ABSTRACT
The financial crisis 2008–09, The Great Recession, has contributed to calls for a return to the gold standard. In Austrian economics, M. White makes a case for a transition to a new gold standard. The gold standard, which emerged during the nineteenth century, starting in Great Britain, united monetary functions into the asset we call money, a commodity money defined by a certain quantity of gold. The theoretical framework suggests that bills of exchange created monetary expansion, in some form, making money only weakly constrained by gold. Monetary fragmentation was very strong in Germany until its unification in 1871. German monetary unification had been a cumbersome process with different standards, but the German unification was combined with monetary unification based on the British gold standard. The monetary heuristic was gold, but the economic value of a given quantity of gold increased through credit, as long as the higher liquidity allowed more economic expansion.
