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Encyclopedia > Gold Standard

The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold. Under the gold standard, currency issuers guarantee to redeem notes, upon demand, in that amount of gold. Governments that employ such a fixed unit of account, which will redeem their notes to other governments in gold, share a fixed-currency relationship. The gold standard is not currently used by any government or central bank, having been replaced completely by fiat currency. However, private currency, backed by gold, is in use. Gold standard may refer to: Look up gold standard in Wiktionary, the free dictionary. ... A monetary system secures the proper functioning of money by regulating economic agents, transaction types, and money supply. ... Face-to-face trading interactions on the New York Stock Exchange trading floor. ... A unit of account is a standard numerical unit of measurement for the market value of goods, services, and other transactions. ... GOLD refers to one of the following: GOLD (IEEE) is an IEEE program designed to garner more student members at the university level (Graduates of the Last Decade). ... Look up fiat in Wiktionary, the free dictionary. ... A private currency is a currency issued by a private institution. ...

Contents

Why gold?

Many economies used gold as the currency standard due to its rarity, durability, easy divisibility, and the general ease of identification,[1] often in conjunction with silver. Silver was typically the main circulating medium, with gold as the metal of monetary reserve. Even after silver was no longer basis of currency,[citation needed] gold remained a base global currency until the collapse of the Bretton Woods System in 1971.[2] Wikipedia does not have an article with this exact name. ...


Under the gold standard, the function of paper currency was to reduce the danger of transporting gold, reduce the possibility of debasement of coins, and avoid the reduction in circulating medium to hoarding and losses, as well as to allow governments to control or regulate the flow of commerce within their dominion. Money backed by a specie, such as gold or silver, is sometimes called representative money, and the notes issued are often called certificates. A £20 Bank of England banknote. ... Debasement is the practice of lowering the value of currency. ... Hoarding is the storing of food or other goods. ... For other uses, see Money (disambiguation). ... Representative money refers to money that consists of a token or certificate that can be exchanged for a fixed quantity of a commodity such as gold, silver or potentially water, oil or food. ... A certificate is an official document affirming some fact. ...


Disadvantages

Beyond the difficulty in transporting, storing, and preventing the debasement of gold, one of the main disadvantages of the gold standard is that it artificially inflates the value of gold, increasing the cost of items and industrial processes in which it is used. The total amount of gold that has ever been mined is estimated at ~125,000 tonnes.[3] At the former gold price of around USD $640 per Troy ounce, or around $20,000 per kilogram, the value of this entire planetary stock would be USD $2.5 trillion, which is less than the value of currency circulating. In the U.S. alone, more than $7.3 trillion is in circulation.[4]


Using a mined commodity such as gold for money can cause inflation when new mineral deposits are found and extracted, and deflation when they are mined to exhaustion. Such inflation and deflation is caused when the commodity money in circulation from mining efforts grows at a different rate than the economy as a whole.[5] Finally, using a fixed commodity as a monetary standard gives central banks substantially fewer options with which to respond to economic crises and stimulate economic growth.[6] Deflation (economics) Deflation (data compression) Deflation is the removal of loose soil by eolian (wind) processes This is a disambiguation page — a navigational aid which lists other pages that might otherwise share the same title. ...


Early coinage

Gold coin of Alexander the Great, ca. 330 BC
Gold coin of Alexander the Great, ca. 330 BC

The first metal used as a currency was silver more than 4,000 years ago, when silver ingots were used in trade. Gold coins first were used from 600 B.C.E. However, long before this time, gold, as per silver, was used as a store of wealth and the basis for trade contracts in Akkadia, and later in Egypt. During the heyday of the Athenian empire, the city's silver tetradrachm was the first coin to achieve "international standard" status in Mediterranean trade. Silver remained the most common monetary metal used in ordinary transactions until the 20th century. Image File history File links Metadata Size of this preview: 800 × 411 pixelsFull resolution (2230 × 1146 pixels, file size: 617 KB, MIME type: image/jpeg) File historyClick on a date/time to view the file as it appeared at that time. ... Image File history File links Metadata Size of this preview: 800 × 411 pixelsFull resolution (2230 × 1146 pixels, file size: 617 KB, MIME type: image/jpeg) File historyClick on a date/time to view the file as it appeared at that time. ... This article is about metallic materials. ... This article is about the chemical element. ... Modern gold ingots from the Bank of Sweden An Ingot is a mass of material cast into a shape which is easy to handle. ... It has been suggested that Commerce be merged into this article or section. ... This article is about monetary coins. ... Akkad (or Agade) was a city and its region of northern Iraq) between Assyria to the northwest and Sumer to the south. ... The Delian League was an association of Greek city-states in the 5th century BC. As it was led by Athens, it is sometimes pejoratively referred to as the Athenian Empire. ... ISO 4217 Code GRD User(s) Greece Inflation 3. ... The Mediterranean Sea is an intercontinental sea positioned between Europe to the north, Africa to the south and Asia to the east, covering an approximate area of 2. ...

