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The Financial Crisis in Perspective (Collection) by Mark Zandi, Satyajit Das, John Authers

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Chapter 5. From Gold Standard to Oil Standard

“Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.”

William Jennings Bryan, July 9, 1896, National Democratic Convention

Leaving the gold standard in 1971 was a necessary condition for the booms and busts that followed. With gold as an anchor, exchange rates barely move. Without the gold standard, currencies depend on the credibility of central banks. And if central banks lose their credibility, the world’s anchor is the price of oil, not gold.

Gold is scarce. If ...

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