Why did the U.S abandon the gold standard?

Answer 1

Under the gold standard, the amount of dollars in circulation was limited to the amount of gold in Fort Knox, or the gold in the coinage.

At the time, the US, and the rest of the world was in the throes of the Great Depression. What was needed to solve the problem and give the economy a jump start was an infusion of cash. So, FDR convinced Congress to de-monetize gold, and issue fiat money, backed only by "The full faith and credit of the United States Government."

The mint cranked up the presses and poured out huge amounts of cash which entered the economy. This made the dollar less valuable. Thus people earned higher wages, prices rose, and the economy started to recover.

That cover it well enough?

Doc Hudson

Answer 2

The dying of Gold replaced into finished in 3 tiers. the 1st replaced into in 1913 while the Federal Reserve Act created the Fed. The 2d replaced into in 1933 while FDR made possession of Gold unlawful and tension people to commerce of their gold for paper funds. And third, while Nixon ended the main perfect wherein foreign places international locations could substitute their money for Gold because of the fact the U. S. dollar replaced into subsidized via Gold at a sequence substitute fee. Now the pros to Gold are that it is not inflationary. you are able to create extra gold till you dig it out of the floor. that supplies economic capability to the people, not some proper economic enterprise. The downsides are 2 fold. First. it extremely is inherently deflationary. devoid of latest funds, you are able to not enhance the economic gadget. undesirable information in case you have a transforming into inhabitants. the different evil to gold is Globalization. the reason Nixon ended the main perfect is via the fact foreign places international locations have been redeeming money for Gold and effectively removing Gold from the U. S. economic gadget. and via those cases the place we import extra desirable than we export, we could in result be exporting our Gold and uploading Widgets. It would not be long formerly we appeared around and there replaced into no Gold left to gas our economic gadget. purely widgets from China. so as much as i like Gold, its a adverse decision of foreign places earnings a twenty first century Globalized international.

Answer 3

the gold standard may be more secure than other forms of money but doesn't always hold more value or grow like a mutual fund will. I know people who move a portion of their retirement funds to invest in gold because it's a 'sure thing'

Answer 4

I think this allowed Wall Street to grow faster because if the government sold treasury bonds instead of buying gold they could encourage foreign investment and therefore strengthen the currency and also prevent inflation because the wealthy U.S. citizens would not take their capital elsewhere. I could be wrong. It may have had to do with the price of gold.

Answer 5

There isn't enough gold to back up the dollar anymore to have a one to one correspondance between gold and a certificate.