A gold standard is a monetary system in which the standard economic unit of accounts is based on a fixed amount of gold. Three types can be distinguished: specie, bullion, and exchange.
- In standard specie gold the monetary unit is associated with the value of gold coins in circulation, or monetary unit has certain circulating gold coin value, but other coins may be made of less precious metals.
- The gold bullion standard is a system in which gold coins are not circulating, but the authorities agree to sell gold bullion on demand at a fixed price as a currency exchange in circulation.
- Gold exchange standards usually do not involve the circulation of gold coins. A key feature of the gold exchange standard is that the government guarantees a fixed exchange rate against the currencies of other countries using the gold standard (specie or bullion), regardless of which type of note or coin is used as a medium of exchange. This creates the de facto gold standard, in which the value of the medium of exchange has a fixed external value in terms of gold which does not depend on the inherent value of the medium of exchange itself.
Most countries abandoned the gold standard as the basis of their monetary system at a point in the 20th century, although many had large gold reserves. A survey of leading American economists showed that they unanimously declined that a return to the gold standard would benefit the average American.
Video Gold standard
History
Origin
Standard gold specie emerged from the acceptance of gold widely as currency. Various commodities have been used as money; usually, who lost the smallest value over time into accepted form. Chemically, gold is all the major metals most resistant to corrosion.
The use of gold as money began thousands of years ago in Asia Minor.
During the early and high Middle Ages, Byzantine gold solidar, commonly known as bezant, is widely used throughout Europe and the Mediterranean. However, when the economic influence of the Byzantine Empire declined, so did the use of bezants. Instead, the European region chose silver as their currency over gold, leading to the development of the silver standard.
Silver money based on Roman denarius became the principal coin of Mercia in the United Kingdom around the time of King Offa, about 757-796 AD. Similar coins, including the Italian denari, the French repellent, and the Spanish dineros, are circulated in Europe. Spanish explorers found silver deposits in Mexico in 1522 and in Potosa in Bolivia in 1545. International trade depended on coins such as the Spanish dollar, Thaler Maria Theresa, and, later, United States trade dollars.
In modern times, the West Indies of England was one of the first areas to adopt the gold standard. Following Queen Anne's proclamation of 1704, the gold standard of the British West Indies is the de facto gold standard based on the Spanish gold doubloon. In 1717, Sir Isaac Newton, ruler of the Royal Mint, set a new mint ratio between silver and gold that had the effect of pushing silver out of circulation and placing England on the gold standard.
The official gold standard was first established in 1821, when the British adopted it after the introduction of gold sovereignty by the new Royal Mint at Tower Hill in 1816. Canada Province in 1853, Newfoundland in 1865, and the United States and Germany ( de jure ) in 1873 adopted gold. The United States uses the eagle as its unit, Germany introduces a new golden sign, while Canada adopts a double system based on the American golden eagle and the British gold ruler.
Australia and New Zealand adopted the British gold standard, as did the West Indies of Britain, while Newfoundland was the only British Empire to introduce its own gold coin. The Royal Mint Branch was established in Sydney, Melbourne, and Perth for the purpose of printing gold rulers from Australia's rich gold deposits.
The specie gold standard ended in the United Kingdom and the rest of the British Empire with the outbreak of World War I.
Silver
From 1750 to 1870, the war in Europe as well as the ongoing trade deficit with China (which was sold to Europe but not widely used for European goods) depleted the silver from the economies of Western Europe and the United States. Coins are beaten in smaller and smaller quantities, and there is a proliferation of banks and stock records used as money.
United Kingdom
In the 1790s, the British Empire suffered from silver shortages. It stops for larger silver coins instead of removing "token" silver coins and too many foreign coins. With the end of the Napoleonic Wars, the Bank of England began a massive merger program that created the standard gold sovereignty, crown circulation, half crown and finally copper in 1821. Silver resinations after a long drought produced a coin blast. The United Kingdom attacked nearly 40 million shillings between 1816 and 1820, 17 million half-crowns and 1.3 million silver crowns.
