Robert Mundell Quotes
The problem started before World War I. The gold standard was working fairly well. But it broke down because of the war and what happened in the 1920s. And then the U.S. started to become so dominant in the world, with the dollar becoming the central currency after the 1930s, the whole world economy shifted.
De Gaulle is commenting on the role of the dollar in American dominance.
The assumption was that money would always be backed by gold or silver. In effect, raising or allaying the money was to change the amount of gold or silver that a particular denomination of money would be able to be exchanged for. This is one of the interesting proofs that these processes did nothing economically—for if they could, no one would want the money. This has always been a weakness or a strength—depending on one’s political point of view—of a gold standard.
When the Muslims dominated most of Spain, under Sharia (Koranic Law), Christians and Jews had to pay a special tax. Also, for many years the Christian areas had to provide 100 virgins a year for the Moorish harems. When the Christians occupied most of Spain in the “reconquest,” they required the few Muslim enclaves left to pay an annual tribute to avoid major war. In 1476 Granada ceased paying the tribute. War followed and in 1492 the Christians reconquered Grenada.
The Hoover administration had lost control of the economy. The nation was in a depression. Banks were failing. Gold was being hoarded and taken out of circulation while we were on the gold standard. Roosevelt’s solution was to decouple American money and gold—a solution that William Jennings Bryan had suggested many years earlier. See {640978}.
Later, William Jennings Bryan and the Populists turned this point into a major political issue. See Bryan’s Cross of Gold Speech.
Robert Alexander Mundell CC was a Canadian economist. He was a professor of economics at Columbia University and the Chinese University of Hong Kong.