Aureus minted in 193 CE by Septimius Severus.
Aureus minted in 193 CE by Septimius Severus.

The Persian Empire collected taxes in gold, and when it was conquered by Alexander the Great, this gold became the basis for the gold coinage of Alexander's empire and those of his Diadochi. The vast gold hoard of the Persian kings was put into monetary circulation, triggering the first known "worldwide" inflation event. Septimius Severus, 193–211 AD. Aureus (7. ... Septimius Severus, 193–211 AD. Aureus (7. ... Events June 1 – Roman Emperor Didius Julianus is assassinated in his palace. ... Lucius Septimius Severus (b. ... Persia redirects here. ... “Taxes” redirects here. ... For the film of the same name, see Alexander the Great (1956 film). ... Ancient Macedons regions and towns Macedon or Macedonia (Greek ) was the name of an ancient kingdom in the northern-most part of ancient Greece, bordered by the kingdom of Epirus to the west and the region of Thrace to the east. ... In general Diadochi (in Greek Διάδοχοι, transcripted Diadochoi) means successors, such that the neoplatonic refounders of Platos Academy in Late Antiquity referred to themselves as diadochi (of Plato). ...

Solidus of Justinian II, ca. 705 CE
Solidus of Justinian II, ca. 705 CE

The Roman Empire minted two important gold coins: the aureus, which was ~7 grams of gold alloyed with silver, and the smaller solidus, which weighed 4.4 grams, of which 4.2 was gold. These values applied only to the early Empire. Later Roman and Byzantine coins were frequently alloyed with baser metals, in an attempt to expand the money supply. Justinian II. Second Reign, 705-711 AD. AV Solidus (4. ... Justinian II. Second Reign, 705-711 AD. AV Solidus (4. ... Justinian II, known as Rhinotmetus (the Split-nosed) (669-711) was a Byzantine emperor of the Heraclian Dynasty, reigned from 685 to 695 and again from 704 to 711. ... For other uses, see Roman Empire (disambiguation). ... A mint is a facility which manufactures coins for currency. ... Aureus minted in 193 by Septimius Severus to celebrate XIIII Gemina Martia Victrix, the legion that proclamed him emperor. ... BIC pen cap, about 1 gram. ... An alloy is a homogeneous hybrid of two or more elements, at least one of which is a metal, and where the resulting material has metallic properties. ... Julian solidus, ca. ...


The dinar and dirham were gold and silver coins, respectively, originally minted by the Persians. The Caliphates in the Islamic world adopted these coins, starting with Caliph Abd al-Malik (685–705). A 25,000 Iraqi dinar note printed after the fall of Saddam Hussein. ... Dirham is a unit of currency in several Arabic-speaking nations, including: Islamic Dirham The Moroccan dirham The United Arab Emirates dirham 1/1000 of the Libyan dinar 1/100 of the Qatari riyal 1/10 of the Jordanian dinar The dirham, spelt diram, is 1/100 of the Tajikistani... A caliphate (from the Arabic خلافة or khilāfah), is the Islamic form of government representing the political unity and leadership of the Muslim world. ... For people named Islam, see Islam (name). ... Abd al-Malik ibn Marwan (646-705) (Arabic: عبد المالك بن مروان ) was an Umayyad caliph. ...

Sequin (Venetian ducat), 1382 CE
Sequin (Venetian ducat), 1382 CE

In 1284 the Republic of Venice coined the ducat, its first solid gold coin. Other coins, the florin, noble, grosh, złoty, and guinea, were also introduced at this time by other European states to facilitate growing trade. Image File history File links Metadata No higher resolution available. ... Image File history File links Metadata No higher resolution available. ... Borders of the Republic of Venice in 1796 Capital Venice Language(s) Venetian, Latin, Italian Religion Roman Catholic Government Republic Doge  - 1789–97 Ludovico Manin History  - Established 697  - Treaty of Zara June 27, 1358  - Treaty of Leoben April 17, 1797 * Traditionally, the establishment of the Republic is dated to 697. ... The ducat (IPA: ) is a gold coin that was used as a trade currency throughout Europe before World War I. Its weight is 3. ... The back of an Italian florin coin The front of an Italian florin coin The florin was struck from 1252 to 1523 with no significant change in its design or metal content standard. ... Edward III: AV noble. ... Ë: The term Grosz may also refer to George Grosz. ... ZÅ‚oty (literally meaning golden, plural: zÅ‚ote or zÅ‚otych, depending on the number) is the Polish currency unit. ...