The 1819 Act for the Resumption of Cash Payments established 1823 as the date of the resumption of convertibility, achieved in 1821. Throughout the 1820s, small records were issued by regional banks. This was restricted in 1826, while the Bank of England was allowed to establish regional branches. However, in 1833, Bank of England records were made as a legitimate means of payment and redemption by other banks was discouraged. In 1844, the Bank Charter Act stipulated that Bank of England records were fully supported by gold and they became legal standards. According to the strict interpretation of the gold standard, this 1844 act marked the formation of a full gold standard for British money.
United States
In the 1780s, Thomas Jefferson, Robert Morris, and Alexander Hamilton recommended to Congress the value of the decimal system. This system also applies to money in the United States. The question is what kind of standard: gold, silver or both. The United States adopted a silver standard based on the dollar that Spain milled in 1785.
International
From 1860 to 1871 attempts to revive bi-metal standards were made, including those based on gold and silver francs; However, with the rapid influx of silver from new deposits, the hope of a rare silver ends.
The interaction between the central bank and the base currency forms the main source of monetary instability during this period. The combination of a limited supply of records, government monopolies on the issuance of notes and indirectly, a central bank and a unit of value produce economic stability. Deviations from these conditions result in a monetary crisis.
The loss of records or leaving silver as a store of value causes economic problems. The government, which demands payment as payment, can drain money from the economy. Economic development expands the need for credit. The need for a solid foundation in monetary affairs resulted in the rapid acceptance of the gold standard in the next period.
Japanese
Following the German decision after the Franco-Prussian War of 1870-1871 to extract reparations in order to facilitate a move to the gold standard, Japan obtained the necessary reserves after the 1918-1995 Chinese-Japanese War. For Japan, moving to gold is considered important to gain access to Western capital markets.
Standard bimetal
US: Pre-Civil War
In 1792, Congress passed the Mint and Coinage Act. It's official use of the federal government of the Bank of the United States to hold its reserves, as well as establish a fixed ratio of gold to the US dollar. Gold and silver coins are the legal means of payment, as happened in Spain. In 1792 the market price of gold was about 15 times that of silver. Silver coins leave the circulation, exported to pay off debts taken to finance the American Revolutionary War. In 1806, President Jefferson suspended the printing of silver coins. This yields a standard silver derivative, since the Bank of the United States is not required to fully regain its currency with reserves. It started a long series of efforts by the United States to create bi-metal standards.
The goal is to use gold for large denominations, and silver for smaller denominations. The problem with bimetallic standards is that the absolute and relative prices of metals change. The mint ratio (the rate at which the mint is obliged to pay/receive for gold relative to silver) remains fixed at 15 ounces of silver to 1 ounce of gold, while the market rate fluctuates from 15.5 to 1 through 16 to 1. With the Coinage Act of 1834, Congress passed an action that changed the mint ratio to about 16 to 1. The discovery of gold in California in 1848 and later in Australia lowered the price of gold relative to silver; This drives silver money out of circulation because it is more valuable in the market than as money. The Passage of Independent Treasury Act of 1848 puts the US on strict hard-money standards. Doing business with the American government requires gold or silver coins.
Government accounts are legally separated from the banking system. However, the mint ratio (fixed exchange rate between gold and silver on mint) continues to exceed gold. In 1853, the US reduced the weight of silver coins to keep them outstanding and in 1857 removed the legal tender status of foreign currency. In 1857 the last crisis of the era of free banking began when American banks suspended silver payments, with ripples through an emerging international financial system. Because inflationary finance measures are carried out to help pay for the US Civil War, the government finds it difficult to pay its obligations in gold or silver and deferred payments from liabilities that are not legally specified in the specie (gold bond); this caused banks to suspend the conversion of bank liabilities (banknotes and deposits) to specie. In 1862 paper money was used as a valid payment instrument. It is fiat money (can not be converted on demand with fixed value into specie). This note is then called "greenback".
