Historically, there have long been close parallels between the collapse of monetary systems and the fall of global security orders. Hegemony requires a sound financial basis and global credibility – assets that can evaporate much faster than anyone in power cares to admit.
The nineteenth-century global order had been built around British imperial power, with the gold standard serving as its financial foundation. The gold standard was sustained by the expectation that even if it was suspended in times of war, the end of hostilities would allow the currency to return to its pre-war gold value. That promise of a constant gold value provided an element of credibility that made it easier for a wartime government to borrow, and thus to bear the cost of the conflict.
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