Beginning with the conquest of the Aztec and Inca Empires, Spain had access to stocks of new gold for coinage in addition to silver. The wide availability of milled and cob gold coins made it possible for the West Indies to make gold the only legal tender in 1704. The circulation of Spanish coins would create the unit of account for the United States, the "dollar", based on the Spanish silver real, and Philadelphia's currency market would trade in Spanish colonial coins. The word Aztec is usually used as a historical term, although some contemporary Nahuatl speakers would consider themselves Aztecs. ... For the a general view of Inca civilisation, people and culture, see Incas. ... The Caribbean or the West Indies is a group of islands in the Caribbean Sea. ...


History of the modern gold standard

See also: History of the English penny

For silver pennies produced after 1820 see Maundy money The silver penny was introduced to England around the year 785 by King Offa of Mercia, in the English midlands. ...

The crisis of silver currency and bank notes (1750–1870)

In the late 18th century wars and trade with China, which sold many trade goods to Europe but had little use for European goods, drained silver from the economies of Western Europe and the United States. Coins were struck in smaller and smaller amounts, and there was a proliferation of bank and stock notes used as money. A current understanding of Western Europe. ...


In the 1790s Britain suffered a massive shortage of silver coinage and ceased to mint larger silver coins. It issued "token" silver coins and overstruck foreign coins. With the end of the Napoleonic Wars, Britain began a massive recoinage program that created standard gold sovereigns and circulating crowns, half-crowns, and eventually copper farthings in 1821. In 1833, Bank of England notes were made legal tender, and redemption by other banks was discouraged. In 1844 the Bank Charter Act established that Bank of England notes, fully backed by gold, were the legal standard. According to the strict interpretation of the gold standard, this 1844 Act marks the establishment of a full gold standard for British money. Combatants Austria[a] Portugal Prussia[a] Russia[b] Sicily[c] Sardinia  Spain[d]  Sweden[e] United Kingdom French Empire Holland[f] Italy Etruria[g] Naples[h] Duchy of Warsaw[i] Confederation of the Rhine[j] Bavaria Saxony Westphalia Württemberg Denmark-Norway[k] Commanders Archduke Charles Prince Schwarzenberg Karl Mack... The Bank Charter Act 1844 was a UK act of parliament, passed under the government of Robert Peel, which restricted the powers of British banks and gave exclusive note-issuing powers to the central Bank of England. ...


There were 113 grains (7.32g) of gold to one pound sterling. A grain is a unit of mass equal to 0. ... GBP redirects here. ...


The U.S. adopted a silver standard based on the "Spanish milled dollar" in July 1785. This was codified in the 1792 Mint and Coinage Act. This began a long series of attempts for America to create a bimetallic standard for the US Dollar, which would continue until the 1930s. Because of the huge debt taken on by the US Federal Government to finance the Revolutionary War, silver coins struck by the government left circulation, and in 1806 President Jefferson suspended the minting of silver coins. The US Treasury was put on a strict "hard money" standard, doing business only in gold or silver coin as part of the Independent Treasury Act of 1846, which legally separated the accounts of the Federal Government from the banking system. Following Gresham's law, silver poured into the US, which traded with other silver nations, and gold moved out. In 1853, the US reduced the silver weight of coins, to keep them in circulation. The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. ... The Spanish dollar or peso (literally, weight) is a silver coin that was minted in the Spanish Empire after a Spanish currency reform in 1497. ... The Coinage Act, passed by the U.S. Congress on April 2, 1792, established the U.S. Mint and regulated coinage of the United States. ... In economics, bimetallism is a monetary standard in which the value of the monetary unit can be expressed either with a certain amount of gold or with a certain amount of silver: the ratio between the two metals is fixed by law. ... The United States dollar is the official currency of the United States. ... For other uses, see Debt (disambiguation). ... John Trumbulls Declaration of Independence, showing the five-man committee in charge of drafting the Declaration in 1776 as it presents its work to the Second Continental Congress in Philadelphia The American Revolution refers to the period during the last half of the 18th century in which the Thirteen... Thomas Jefferson (13 April 1743 N.S.–4 July 1826) was the third President of the United States (1801–09), the principal author of the Declaration of Independence (1776), and one of the most influential Founding Fathers for his promotion of the ideals of Republicanism in the United States. ... The U.S. Treasury building today. ... For other uses, see Bank (disambiguation). ... Greshams law is commonly stated as: When there is a legal tender currency, bad money drives good money out of circulation. or more accurately Money overvalued by the State will drive money undervalued by the State out of circulation. ...