US: Post Civil War
After the Civil War, Congress wanted to re-establish metal standards at pre-war level. Gold market prices in the greenbacks above pre-war fixed prices ($ 20.67 per ounce of gold) are in need of deflation to reach pre-War prices. This is achieved by growing the money supply less quickly than the real output. In 1879 the market price matched the price of gold. The currency action of 1873 (also known as Crime Acts '73) was demonized silver. This removes 412.5 silver dollars from circulation. The next silver is only used in coins worth less than $ 1 (currency denomination). With the resumption of convertibility on June 30, 1879 the government again paid its debts in gold, greenbacks acceptable for customs and redeemed greenbacks in gold demand. Therefore, the greenback is a perfect substitute for gold coins. During the latter part of the nineteenth century the use of silver and back to bimetal standards was a recurring political issue, raised primarily by William Jennings Bryan, the People's Party and the free Silver movement. In 1900 the gold dollar standard unit of account and the stated gold reserves to a record established government issued paper. Greenbacks, silver certificates, and silver dollars continue to be legitimate payments, all redeemable for gold.
Fluctuations in the US gold stock, 1862-1877
The US had 1.9 million ounces (59 t) of gold inventory in 1862. The stock rose to 2.6 million ounces (81 t) in 1866, declining in 1875 to 1.6 million ounces (50 t) and rising to 2.5 million ounces (78 tons). ) in 1878. Net exports do not reflect that pattern. In the decade before the net exports of the Civil War were more or less constant; their postwar campaign varied irregularly around pre-war levels, but fell significantly in 1877 and became negative in 1878 and 1879. Gold net imports meant that foreign demand for US currency to buy goods, services and investments exceeded the corresponding American demands for foreign currency. In the last years of the greenback period (1862-1879), gold production increased while gold exports declined. The decline in gold exports is considered by some as a result of changes in monetary conditions. The demand for gold during this period was as a speculative vehicle, and for its primary use in the foreign exchange market financing international trade. The main effect of increased demand for gold by the public and Treasury is to reduce exports of gold and increase prices Greenback gold relative to purchasing power.
Gold exchange default
Towards the end of the 19th century, some standard silver countries began pegging their silver coin units to the gold standard of the United Kingdom or the United States. In 1898, British Indian pegged the silver rupee to pound sterling at a fixed rate of 1s 4d, while in 1906, the Straits Settlements adopted the gold exchange standard against sterling, fixing the silver dollar of Straits in 2s 4d.
Around the beginning of the 20th century, the Philippines pegged silver pesos/dollars to US dollars at 50 cents. This step was helped by the passage of the Philippine Implementation Act by the United States Congress on March 3, 1903. Around the same time Mexico and Japan pegged their currency to the dollar. When Siam adopted the gold exchange standard in 1908, only China and Hong Kong remained using the standard of silver.
When adopting the gold standard, many European countries changed the name of their currency, for example from Daler (Sweden and Denmark) or Gulden (Austrian-Hungarian) to Crown, since previous names were traditionally associated with silver coins and the latter with gold coins.
World War I impact
Government with inadequate tax revenues freeze recurrence of convertibility in the 19th century. However, the real test came in the form of World War I, a test that "failed at all" according to economist Richard Lipsey.
By the end of 1913, the classical gold standard was at its peak but World War I caused many countries to suspend or abandon it. According to Lawrence Officer the main reason for the failure of the gold standard to continue its previous position after World War 1 was "the precarious position of Bank of England liquidity and gold exchange standards." Running with sterling causes the UK to impose exchange controls that are fatally weakening standards; convertibility is not deferred legally, but gold prices no longer play the role they did before. In financing the war and abandoning gold, many of the warring parties experienced drastic inflation. The price level doubled in the US and UK, tripled in France and quadrupled in Italy. The exchange rate changed less, although European inflation was worse than America. This means that the cost of American goods decreased relative to that in Europe. Between August 1914 and spring 1915, the value of US dollar exports tripled and its trade surplus exceeded $ 1 billion for the first time.
Ultimately, this system can not deal fairly quickly with large balance of payments and surplus deficits; this was previously attributed to the downward wage rigidity caused by the emergence of trade unions, but is now regarded as a mistake inherent in systems arising under the pressure of war and rapid technological change. However, prices have not reached a balance during the Great Depression, which serves to completely shut down the system.
