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!! [{$pagename}] and [United States federal government]
A strict adherence to the gold standard would limit the potential for damaging inflation this is because the amount of money supply in the system is naturally limited by the amount of gold that is kept in reserves.
Of course the gold standard's biggest advantages can be seen by some as disadvantages strict adherence to the standard can even lead to deflation which is also damaging to the economy.
The convertibility of gold was a pressing issue for [Franklin Delano Roosevelt] during the great depression as it limited the money supply.
[Franklin Delano Roosevelt] he actually issued an executive order which made owning gold illegal and required everyone to convert it into us dollars.
The reason that he did this was to set a government price for that gold that was quite inflated this would then allow the federal reserve to inflate its balance sheet by over 70 percent.
So yes the gold standard was not ideal for these governments but at least it kept them in check it kept a certain degree of confidence in the value of money and when applied correctly could prevent hyperinflation. So confident were countries in the virtues of the gold standard that in [1944|Year 1944], 44 countries signed on to what was called the [Bretton Woods Agreement|]. Within the Breton Woods system all national currencies were valued in relation to the us dollar this therefore made the us dollar the dominant reserve currency. The dollar in turn was convertible to gold at a fixed rate of $35 dollars per ounce. So you can think of it as a quasi gold standard still backed by gold; but indirectly. The [Bretton Woods Conference] system had a pretty decent run until [1971|Year 1971] when Richard Nixon committed his first impeachable offense yes Nixon's termination of the convertibility of [United States Dollar] into gold should have sunk him before watergate this is because Richard Nixon set the wheels in motion for the current fiat money system that we know today a glorified confidence game backed by nothing. \\ So what exactly happened?well in august of 1971 Nixon said that the u.s would quote suspend temporarily the convertibility of the dollar into gold or other reserve assets except in amounts and conditions determined to be in the interests of money stability and in the best interest of the united states.Well it turns out that that temporary suspension became permanent.
This page (revision-6) was last changed on 29-Nov-2024 16:16 by -jimTop