What is the quality of gold?
In ancient times, historically, precious metals, gold and silver were used to make money. Money in the form of coins was made of gold, which was easy to calculate, because each coin had a certain weight, it was known, so when someone presented a foreign coin, it was immediately known that it At what cost to be accepted?
After a while, metal currency was replaced by paper currency, because on the one hand they were simple, on the other hand they were light, so it was easy to transport and count and issue, because by that time money was circulating. The world had grown. And, when money became paper, it was not clear what the exchange rate should be.
All of this, therefore, caused special difficulties in international trade, such trade increased, and it was not clear at what rate the currencies of different countries would be counted against each other. Therefore, it is accepted that each bill is equal to a certain amount of gold. Within the country, the states resolved these issues with their citizens, but with international remittances, the countries, after receiving foreign currency, offered the country an issuer in exchange for gold. Was right
After World War II, the dollar became a reserve currency, and the US government guaranteed that the dollar would convert to gold at 35 35 per troy ounce. For a while, Pegg successfully survived, but by 1971 large dollars had been issued, and President Nixon had signed the decision that the United States would abandon the gold standard, and now convert the dollar into gold. will give. will make. This does not mean that the elimination of such pegs led to uncontrolled outflows of money, which led to a gradual rise in inflation, for example, from 1967 to now and fifty dollars per ounce of gold in fifty years. Its price has increased almost 44 times.
Proponents of the Gold Standard say governments cannot control money because of limited gold reserves. Opponents of the Gold Standard point out that with a lack of money in circulation, it slows down the economy, and leads to a decline in production as a result of the liquidity crisis.
What are the advantages of Gold Standard?
If you list all the benefits of the Gold Standard, they include:
• The consistency of the exchange rate, which does not change its position for long.
• Risk reduction and increase in international trade.
• Instability in the state, and maximum protection against inflation within the country. No one is increasing the money supply because it does not have the support of gold.
• Gold quality can work as long as the state does not run out of its gold reserves.