For example, Germany was out of the gold standard in 1914, and could not effectively return there because war reparations have spent much of its gold reserves. During the Ruhr Occupation, the German central bank (Reichsbank) issued a large amount of non-conversion value to support workers striking against French occupation and buying foreign currency for reparations; this led to German hyperinflation in the early 1920s and the depletion of the German middle class.
The US did not suspend the gold standard during the war. The newly formed Federal Reserve intervened in currency markets and sold bonds to "sterilize" some gold imports that should increase stocks of money. By 1927 many countries had returned to the gold standard. As a result of World War 1 the United States, which had become a net debtor country, had become a net creditor in 1919.
Standard ignore
The gold standard ended in the United Kingdom and the rest of the British Empire at the outbreak of World War I, when the Treasury record replaced the circulation of the gold ruler and the half-gold ruler. By law, the gold standard is not revoked. The end of the gold standard has been successfully performed by the Bank of England through a call to patriotism that encourages citizens not to exchange paper money for gold. It was only in 1925, when England returned to the gold standard along with Australia and South Africa that the specie gold standard was officially over.
The 1925 British Gold Standard Act both introduced the gold bullion standard and also revoked the gold standard of the specie. New standards end the circulation of specie gold coins. Instead, the law forces the authorities to sell gold bars on demand at a fixed price, but "only in the form of bars containing about four hundred ounces of pure gold [12 kg]". John Maynard Keynes, citing deflationary hazards, argued about the return of the gold standard. By setting pricing at the prewar level of $ 4.86, Churchill argues that it has made a mistake that caused the depression, unemployment and general strike of 1926. The decision was described by Andrew Turnbull as a "historical error".
Many other countries follow the UK to return to the gold standard, this is followed by periods of relative stability but also deflation. This situation continued until the Great Depression (1929-1939) forced the countries out of the gold standard. On September 19, 1931, a speculative attack against the pound forced England to leave the gold standard. Loans from the Federal Reserve of the United States and France of £ 50 million were insufficient and depleted in a matter of weeks, due to the large flow of gold across the Atlantic. The English benefit from this departure. They can now use monetary policy to stimulate the economy. Australia and New Zealand have abandoned the standards and Canada quickly followed suit.
The partially supported partially supported gold standard is inherently unstable, due to the conflict between liability expansion to foreign central banks and the worsening reserve ratio of the Bank of England. France then tried to make Paris a world-class financial center, and received a huge gold flow as well.
In May 1931, an operation at the largest commercial bank in Austria caused it to fail. Running spread to Germany, where the central bank also collapsed. International financial aid was delayed and in July 1931 Germany adopted exchange controls, followed by Austria in October. The experience of Austria and Germany, as well as the difficulties of British budget and politics, was one of the factors that destroyed the sterling belief, which occurred in mid-July 1931. Occurred and the Bank of England lost most of its reserves.
Depression and World War II
The Great Depression
Some economic historians, such as Barry Eichengreen, blame the gold standard of the 1920s for extending the economic depression that began in 1929 and lasted for about a decade. In the United States, adherence to the gold standard prevents the Federal Reserve from extending money supply to stimulate the economy, funding bankrupt banks and funding government deficits that can "pump pumps" for expansion. Once out of the gold standard, it becomes free to engage in the creation of the money. The gold standard limits the flexibility of central bank monetary policy by limiting their ability to expand the money supply. In the US, the central bank was asked by the Federal Reserve Act (1913) to get 40% gold support from its request record. Others include former Federal Reserve Chairman Ben Bernanke and Nobel Prize winner Milton Friedman put the blame for the hard and long Depression at the foot of the Federal Reserve, largely due to tightening of deliberate monetary policy even after the gold standard. They blame the main US economic contraction in 1937 on tightening monetary policy resulting in higher capital costs, weaker securities markets, reduced net government contributions to revenues, undistributed earnings taxes and higher labor costs. The money supply reached its peak in March 1937, with a trough in May 1938.