Establishment of the international gold standard

Germany was created as a unified country following the Franco-Prussian War; it established the mark. Rapidly most other nations followed suit. Gold became a transportable, universal and stable unit of valuation, and the world's dominant economy, the United Kingdom, had a longstanding commitment to the gold standard.[7] See Globalization. Combatants Second French Empire North German Confederation allied with South German states (later German Empire) Commanders Napoleon III François Achille Bazaine Patrice de Mac-Mahon, duc de Magenta Otto von Bismarck Helmuth von Moltke the Elder Strength 400,000 at wars beginning 1,200,000 Casualties 150,000... German 20 Mark banknote from 1914 (www. ... The rise of multinational corporations and outsourcing have played a crucial part in globalization. ...


Dates of adoption of a gold standard

Throughout the decade of the 1870s deflationary and depressionary economics created periodic demands for silver currency. However, such attempts generally failed, and continued the general pressure towards a gold standard. By 1879, only gold coins were accepted through the Latin Monetary Union, composed of France, Italy, Belgium, Switzerland and later Greece, even though silver was, in theory, a circulating medium. The real (plural réis) was the unit of currency in Portugal until 1911. ... German 20 Mark banknote from 1914 (www. ... The Latin Monetary Union (LMU) was a 19th century attempt to unify several European currencies into a single currency that could be used in all the member states, at a time when most national currencies were still made out of gold and silver. ... De facto is a Latin expression that means in fact or in practice. It is commonly used as opposed to de jure (meaning by law) when referring to matters of law or governance or technique (such as standards), that are found in the common experience as created or developed without... USD redirects here. ... Troy weight is a system of units of mass customarily used for precious metals, black powder, and gemstones. ... The Scandinavian Monetary Union (Swedish: Skandinaviska myntunionen, Danish: Skandinaviske møntunion) was a monetary union formed by Sweden and Denmark on May 5, 1873 by fixing their currencies against gold at par to each other. ... The gulden (sometimes guilder in English), represented by the symbol Æ’ or fl. ... ISO 4217 Code ESP User(s) Spain, Andorra Inflation 1. ... The markka (or Finnish mark) was the currency used in Finland from 1860 until January 1, 1999 (in practice on January 1, 2002), when it was replaced by the euro (€). The currency code used for the markka was FIM, and the usual familiar notation was a postfix mk. ... Austria issued a coin called a Florin from 1857 until 1892. ... Crown of the Austrian Empire The Crown of the Empire of Austria (in German: Österreichische Kaiserkrone or Krone des Kaisertums Österreich) was originally the personal crown of emperor Rudolf II. It is therefore also known as the Crown of Rudolf II, or the Crown of the Austrian Empire. ... 1998 Russian Federation one rouble coin. ... ISO 4217 Code JPY User(s) Japan Inflation -0. ... “INR” redirects here. ... Look up De jure in Wiktionary, the free dictionary. ... Deflation (economics) Deflation (data compression) Deflation is the removal of loose soil by eolian (wind) processes This is a disambiguation page — a navigational aid which lists other pages that might otherwise share the same title. ... WORLD OF WARCRAFT IS THE BEST GAME EVER INVENTED AND PLAY IT. IF YOU DONT PLAY WORLD OF WARCRAFT, YOU ARE A nOOb. ... The Latin Monetary Union (LMU) was a 19th century attempt to unify several European currencies into a single currency that could be used in all the member states, at a time when most national currencies were still made out of gold and silver. ...


Gold standard from peak to crisis (1901–1932)

Abandoning the standard to fund the war

The British government ended the convertibility of Bank of England notes to gold in 1914 to fund military operations during World War I. By the end of the war Britain was on a series of fiat currency regulations, which monetized Postal Money Orders and Treasury Notes. The government later called these notes banknotes, which are different from US Treasury notes. The United States government took similar measures. After the war, Germany, losing much of its gold in reparations, could no longer coin gold "Reichsmarks," and moved to paper currency, although the Weimar Republic later introduced the "rentenmark," and later the gold-backed reichsmark in an effort to control hyperinflation. The United Kingdom is a unitary state and a democratic constitutional monarchy. ... “The Great War ” redirects here. ... Look up fiat in Wiktionary, the free dictionary. ... Treasury securities are government bonds issued by the United States Department of the Treasury through the Bureau of the Public Debt. ... Anthem Das Lied der Deutschen Germany during the Weimar period, with the Free State of Prussia (in blue) as the largest state Capital Berlin Language(s) German Government Republic President  - 1918-1925 Friedrich Ebert  - 1925-1933 Paul von Hindenburg Chancellor  - 1919 Philipp Scheidemann(first)  - 1933 Kurt von Schleicher (last) Legislature... A 1926 5 Rentenmark banknote The Rentenmark (literally, Security Mark) (RM) was a currency issued on 15 November 1923 to stop the hyperinflation of 1922 and 1923 in Germany. ... User(s) Germany Subunit 1/100 Reichspfennig Symbol RM Reichspfennig Rpf. ... Certain figures in this article use scientific notation for readability. ...


