The End of the World Is Just the Beginning: Mapping the Collapse of Globalization

Tracing the origins of currency, the text notes that not until the seventh century BCE was barley replaced with something of value, such as a metal. It is essential for a government to build trust in its currency. If people believe that a currency is not exchangeable for something of value, financial collapse is likely. However, the text explains that even good economic management can culminate in currency collapse. The more economic growth a country has, the more need it has for supplies of a precious metal. At some point, obtaining those supplies is impossible. The text cites two examples. The first is the Spanish Empire’s loss of access to silver mines when Peru gained independence. The second is the US’s inability to back the dollar with supplies of gold by the 1970s. At that point, President Nixon “cut the cord” (178) and removed the gold standard; the dollar was backed solely by the “‘full faith and credit’ of the U.S. government” (178).

With the US’s abandonment of the gold standard in 1971, the rule that money exists in limited quantities ended. In a world of fiat currencies, the Asian model made finance a tool of the state.