Higher interest rates increase deflationary pressure against the dollar and reduce investment in US banks. Commercial banks turned the Federal Reserve Notes into gold in 1931, reducing its gold reserves and forcing an appropriate reduction in the amount of currency in circulation. This speculative attack created a panic in the US banking system. Due to fear of devaluation, many depositors withdrew funds from US banks. As the bank grows, reverse repercussions cause a contraction in the money supply. In addition, the New York Fed has lent more than $ 150 million of gold (more than 240 tons) to the European Central Bank. This transfer contracts US money supply. Foreign borrowing became questionable after England, Germany, Austria and other European countries went from the gold standard in 1931 and weakened dollar confidence.
Forced contraction of money supply leads to deflation. Even when nominal interest rates fall, real interest rates adjusted for inflation remain high, rewarding those who hold money instead of spending it, further slowing the economy. Recovery in the United States is slower than in Britain, partly because of Congress's reluctance to abandon the gold standard and float the US currency as did the UK.
In the early 1930s, the Federal Reserve defended the dollar by raising interest rates, trying to increase demand for the dollar. It helps attract international investors who buy foreign assets with gold.
Congress passed the Golden Reserve Act on January 30, 1934; measuring nationalized all gold by ordering a Federal Reserve bank to hand over their supply to US Treasury. In return the banks receive gold certificates for use as reserves against Federal Reserve deposits and records. It also authorizes the president to devalue the gold dollar. Under this authority the president, on January 31, 1934, changed the dollar value from $ 20.67 to troy ounce to $ 35 to troy ounce, devaluation of over 40%.
Other factors in the prolongation of the Great Depression include war trade and the reduction of international trade caused by obstacles such as Smoot-Hawley Tariffs in the US and Imperial Imperial preferences policy, the failure of the central bank to act responsibly, government policies designed to prevent wages from falling, such as the Davis-Bacon Act of 1931, during the deflationary period resulting in lower production costs slower than the sale price, thus hurting business profits and tax increases to reduce the budget deficit and to support new programs such as Social Security. The marginal rate of income tax on the US rose from 25% to 63% in 1932 and to 79% in 1936, while the lower rate increased more than tenfold, from 0.375% in 1929 to 4% in 1932. The concurrent large drought produce US Dust Bowl.
The Austrian school affirms that the Great Depression is the result of credit failure. Alan Greenspan writes that bank failures of the 1930s were triggered by Great Britain that dropped the gold standard in 1931. This action "undermined" the remaining trust in the banking system. Financial historian Niall Ferguson writes that what made the Great Depression truly 'great' was the European banking crisis of 1931. According to Fed Chairman Marriner Eccles, the main cause is the concentration of wealth that results in a stagnant or declining standard of living for the poor. and middle class. These classes were owed, resulting in a credit burst in the 1920s. Finally the burden of debt grew too heavily, resulting in massive defaults and financial panic of the 1930s.
World War II
Under the international monetary agreement of Bretton Woods in 1944, the gold standard was kept without domestic convertibility. The role of gold is very limited, as the currencies of other countries remain in dollars. Many countries keep gold reserves and pay off gold accounts. Still they prefer to settle balances with other currencies, with American dollars being favorites. The International Monetary Fund was established to assist the exchange process and assist countries in maintaining fixed interest rates. In the adjustment of Bretton Woods softened through credit that helps countries avoid deflation. Below the old standard, a country with an exorbitant currency will lose gold and experience deflation until the currency is re-appreciated properly. Most countries define their currency in dollars, but some countries impose trade restrictions to protect reserves and exchange rates. Therefore, most of the country's currency is basically still irreversible. In the late 1950s, exchange restrictions were dropped and gold became an important element in international finance settlement.
Bretton Woods
After the Second World War, systems similar to the gold standard and sometimes described as "gold exchange standards" were established by the Bretton Woods Agreement. Under this system, many countries set the exchange rate relative to the US dollar and the central bank can swap dollar holdings into gold at an official exchange rate of $ 35 per ounce; this option is not available for companies or individuals. All currencies pegged to the dollar thus have a fixed value in terms of gold.