In the UK the pound was returned to the gold standard in 1925, by a somewhat reluctant Winston Churchill. Although a higher gold price and significant inflation had followed the WWI ending of the gold standard, Churchill returned to the standard at the pre-war gold price. For five years prior to 1925 the gold price was managed downward to the pre-war level, causing deflation throughout those countries using the Pound Sterling. This deflation reached across the remnants of the British Empire everywhere the Pound Sterling was still used as the primary unit of account. The British government abandoned the standard again on September 20, 1931. Sweden abandoned the gold standard in October 1931, the U.S. in 1933, and other nations were, to one degree or another, forced off the gold standard. GBP redirects here. ... Churchill redirects here. ... GBP redirects here. ... The British Empire in 1897, marked in pink, the traditional colour for Imperial British dominions on maps. ... GBP redirects here. ... is the 263rd day of the year (264th in leap years) in the Gregorian calendar. ...


Depression and World War II

British hesitate to return to gold standard

During the 1939–1942 period, the UK depleted much of its gold stock in purchases of munitions and weaponry on a "cash and carry" basis from the U.S. and other nations.[citation needed] This depletion of the UK's reserve convinced Winston Churchill of the impracticality of returning to a pre-war style gold standard. John Maynard Keynes, who had argued against such a gold standard, became increasingly influential. He proposed a more wide ranging version of the "stability pact" style gold standard, later expressed in the Bretton Woods Agreement. Originally, cash and carry simply designates a method of making purchases where the customer pays the purchased goods immediately and takes them away himself -- as opposed to having the goods delivered and paying a bill later. ... Keynes redirects here. ... The Bretton Woods system of international economic management established the rules for commercial and financial relations among the major industrial states. ...


Post-war international gold standard (1946–1971)

Main article: Bretton Woods system

Wikipedia does not have an article with this exact name. ...

Theory

The theory of the gold standard rests on the idea that inflation is caused by an increase in the supply of money, an idea advocated by David Hume, and that uncertainty over the future purchasing power of currency depresses business confidence and leads to reduced trade and capital investment. // In macroeconomics, money supply (monetary aggregates, money stock) is the quantity of currency and money in bank accounts in the hands of the non-bank public available within the economy to purchase goods, services, and securities. ... This article is about the philosopher. ...


Differing definitions of gold standard

If the monetary authority holds sufficient gold to convert all circulating money, then this is known as a 100% reserve gold standard, or a full gold standard. In some cases it is referred to as the Gold Specie Standard to more easily separate it from the other forms of gold standard that have existed at various times. The 100% reserve standard is generally considered unworkable because the quantity of gold in the world is too small a quantity of money to sustain current worldwide economic activity and the "right" quantity of money (i.e. one that avoids either inflation or deflation) is not a fixed quantity, but varies continuously with the level of commercial activity.


In an international gold-standard system, which may exist in the absence of any internal gold standard, gold or a currency that is convertible into gold at a fixed price is used as a means of making international payments. Under such a system, when exchange rates rise above or fall below the fixed mint rate by more than the cost of shipping gold from one country to another, large inflows or outflows occur until the rates return to the official level. International gold standards often limit which entities have the right to redeem currency for gold. Under the Bretton Woods system, these were called "SDRs" for Special Drawing Rights. Special Drawing Rights (SDRs) is a potential claim on the freely usable currencies of International Monetary Fund members. ...


Perceived stability offered by gold standard

The gold standard, in theory, limits the power of governments to inflate prices through excessive issuance of paper currency. It is also supposed to create certainty in international trade by providing a fixed pattern of exchange rates. Under the classical international gold standard, disturbances in the price level in one country would be wholly or partly offset by an automatic balance-of-payment adjustment mechanism called the "price specie flow mechanism." At the time of the Bretton Woods agreement, it was believed that markets were always internally clear; Say's Law. However, in practice, wages, not capital, depreciate in price first. The price specie flow mechanism is a logical mechanism created by David Hume which dispeled the Mercantilist (1500-1776) notion that a nation can have a continuously favorable balance of trade. ... In economics, Say’s Law or Say’s Law of Markets is a principle attributed to French businessman and economist Jean-Baptiste Say (1767-1832) stating that there can be no demand without supply. ...


