ANCHORS AWEIGH - THE TRANSITION FROM COMMODITY MONEY TO FIAT MONEY INWESTERN ECONOMIES

In this paper I argue that the transition from commodity money to fiat money in the 1970s was a less dramatic change than suggested by a fir st glance at monetary history or monetary theory. I show that, histori cally, the quantity of the commodity-based money was at the discretion of the monetary authority and how, over time, the desire to economize on the commodity backing led to national and international institutio ns that reduced the extent to which money issues under the commodity s tandard represented an explicit claim to an intrinsically valuable ass et.