Australia’s Gold Standard Blunder Has Striking Parallels With the United States and the UK

Australia became a nation on January 1, 1901, when sixBritish colonies-New South Wales, Victoria, Queensland, Western Australia, South Australia, and Tasmania-unified to form a Commonwealth. For nearly a decade, each former colony circulated its own money (both gold coin and gold-backed paper). A remarkably stable arrangement, the different currencies traded against each other at par (one for one). Then in 1910, the Parliament created a single national currency, the Australian dollar, and pegged it to the British pound, which effectively tied Aussie money to gold.

So far, so good.