Beginning in the administration of President Charles de Gaulle in 1959-1969 and continuing through 1970, France reduced dollar reserves, swapped gold at official exchange rates, reduced the impact of the US economy. This, along with the fiscal burden of federal spending on the Vietnam War and the ongoing balance of payments deficit, prompted US President Richard Nixon to end the international convertibility of the US dollar to gold on August 15, 1971 ("Nixon Shock").
This is intended as a temporary measure, with the dollar gold price and the official rate remaining constant. Currency revaluation is the main goal of this plan. No official revaluation or redemption takes place. The dollar then drifted. In December 1971, the "Smithsonian Agreement" was reached. Under this agreement, the dollar is devalued from $ 35 per troy ounce of gold to $ 38. The currency of other countries is appreciated. However, the convertibility of gold does not continue. In October 1973, the price was raised to $ 42.22. Again, devaluation is insufficient. Within two weeks of the second devaluation, the dollar was left floating. The nominal value of $ 42.22 was made official in September 1973, long after it had been abandoned in practice. In October 1976, the government formally changed the definition of the dollar; references to gold have been removed from the law. From this point on, the international monetary system is made of pure fiat money.
Maps Gold standard
Gold production
It is estimated that a total of 174,100 tons of gold has been mined in human history, according to the GFMS in 2012. This is roughly equivalent to 5.6 billion troy ounces or, in volume terms, about 9,261 cubic meters (327,000 cuÃ, ft), or 21 meter cubes 69 feet) on the side. There are various estimates of the total volume of gold mined. One reason for the variation is that gold has been mined for thousands of years. Another reason is that some countries are not so open about how much gold is mined. In addition, it is difficult to calculate the gold output in illegal mining activities.
World production for 2011 is about 2,700 tons. Since the 1950s, the annual growth of gold production has around the rate of growth of the world's population (ie doubled in this period) although it has lagged behind world economic growth (about 8-fold since the 1950s, and 4x since 1980).
Theory
Commodity money is uncomfortable to be stored and transported in large quantities. Furthermore, it does not allow the government to manipulate the flow of trade with the same ease as that of fiat currencies. Thus, commodity money gives way to representative money and gold and other species are maintained as supporters.
Gold is the preferred form of money because of its scarcity, endurance, transience, fungibility and ease of identification, often in relation to silver. Silver is usually the main circulation medium, with gold as a monetary reserve. The commodity money is anonymous, because identification marks can be removed. Commodity money maintains its value despite what might happen to monetary authorities. After the fall of South Vietnam, many refugees brought their wealth to the West with gold after the national currency became worthless.
Under the standard currency the commodity itself has no intrinsic value, but it is accepted by the merchant as it can be redeemed at any time for an equivalent specie. The US silver certificate, for example, can be redeemed for an original piece of silver.
Representative money and gold standards protect citizens from hyperinflation and other monetary policy abuse, as seen in some countries during the Great Depression. Commodity money on the contrary causes deflation and the bank runs.
Countries that abandoned gold standards earlier than other countries recovered from the Great Depression earlier. For example, the United Kingdom and the Scandinavian countries, which abandoned the gold standard in 1931, recovered much earlier than France and Belgium, which remained longer in gold. Countries like China, which have a silver standard, almost completely avoid depression (because that fact is barely integrated into the global economy). The relationship between leaving the gold standard and the severity and duration of depression is consistent for dozens of countries, including developing countries. This may explain why the experience and length of depression differ between national economies.
Variations
The gold standard is full or 100% -remembering exists when the monetary authority holds enough gold to convert all the outstanding representation money into gold at the promised exchange rate. Sometimes referred to as the gold standard specie to more easily distinguish it. The full standard opponents find it difficult to apply, saying that the quantity of gold in the world is too small to sustain global economic activity at or near current gold prices; Implementation will require much improvement in the price of gold. Supporters of the gold standard have said, "Once money is formed, every stock of money becomes compatible with the amount of work and real income." While prices will certainly adjust to the supply of gold, the process may involve considerable economic disruption, as experienced during previous attempts to maintain the gold standard.
