caused by the reduced amount of gold, the demand for these imported commodities declines. The deflation in the former importing country leads to a reduction of costs for the production of commodities. These cheaper commodities are attractive for the former exporting country which starts to import them. Another gold outflow appears from the former exporting country back to the former importing country, as both switched their roles.
Summary of Chapters
1. Introduction: Presents the motivation for the thesis following the 2007/2008 financial crisis and introduces the debate regarding a return to gold-backed currency.
2. History: Provides a chronological overview of the three major historical phases of the gold standard, ranging from the classical period to the Bretton Woods system.
3. Theory & Renaissance: Analyzes the theoretical mechanics of gold standards, the challenges of implementing 100% reserves, and the critique of current fiat systems.
4. Conclusion: Summarizes the findings, arguing that a return to the gold standard is highly unlikely and potentially destabilizing, ultimately supporting the current fiat system as a pragmatic compromise.
Key Words
Gold Standard, Commodity Money, Fiat Money, Bretton Woods, Price-Specie Flow Mechanism, Inflation, Deflation, Monetary Supply, Free Banking, Central Banks, Gold Reserves, Economic Growth, Financial Crisis, Currency Reform, Monetary Policy
Frequently Asked Questions
What is the primary focus of this thesis?
The work explores the historical existence of the gold standard and evaluates the theoretical arguments for and against a potential relaunch of gold-backed money in the modern era.
What are the core thematic areas discussed?
The thesis covers the evolution of monetary history, the price-specie flow mechanism, the economic feasibility of returning to gold reserves, and the risks associated with fiat versus commodity money.
What is the central research question?
The research investigates whether a return to a gold-backed currency system is a viable solution to the economic instabilities observed in current fiat money systems.
Which scientific methodology is employed?
The thesis utilizes a historical overview combined with an economic analysis of monetary data and theoretical frameworks derived from authors like Hume, Keynes, and Rothbard.
What is covered in the main section of the work?
The main section details the history of the gold standard, theoretical models like the price-specie flow mechanism, and critical calculations regarding the costs and inflationary effects of a transition to gold-backed reserves.
Which keywords best characterize this work?
Essential keywords include Gold Standard, Commodity Money, Fiat Money, Bretton Woods, Inflation, Deflation, Monetary Supply, and Free Banking.
How does the author evaluate the "Free Banking" model?
The author discusses the model described by Rothbard, noting that while it works in theory, its practical implementation faces insurmountable obstacles, such as the necessity for global commitment and the risk of massive inflation.
Why does the author conclude that a gold standard is unlikely to be relaunched?
The author concludes that such a move would likely trigger severe economic crises, partly because the total global gold supply is insufficient to back current money supplies without causing extreme deflation or inflationary shocks.
- Quote paper
- Gerrit Beine (Author), 2013, The Gold Standard: Theory, History, and Renaissance, Munich, GRIN Verlag, https://www.grin.com/document/232423
