The Similarities Between The Interwar Gold Standard And The Euro

What are the similarities between the Interwar Gold Standard and the Euro? What are the differences?

The tight monetary and fiscal policies of the late 1920s that induced investment to fall weredue to the adherence of policy-makers to the ideology of the gold standard. As a result of this ideology, monetary and fiscal authorities implemented contractionary policies when hindsight showsclearly that expansionary policies were needed.
The gold standard was revived with some difficulty after the First World War.
The United States never went off gold standard the First World War, it becamea gigantic sink for the gold reserves of the rest of the world.
The Conservative Prima Minister, Stanley Baldwin, repeated the mantra of the gold standard: men would have “to face a reduction inwages” to put the coal industry on its feet. This of course was just one way of putting industry on its feet. But it was the only way open under the gold standard, alternatives involving higher pricesand a lower exchange rate being inadmissible. Countries on the gold standard could not devalue their currencies or allow the demand for exports to determinate their exchange rate. They could not expandthe money supply to stimulate domestic demand, for doing so would push up prices, provoke gold exports, and weaken the currency. The only way of reducing prices was to reduce production costs, thelargest of which was labour.
From labour’s point of view, pushing down wages reduced the purchasing power of the employed and implied job losses insofar as the mechanism for depressing wages wasfurther restriction of demand.
The result was a general strike. As the inflation ran out of control, its main effects come to be aggravating uncertainly and demoralizing consumers.
The euro is notidentical to the gold standard, but the parallels are there. Adopting the euro, unlike adopting the gold standard, was an absolute rather than a contingent commitment. Countries could leave the gold...