Mundell-Fleming model

According to modern neo-classical synthesis economics, the Mundell-Fleming Model describes the behavior of currencies under a gold standard. Since the value of the currencies is fixed by the par value of each currency to gold, the remaining freedom of action is distributed between free movement of capital, and effective monetary and fiscal policy. One reason that most modern macro-economists do not support a return to gold is the fear that this remaining amount of freedom would be insufficient to combat large downturns or deflation.[citation needed] The Mundell-Fleming model is an economic model first set forth by Robert Mundell and Marcus Fleming. ...


Advocates and opponents of a renewed gold standard

The return to the gold standard is supported by Objectivists, followers of the Austrian School of Economics, and many libertarians. This article is about the philosophy of Ayn Rand. ... The Austrian School is a school of economic thought which rejects opposing economists reliance on methods used in natural science for the study of human action, and instead bases its formalism of economics on relationships through logic or introspection called praxeology. ... This article deals with the libertarianism as defined in America and several other nations. ...


It is opposed by the vast majority of governments and economists,[citation needed] because the gold standard has frequently been shown to provide insufficient flexibility in the supply of money and in fiscal policy, because the supply of newly mined gold is finite and must be carefully husbanded and accounted for.[citation needed][dubious ] In theory, paper money printed based on the finite amount of gold will go up in value as it becomes rarer[citation needed]. In macroeconomics, money supply (monetary aggregates, money stock) is the quantity of currency and money in bank accounts in the hands of the non-bank public available within the economy to purchase goods, services, and securities. ...


Few economists[attribution needed] today advocate a return to the gold standard, other than the Austrian school and some supply-siders. However, many prominent economists have expressed sympathy with a hard currency basis, and have argued against fiat money, including former US Federal Reserve Chairman Alan Greenspan and macro-economist Robert Barro. Greenspan famously argued the case for returning to a gold standard in his 1966 paper "Gold and Economic Freedom", in which he described supporters of fiat currencies as "welfare statists" hell-bent on using monetary printing presses to finance deficit spending. In debates with US Congressman Dr. Ron Paul, Greenspan has argued that the fiat money system of today has retained the favorable properties of the gold standard because central bankers have pursued monetary policy as if a gold standard were still in place. Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created using incentives for people to produce (supply) goods and services, such as adjusting income tax and capital gains tax rates. ... Fiat money or fiat currency, is money that is current or legal tender as satisfaction for money debts by government fiat, that is by law. ... Squalltoonix (born March 6, 1926 in New York City) is an American economist and was Chairman of the Board of Governors of the Federal Reserve of the United States from 1987 to 2006. ... Robert Barro Robert Barro (born 1944) is an influential macroeconomist and the Wesley Clair Mitchell Professor of Economics at Columbia University. ... Ronald Ernest Ron Paul (b. ...


The current monetary system relies on the US Dollar as an “anchor currency” which major transactions, such as the price of gold itself, are measured in. Currency instabilities, inconvertibility and credit access restriction are a few reasons why the current system has been criticized. A host of alternatives have been suggested, including energy-based currencies, market baskets of currencies or commodities; gold is merely one of these alternatives.


In 2001 Malaysian Prime Minister Mahathir bin Mohamad proposed a new currency that would be used initially for international trade between Muslim nations. The currency he proposed was called the islamic gold dinar and it was defined as 4.25 grams of 24 carat (100%) gold. Mahathir Mohamad promoted the concept on the basis of its economic merits as a stable unit of account and also as a political symbol to create greater unity between Islamic nations. The purported purpose of this move would be to reduce dependence on the United States dollar as a reserve currency, and to establish a non-debt-backed currency in accord with Islamic law against the charging of interest.[1] However to date, Mahathir's proposed gold-dinar currency has failed to become an accomplished fact.[2][3] The Prime Minister of Malaysia is the indirectly elected head of government of Malaysia. ... Mahathir bin Mohamad (b. ... Islamic dinar and dirham The Islamic gold dinar (sometimes referred as Islamic dinar or Gold dinar) is a bullion gold coin made from 4. ... Carat is a measure of the purity of gold and platinum alloys. ... USD redirects here. ... Sharia (Arabic شريعة also Sharia, Shariah or Syariah) is traditional Islamic law. ...


Gold as a reserve today

Gold ingots like these, from the Bank of Sweden, still form an important currency reserve and store of private wealth.