According to research produced by the Bank of Canada, the emerging Bitcoin economy has much in common with the economy based on the gold standard, in particular:
- an unlimited and predictable inventory anchor system
- there is no central bank or monetary authority that controls supply
- low or no inflation
- almost no arbitrage fees for international transactions
- The government has less control over their domestic economy
- The government loses seigniorage revenue they earn from the ability to make money without cost
Edward Hadas and Michael Hiltzik note that the monetary system based on Bitcoin and gold has some similar disadvantages:
- independence from the government
- price drop
- spend less during the crisis
George Gilder, a supporter of the gold standard, proposed violating the "government monopoly on money" by using a combination of Bitcoin for the internet and treating gold in terms of taxes as currency.
Advocate
Back to the gold standard was considered by the US Gold Commission back in 1982, but found only minority support. In 2001, Malaysian Prime Minister Mahathir bin Mohamad proposed a new currency to be used initially for international trade among Muslim countries, using an Islamic gold dinar, defined as 4.25 grams of pure gold (24 carats). Mahathir claims it will be a stable account unit and a political symbol of unity between Islamic countries. This will clearly reduce dependence on the US dollar and establish unsustainable debt-ridden currencies in accordance with Sharia law that prohibits charging interest. In 2013 the global monetary system continues to rely on the US dollar as the main reserve currency.
Former Federal Reserve Chairman Alan Greenspan admits he is one of the "small minorities" within the central bank that has a positive outlook on the gold standard. In a 1966 essay he contributed to a book by Ayn Rand, entitled "Gold and Economic Liberties", Greenspan argued the case to return to the 'pure' gold standard; In the essay he described the proponents of fiat currencies as "welfare statists" who intend to use monetary policy to finance deficit spending. He recently claimed that by focusing on inflation targeting, "the central bankers have behaved as if we are at the gold standard", thereby restoring unnecessary standards.
Similarly, economists such as Robert Barro argue that while some form of "monetary constitution" is essential for a stable monetary policy, depoliticization, this constitutional form takes - for example, the gold standard, some other commodity-based standards, or fiat currency with the standard rules for determining the quantity of money - is far less important.
The gold standard is supported by many followers of the Austrian School of Economics, free market libertarians and some suppliers.
US politics
In the United States, rigid constitutionalists have objected to governments issuing fiat currencies through central banks. Some supporters of the gold standard also called for an end to mandate for fractional reserve banking. Many similar alternatives have been suggested, including energy-based currency, currency or commodity collection, with gold as a component.
Former congressman Ron Paul is a long-term profile advocate with the gold standard, but also expressed support for using standards based on a basket of commodities that better reflect the state of the economy.
In 2011 the Utah legislature passed a law to receive gold and silver coins issued by the federal government as a legitimate payment instrument to pay taxes. As a currency issued by the federal government, the coins have become legitimate means of payment of taxes, even though their current metal content price exceeds their monetary value. Similar laws are being considered in other US states. The bill was initiated by newly elected Republican legislators linked to the Tea Party movement and fueled by concerns over President Barack Obama's policies.
In 2013, the Arizona Legislature passed SB 1439, which would make the gold and silver coin as a legitimate payment instrument in debt repayment, but the bill was vetoed by the Governor.
By 2015, some candidates for 2016 presidential elections advocate for gold standards, based on fears that the Federal Reserve's efforts to boost economic growth may create inflation. Economic historians disagree with candidate statements that the gold standard will benefit the US economy.
Criticism
In 2012, a poll of 40 US economists at the IGM Economic Experts Panel found that none of them agreed with the claim that a return to the gold standard would result in "price and work stability that would be better for the average American "The panel of economists surveyed included Nobel Prize winners, economic advisers of former presidents of the Republic and Democrats, and senior faculty from Harvard, Chicago, Stanford, MIT, and other well-known research universities. (The specific question posed to economists is: "If the US replaces the discretionary policy policy with the gold standard, defining the 'dollar' as a certain amount of gold ounces, the stability of prices and employment will be better for the average American.")
Source of the article : Wikipedia
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