The gold standard shielded monetary policy from democratic politics

Evidence

For the Treasury and the Bank of England, returning to gold, so costly in terms of unemployment and social sacrifi ce, had a further invaluable political payoff that was worth any economic sacrifi ce. Th e gold standard buttressed the exemption of monetary policy, and consequently also of fi scal policy, from political discussion and intervention. — Clara E. Mattei, The Capital Order, 998

Categorization

• DEEPTHINKING: The gold standard as a mechanism for removing economic policy from democratic politics — an institutional device for depoliticization — is a powerful analytical claim that generalizes well beyond the interwar case.
• XREF: Strongly connects to modern central-bank independence and the eurozone’s institutional design, both framed as removing monetary policy from politics — the same depoliticization mechanism Mattei identifies. — connects to: Democracies cannot sustain a gold standard because voters will reject it — Mark Blyth, Austerity: The History of a Dangerous…, 534; The gold standard’s wage flexibility presupposed excluding democratic labor from politics — Mark Blyth, Austerity: The History of a Dangerous…, 492; Democratic politics and internal deflation make currency pegs politically uncredible. — Mark Blyth, Austerity: The History of a Dangerous…, 214 (+8 more)

Broader Connections

• The gold standard naturalized austerity by removing it from political dispute #expands (0.90) — Clara E. Mattei, The Capital Order, 1302
• The gold standard structurally blocked redistributive spending before World War I #expands (0.85) — Clara E. Mattei, The Capital Order, 102