During the 1990s Russia liquidated much of the former USSR's gold reserves, while several other nations accumulated gold in preparation for the Economic and Monetary Union. The Swiss Franc left a full gold-convertible backing. However, gold reserves are held in significant quantity by many nations as a means of defending their currency, and hedging against the U.S. Dollar, which forms the bulk of liquid currency reserves. Weakness in the U.S. Dollar tends to be offset by strengthening of gold prices. Gold remains a principal financial asset of almost all central banks alongside foreign currencies and government bonds. It is also held by central banks as a way of hedging against loans to their own governments as an "internal reserve". Approximately 25% of all above-ground gold is held in reserves by central banks. Commons:Image:Gold ingots. ... Commons:Image:Gold ingots. ... Sveriges Riksbank (Swedish National Bank) is the central bank of Sweden, sometimes called just the Bank of Sweden. ... // Gold ingots, like these from the Bank of Sweden, form the base of many monetary systems Gold reserves (or gold holdings) are held by central banks as a store of value. ... // Gold ingots, like these from the Bank of Sweden, form the base of many monetary systems Gold reserves (or gold holdings) are held by central banks as a store of value. ...


Both gold coins and gold bars are widely traded in deeply liquid markets, and therefore still serve as a private store of wealth. Some privately issued currencies, such as digital gold currency, are backed by gold reserves. Gold coins are one of the oldest forms of money. ... For the U.S. city, see Gold Bar, Washington. ... For the business meaning, see Wealth (economics). ... e-gold is, according to their website, 100% backed by gold Digital gold currency (or DGC) is a form of electronic money denominated in gold weight. ...


In 1999, to protect the value of gold as a reserve, European Central Bankers signed the "Washington Agreement," which stated they would not allow gold leasing for speculative purposes, nor would they "enter the market as sellers" except for sales that had already been agreed upon. Headquarters Coordinates , , Established 1 January 1998 President Jean-Claude Trichet Central Bank of Austria, Belgium, France, Finland, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Slovenia, Spain Currency Euro ISO 4217 Code EUR Reserves €43bn directly, €338bn through the Eurosystem (including gold deposits). ...


See also

e-gold is, according to their website, 100% backed by gold Digital gold currency (or DGC) is a form of electronic money denominated in gold weight. ... Full-reserve banking is a theoretically conceivable banking practice in which all deposits, banknotes, and notes in a financial system would be backed up by assets with a store of value. ... Reserves of foreign exchange and gold in 2006 A pile of 12. ... The Federal Reserve System is headquartered in the Eccles Building on Constitution Avenue in Washington, DC. The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. ... The term gold bug is used to describe investors who are very bullish on buying the commodity (XAU - ISO 4217) gold. ... IMF redirects here. ... The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. ... The World Bank logo The World Bank (the Bank) is a part of the World Bank Group (WBG), is a bank that makes loans to developing countries for development programs with the stated goal of reducing poverty. ... BIS Headquarters in Basel The Bank for International Settlements (or BIS) is an international organization of central banks which exists to foster cooperation among central banks and other agencies in pursuit of monetary and financial stability. It carries out its work through subcommittees, the secretariats it hosts, and through its... Special Drawing Rights (SDRs) is a potential claim on the freely usable currencies of International Monetary Fund members. ... Mount Washington Hotel The United Nations Monetary and Financial Conference, commonly known as Bretton Woods conference, was a gathering of 730 delegates from all 45 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire to regulate the international monetary and financial order after the conclusion of... Wikipedia does not have an article with this exact name. ...

