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Chapter 4: Government money
Because gold is heavy to move and store, it gathered in bank and central bank vaults, and paper claims circulated instead. The author argues this centralisation let governments suspend convertibility, starting with the First World War, and finally cut the link to gold in 1971. He compares the era of government money with the gold standard and argues it brought more inflation and more frequent crises, a view many mainstream economists dispute.
Summary in our own words, not a quote from the book. The author's arguments, not investment advice. Book · Author's course
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Key ideas
- Centralised gold made paper money and suspension possible
- 1914 and 1971 as turning points
- The author's critique of central banking (a contested view)
Check yourself
- Why did gold end up concentrated in vaults?
- What changed in 1971?
- Which part of this chapter do mainstream economists most disagree with?