2007-01-15 03:47:59 · 5 answers · asked by pcnut4u 2 in Social Science ➔ Economics
It would make it very difficult (or impossible) for the central bank to use monetary policy to influence the economy.
You'd be stuck with fiscal policy as your only tool, and having looked at the Federal Budget recently, its a very poor tool indeed.
2007-01-15 04:25:29 · answer #1 · answered by Anonymous · 0⤊ 0⤋
going back to the gold standard, is synonymous with fixing our currency rate. Saying a piece of gold is worth so and so dollars obligates you to movie your money supply to back up your claim. This renders our Central Bank useless, and our monetary policy non-existent. We would be at the whims of the global market for gold. This would be extremely bad for developing countries who have fixed their currency to ours because not their on the gold standard too. If thing go bad, a currency crisis would be immanent.
2007-01-15 05:07:17 · answer #2 · answered by Mr. DC Economist 5 · 0⤊ 0⤋
The country would be forced into a massive economic downturn that would make the depression look like a walk in the park. You see, we have a huge national debt and we also have very little gold.
2007-01-15 03:58:33 · answer #3 · answered by Terry Z 4 · 0⤊ 0⤋
probably pretty similar to what happened last time
2007-01-15 03:55:33 · answer #4 · answered by tlex 3 · 0⤊ 0⤋
er... not enough gold.
Wouldn't work.
Not wise to base our monetary system on a commodity.
2007-01-15 03:55:23 · answer #5 · answered by Morey000 7 · 0⤊ 1⤋