“November 11th marks the hundredth anniversary of the end of the First World War. Ten years ago, I wrote a piece for the American Institute for Economic Research (AIER), on “The Lasting Legacies of World War I: Big Government, Paper Money, and Inflation,” at the time of the 90th anniversary of the closing of the “Great War” as it used to be called.
World War I turned the world upside down. From a epoch before 1914 that may be said without too much exaggeration to have been a relatively (classical) liberal era of fairly wide individual freedom, free markets and free trade, rule of law, and constitutionally limited governments, it was transformed during the next two decades of the 1920s and 1930s into a new epoch of socialism, communism, nationalism, fascism and Nazism, interventionism and welfare statism.
But the war, itself, carried a huge cost in human life and physical destruction. It also saw the end to the gold standard, the printing of oceans of paper money to fund the war expenses of all the belligerents, and monetary debasements that became catastrophic hyperinflations in countries such as Germany in the years immediately after the world.
It is, therefore, worth recalling the degree and depths of the political, economic and monetary disaster that the First World War resulted in; and its continuing legacy of paternalistic government regulation and planning, which is still very much reflected in our world today.”