icedancer2theend
Verified User
A few years ago I held a naive opinion of the gold standard and though Ron Paul had a pipeline to not only the truth, but to a solution. Since that time I have listened to reasoned arguments of friends and have concluded that Dr. Paul and I are/were wrong.
Why Did America Leave The Gold Standard?
The Bretton Woods system (1945 -1971) came to an end when the United States stopped allowing dollars to be converted into gold. The “gold window” shut and foreign governments could no longer trade dollars for gold at $35/ounce. The U.S. dollar then became a “fiat currency” backed only by the “full faith and credit of the United States.” Since then the dollar has been the world’s only reserve currency.
Under Bretton Woods, government regulations mandated that banks hold fixed ratio of gold as currency reserves. There was a greater need for gold as economies expanded. No nation has returned to the gold standard since the end of the Bretton Woods system. Switzerland has plenty of gold, but they have not opted for a gold standard with good reason.
If they had been on gold in recent years they would have suffered massive deflation and an extreme recession. The rapid price rise of gold would have tripled the value of their franc against other currencies and their exports would have been completely priced out of world markets. Our present fiat system allows the free market to determine the value of our currency.
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Why Did America Leave The Gold Standard?
The Bretton Woods system (1945 -1971) came to an end when the United States stopped allowing dollars to be converted into gold. The “gold window” shut and foreign governments could no longer trade dollars for gold at $35/ounce. The U.S. dollar then became a “fiat currency” backed only by the “full faith and credit of the United States.” Since then the dollar has been the world’s only reserve currency.
Under Bretton Woods, government regulations mandated that banks hold fixed ratio of gold as currency reserves. There was a greater need for gold as economies expanded. No nation has returned to the gold standard since the end of the Bretton Woods system. Switzerland has plenty of gold, but they have not opted for a gold standard with good reason.
If they had been on gold in recent years they would have suffered massive deflation and an extreme recession. The rapid price rise of gold would have tripled the value of their franc against other currencies and their exports would have been completely priced out of world markets. Our present fiat system allows the free market to determine the value of our currency.
link
