Ever since Richard Nixon took the U.S. off the gold standard in 1971, some have been pining for its return. There are a number of reasons for and against. Typically thought of as a fringe idea, the return of the gold standard is beginning to gain a little more traction. Article source: 500 money loan with easy payment plans
Gold standard panel mulled by GOP
The United States went off the gold standard entirely in 1971 and since then, along with every other country on earth, has used flat money as its medium of exchange. Those calling for a return to the gold standard are often dismissed, though, according to the Wall Street Journal, numerous prominent Republicans are in favor of looking into it. A panel to study the idea has been proposed, according to CNN.
Printing press costs
A specific amount of gold would have to be pegged to all the money out there, which is why people want the gold standard. It produces price stability. The government cannot just print money to cover any situation they are in, and the Federal Reserve cannot print cash at all.
Monetary value remains steady, according to Daily Finance, as each dollar represents an amount of gold held by the government. The value of cash is determined by the credit worthiness of the government that is printing it. Ergo, since the money supply under the gold standard is steady, prices and, more to the point, inflation in the central price index, remain, in theory, steady.
Costs not steady in past
According to the Atlantic, prices were not stable when there was a gold standard. Costs are more stable now where the central price inflation has not gone above or dipped below five percent from December 2008 to June 2012. From 1919 to 1932, it was up and down. It went from 15 percent in 1919 to 25 percent in 1920 to 15 percent in 1921 and 5 percent in 1925 and back to 10 percent in 1931.
From 1860 to 1933, there were 19 recessions with an average length of 26 months despite being the height of the gold standard, according to Daily Finance. Since 1933, the average length of a recession is only 11 months and there have been 13 of them. It is clear that recessions were much worse when the gold standard was around.
Prices were steady
Prices were steady for a while though between 1945 and 1968, according to BBC. That was when the Bretton Woods Agreement was in place. The U.S. government had a reserve with all the gold in it, and each dollar was tied to gold but could not be redeemed for it. The dollar was worth 35 ounces of gold at the time, and anything worked great.
In 1968, however, the American government was involved in a very expensive war in Vietnam. As jolly as wars are, deploying the military is also expensive. Foreign central banks started asking for gold rather than dollars in transactions and the dollar's value plummeted, leading to President Nixon curtailing the gold standard in 1971.
It is unknown if the thought will really follow through, according to CNN, and there is not enough gold to make the switch right now. There is about $2.6 trillion money in circulation and 260 billion ounces of gold.