Today, there is almost universal consensus opposing war. The twentieth century was the bloodiest in human history, and the major wars in this century have lasted even longer than the last. However, there is seldom any discussion in the mainstream press concerning one of the most critical contributors to war – the fiat money system. Let’s examine this under-discussed connection between the abandonment of the gold standard and the wars of Europe and the U.S.
Wars under the gold standard
The entire world was on the gold standard up until 1914. Under the international gold standard, nations could not print and spend money without restraint, as is the case today. So a government could only pay for wars by taxing its citizens or convincing them to purchase war bonds. As a result, hostilities between the world’s most powerful nations were relatively brief.
Wars under the fiat system
The international gold standard ended with the outbreak of World War I in Europe, as warring nations abandoned it to fight. This move to a fiat system changed the nature of warfare permanently. The fiat system enables countries to finance wars by borrowing money and devaluing their currencies. As a result, their spending on warfare is no longer constrained.
As Saifedean Ammous chronicles in his book, The Bitcoin Standard, the net result of moving to the fiat system was that an otherwise regional European conflict triggered a global war lasting five years and killing millions of people. Moreover, according to numerous historians today, the plunder and economic devastation caused by World War I paved the way for the rise of extremist groups and leaders, leading to World War II.
The United States abandoned the gold standard in 1971, in large part to fund the Vietnam War. Since then, U.S. wars such as Afghanistan and Iraq have continued for years without public support. The continuation is only possible because, under our fiat system, America can now finance wars by borrowing trillions of dollars and printing as much money as it wants.
So maybe if we want a better, more peaceful world, we should begin by looking at our money.
If you enjoyed this article, check out Ashton’s conversation with author and financial commentator Dominic Frisby. Ashton and Dominic discuss the connection between taxes and wars, Bitcoin’s future and the disintegrating Nation-State.
Ashton Cohen is an attorney, investor, writer, and host of Ashton Cohen: The ELECTile Dysfunction Podcast.
