TODAY’S CURRENCY AND FINANCIAL WARS 121the money supply in half and that threw the UK into a depression
three years ahead of the rest of the world. While the rest of the
world ran into the depression in 1929, the UK it started in 1926.
I mention that story because to go 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 stan-
dard. Don’t you know that the gold standard caused the great
depression?”
I do know that — it was a contributor to the great depres-
sion, but it was not because of gold, it was because of the price.
Churchill picked the wrong price and that was deflationary.
The lesson of the 1920’s is not that you can’t have a gold
standard, but that a country needs to get the price right.
They continued down that path until, finally, it was un-
bearable for the UK, and they devalued in 1931. Soon after,
the US devalued in 1933. Then France and the UK devalued
again in 1936.
You had a period of successive currency devaluations and
so-called “beggar-thy-neighbor” policies. The result was, of
course, one of the worst depressions in world history. There was
skyrocketing unemployment and crushed industrial production
that created a long period of very weak to negative growth.
Currency War One was not resolved until World War II and
then, finally, at the Bretton Woods conference. That’s when the
world was put on a new monetary standard.
Currency War Two raged from 1967 to 1987. The seminal
event in the middle of this war was Nixon’s taking the US, and ul-
timately the world, off the gold standard on August 15th, 1971.
He did this to create jobs and promote exports to help the
US economy. What actually happened instead?
We had three recessions back to back, in 1974, 1979, 1980.
Our stock market crashed in 1974. Unemployment skyrock-