The Gold Standard: How Does it Work? Do We Need It?



The Gold Standard: How Does it Work? Do We Need It? The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold. There are distinct kinds of gold standard. First, the gold specie standard is a system in which the monetary unit is associated with circulating gold coins, or with the unit of value defined in terms of one particular circulating gold coin in conjunction with subsidiary coinage made from a less valuable metal. Similarly, the gold exchange standard typically does not involve the circulation of gold coins, instead using notes or coins made of silver or other metals, but where the authorities guarantee a fixed exchange rate with another country that is on the gold standard. This creates a de facto gold standard, in that the value of the silver coins has a fixed external value in terms of gold that is independent of the inherent silver value. Finally, the gold bullion standard is a system in which gold coins do not circulate, but in which the authorities have agreed to sell gold bullion on demand at a fixed price in exchange for the circulating currency. No country currently uses the gold standard as the basis of its monetary system, although several hold substantial gold reserves. (from Wikipedia) There are strong arguments for and against the gold standard. Others say that neither the Federal Reserve OR the gold standard should exist, and that instead, the U.S. Treasury itself should control the currency supply by issuing a Greenback currency (rather than the PRIVATE Federal Reserve Bank). This position's case has been well made in the documentary film "The Secret of Oz" by Bill Still. Watch "The Secret of Oz" for free on Bill Still's channel: http://www.youtube.com/watch?v=swkq2E8mswI&feature=plcp SUBSCRIBE to Bright Enlightenment: http://www.youtube.com/BrightEnlightenment Join the club: http://www.facebook.com/BrightEnlightenment What do you think? Federal Reserve? Gold Standard? U.S. Treasury Greenbacks? Leave a comments, thoughts, and opinions in the comments!

Comments

  1. Really interesting video, well explained!
  2. I would replace gold standard with pure carbon standard #!#
  3. Under a gold standard, how did interest accrue?
    Did countries ever deficit spend under the gold standard?
    Did countries ever have a balance of payment deficit?
    Or was all money held in reserve?

    I need answers to the questions ASAP.
  4. There isn't any miracule cure to stop crisis from happening because all models have weaknesses. I think a gold standard is the best of the bad options because then the currency isn't controlled by a few people. People can't be trusted because of lack of knowledge and lack of honesty.

    This is my current thoughts and opinion, I am willingly to change my opinion if arguments convinces me that I am wrong. I also have a lack of knowledge in economy, just like everyone else.
  5. The US and EU have throw 13 trillion $ (yes, that's TRILLION!) into their economies in the last 10 years with almost ZERO inflation. So much for the theory that printing money causes inflation.
  6. Thank you so much, very clear and full of info!
  7. Errors:-
    GS existed long before Bretton Woods.
    BW only allowed NATIONs to redeem USD for Au, Citizens were unable to do so from the 1930s
  8. Rubbish. We were on a gold standard when we experienced the Great Depression.

    What happens when your gold flows to other nations through balance of trade or other payments/redemptions?

    When your gold supply goes down so does your money supply and you have deflation which is the root of the Great Depression.

    When you need money to start new businesses but can't get it because of a limited amount of money due to a gold standard, what do you do?

    There is a reason why the world isn't on a gold standard. It doesn't work.
  9. if there exists 1 billion dollars in the entire world, each dollar is relatively strong. If there exists 1 quadrillion dollars, for the same economy with the same population on the same planet, 1 dollar is almost worthless. It's not complicated math.
  10. Exchange rates under the gold standard were stable only in between devaluations. Under floating exchange rates, devaluations happen gradually, without major disruptions and sudden shocks.
  11. The current state (2012) of the world economy is not due to the lack of a gold standard. Nor was the state of the world economy in 1932 due to the existence of a gold standard. In both cases central banks are impotent. Expansionary fiscal policy is what ultimately ended the Great Depression (forced by WWII), and expansionary fiscal policy will end the current world malaise.
  12. I really want to start a new North Texan Currency tying it to the value of Gold.
  13. Gold is worthless, we as a society just agree that it has value much like fiat money. Gold Bugs just have a weird fetish towards gold.
  14. The Gold Standard FAILED!
  15. A GOLD STANDARD WILL NOT WORK UNLESS THE WHOLE WORLD HOLDS GOLD AT THE SAME VALUE ...We held gold at $35 an oz ... other places in the world held gold at a higher price ... those countries requested that the US pay them in gold ... we lost in the exchange so we got off the gold standard
  16. Apologies accepted amigo (8:23)
  17. if we human need go back to use "metal standard",gold and silver is not good enough.
    I think "Titanium (Ti) standard " is the best way .
    [1] Titanium is much more than gold and silver in the earth .
    [2]Titanium is stable , no toxicity ,easy to store .
    [3] Titanium is useful in military Industry and living sector.
  18. Wrong way round. Establishing a gold standard doesn't mean defining the price of gold in e.g. US dollars but rather defining the value of the US dollar (or whichever currency) in terms of an amount (mass) of gold.
  19. How do you come up with an arbitrary value for gold standard dollar for each country?


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Duration: 12m 23s

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