The gold standard requires that any money you print be backed by physical ownership of gold. Unfortunately there is only so much gold out there, but you can print as much money as you want.
In the 1970s, the U.S. had just gone through a significant boom in the economy in the 1960s. Generally, this is inflationary, but with the gold standard, the country is unable to adjust monetary policy to combat this inflation. Thus you have speculators betting on the demise of the dollar and the Federal Reserve trying to buy as much gold as possible to back the dollar. At some point, this becomes impossible.
In 1971, Nixon got rid of the gold standard and allowed the dollar to depreciate. Since then, the world has gotten off the gold standard and they are now on the dollar standard.
2007-05-27 15:14:07
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answer #1
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answered by Tats 3
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The gold standard ended during the Roosevelt administration. A gold standard limits the amount of money that can be in circulation at any given time. This in turn will flat line an economy. Never letting it grow because there isn't enough gold held by the government to allow for an increase in the money supply. The reason Roosevelt ended the gold standard was to fund the new deal, putting people back to work during the great depression.
Gold was completely deregulated during the Nixon administration. Until that time golds price was regulated by the federal government. Now the price of gold can fluctuate like any other commodity
2007-05-27 15:27:56
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answer #2
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answered by old-bald-one 5
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simply put, -If you want to be on the gold standard you must have gold to back up the paper money that you want to issue. And as the price of gold can flucuate wildly at times, it can cause the value of the paper money to do the same.
But we are still on a moderated version of the gold standard as the U.S. government keeps large quantities of gold in places like Fort Knox.
2007-05-27 15:04:21
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answer #3
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answered by albodad 3
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It wasn't that long ago that the gold standard was abandoned,
And it was aboandoned because the governments could not manipulate the money supply if it was tied to gold, Once the gold standard was abandoned, governments could create as much "Fiat" money as they wanted in order to conduct wars or any other big expenses.
Fiat money is present day currency, it is worth , in trade, only what people will accept it for, this means people must beleive it is tradable for goods and services, But if the beleif goes away, Fiat money is only useable for making fires, or using as low quality toilet paper.
2007-05-27 15:17:26
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answer #4
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answered by bob shark 7
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In 1973 the gold standard was abandoned by President Nixon due to uncontrollable currency rate fluctuations.
2007-05-28 17:40:35
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answer #5
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answered by yeohbiz 2
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It was to elimaninate the violatility in the currency. We are on the fiat standard, but it will always have value. Why? Because you can pay your taxes with it.
Also, the government or the Fed doesn't create money, they print currency. But, currency is the spare change of money. Banks create money. The Fed can influence the ease that banks do this, they can absorb the supply by issuing bonds, or they can inject money by buying back bonds. But, Banks create money. Check out a great article on Straight Dope that explains how they do this.
2007-05-28 03:50:59
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answer #6
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answered by tiescore 6
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Washington became extra corrupt interior the final 0.5 of the nineteenth century that it is now, and so have been state and native government, there have been hug giveaway of land to railroads and gadget politic became a manner of existence in cities. before advocating regulations that ought to take us back to the previous, you ought to study some historic previous. The maximum suitable will develop the potential of the Banks.. people knew this in 1896 yet this has gotten misplaced interior the argument on the subject of the FED. The bankers gained the combat for the main suitable then yet ultimately misplaced the conflict. and now you elect to grant it back to them by way of fact Ron Paul does not like the regulations of the FED. "in the event that they dare again out interior the open field and take care of the main suitable as a stable ingredient, we will combat them to the uttermost, having at the back of us the production hundreds of the rustic and the international. Having at the back of us the business hobbies and the laboring hobbies and each and all of the toiling hundreds, we will answer their demands for a maximum suitable with the help of asserting to them, you shall no longer press down upon the foreheadof exertions this crown of thorns. You shall no longer crucify mankind upon a flow of gold."
2016-10-06 04:01:58
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answer #7
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answered by ? 4
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Gold was to heavy and bulky. So the converted to tobacco and then to out current currency. The US still has its gold but its in a big huge safe that no one can see.
2007-05-27 15:06:47
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answer #8
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answered by Brent M 3
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2017-03-01 01:46:49
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answer #9
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answered by Diane 3
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