References

  1. ^ Krech, Shepard; John Robert McNeill and Carolyn Merchant (2004). Encyclopedia of World Environmental History, 597. 
  2. ^ Chand, S. (2000). Macroeconomics Theory and Policy, 664. 
  3. ^ W.C. Butterman and Earle B. Amey III. "Open-File Report 02-303"PDF (2.79 MiB)
  4. ^ U.S. Federal Reserve estimate of the M2 money supply.
  5. ^ http://www.econlib.org/library/Enc/GoldStandard.html
  6. ^ Eichengreen, B. (1998) "Exchange Rate Stability and Financial Stability" Open Economies Review 9:1 (Springer Netherlands)
  7. ^ D.Baines Economic history in the 20th century (London: LSE/University of London External Programme 2003), chapter 4.
  8. ^ The UK suspended the gold standard during the Napoleonic wars. Baines, op.cit., section 4.5.1.
  • The Gold Standard in Theory and History, Barry Eichengreen (Editor), Marc Flandreau, 1997, ISBN 0415150612
  • The Gold Standard and Related Regimes : Collected Essays (Studies in Macroeconomic History), Michael D. Bordo (Editor), Forrest Capie (Editor), Angela Redish (Editor), 1999, ISBN 0521550068
  • A Retrospective on the Classical Gold Standard, 1821–1931 (National Bureau of Economic Research Conference Report), Michael D. Bordo (Editor), Anna J. Schwartz (Editor), 1984, ISBN 0226065901
  • Between the Dollar-Sterling Gold Points: Exchange Rates, Parity, and Market Behavior. Lawrence H. Officer, Cambridge University Press, 1996
  • Golden Fetters: The Gold Standard and the Great Depression, 1919–1939 (NBER Series on Long-Term Factors in Economic Development), Barry Eichengreen, 1996, ISBN 0195101138
  • Money and Politics: European Monetary Unification and the International Gold Standard (1865–1873) Luca Einaudi 2001
  • Keynes, the Liquidity Trap and the Gold Standard: A Possible Application of the Rational Expectations Hypothesis, Robert Marks 1995
  • Ideology and the Evolution of Vital Economic Institutions: Guilds, The Gold Standard, and Modern International Cooperation Earl A. Thompson, Charles R. Hickson, 2000
  • Gold Standard and Employment Policies between the Wars, Sidney Pollard Ed. 1970
  • Stability of International Exchange: Report on the Introduction of the Gold-Exchange Standard into China and Other Silver-Using Countries, Commission on International Exchange, 2001
  • [4] Ken Elks' series on British Coinage
  • Banking in Modern Japan Research Division of the Fuji Bank, 1967
  • Bordo, Michael D. "Bimetallism". In The New Palgrave Encyclopedia of Money and Finance edited by Peter K. Newman, Murray Milgate and John Eatwell. New York: Stockton Press, 1992.
  • Gold Standard and the International Monetary System, 1900–1939, Ian M. Drummond 1983
  • The Gold Standard in Theory and Practice, RG Hawtrey, Longmans and Green
  • Glitter of Gold: France, Bimetallism, and the Emergence of the International Gold Standard, 1848–1873 Marc Flandreau 2003
  • Cyclopædia of Political Science, Political Economy, and the Political History of the United States by the Best American and European Writers, John Lalor, 1881
  • The Gold Standard, Deflation, and Financial Crisis in the Great Depression: An International Comparison Ben Bernanke, Harold James 1990
  • The World Currency Crisis by Murray Rothbard
  • The Downfall of the Gold Standard Gustav Cassel 1966
  • Currency Convertibility: The Gold Standard and Beyond Jorge Braga de Macedo (Editor) 1996
  • Deceit of the Gold Standard and of Gold Monetization, William H. Russell 1982
  • Gold, Prices and Wages under the Greenback Standard Wesley Clair Mitchell
  • Gold Standard Illusion: France, the Bank of France, and the International Gold Standard, 1914–1939 Kenneth Moure
  • Modern Perspectives on the Gold Standard Tamim Bayoumi (Editor), Mark P. Taylor (Editor), 1997
  • Keynes, John M. 1925; The Economic Consequences of Mr. Churchill (Criticism of returning to the gold standard at the pre-war level – [5])
  • A Treatise on Money, John Maynard Keynes 1930
  • Credibility of the Interwar Gold Standard, Uncertainty, and the Great Depression J. Peter Ferderer 1999
  • Monetary Standards in the Periphery: Paper, Silver and Gold,1854–1933, Pablo Martin Acena (Editor), Jaime Reis (Editor), 2000
  • History of the Bank of England The Bank of England updated 2004
  • Anatomy of an International Monetary Regime: The Classical Gold Standard, 1880–1914 Giulio M Gallarotti
  • Canada and the Gold Standard: Balance of Payments Adjustments under Fixed Exchange Rates 1871–1913 Trevor Dick, John E. Floyd 1992
  • A.G. Kenwood & A.L. Lougheed (1992). The growth of the international economy 1820–1990. Routledge. London.. ISBN 91-44-00079-0. 
  • Richard Hofstadter (1996). "Free Silver and the Mind of "Coin" Harvey", The Paranoid Style in American Politics and Other Essays. Harvard University Press. Harvard.. ISBN 0-674-65461-7. 
  • Gold - The Once and Future Money, Nathan Lewis, John Wiley and Sons ISBN 0-470-04766-8
  • War-Time Financial Problems, available at Project Gutenberg.

External links


  Results from FactBites:
 
Gold Standard, by Michael D. Bordo: The Concise Encyclopedia of Economics: Library of Economics and Liberty (0 words)
The gold standard was a commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold.
England adopted a de facto gold standard in 1717 after the master of the mint, Sir Isaac Newton, overvalued the silver guinea and formally adopted the gold standard in 1819.
The gold standard was also an international standard—determining the value of a country's currency in terms of other countries' currencies.
Carbon Asset Management Gold Standard Fund (0 words)
Gold Standard projects under the Clean Development Mechanism, Joint Implementation and voluntary offset markets are eligible for development assistance and partnership with Carbon Asset Management Sweden AB.
Gold Standard projects are endorsed by 42 local and global NGOs, including WWF, SouthSouthNorth, Greenpeace, and others.
Gold Standard projects adhere to rigorous requirements regarding local participation and sustainable development benefits.
  More results at FactBites »

 
 

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