The research objective of this term paper is to answer the question in how far a return to a gold-backed currency is possible in the USA. In order to answer this question, this paper starts with the history of gold-backed currencies. The main emphasis of this chapter is put on the Bretton Woods system and its arguments for and against this system. In chapter 3, the Fiat Money System, which was the aftermath of the Bretton Woods system and is still the common money system of the USA and the world, is explained more precisely while stating the positive and negative effects it had on the economy. In the following chapter, the question of a return to a gold-backed currency will be answered based on the results previously elaborated. Completing this research, a final conclusion will briefly summarise the conflicting arguments.
Nowadays the worth of currencies is to be perceived as a result driven by the state and trust of the people. Therefore, currencies do not have an intrinsic value. This money system is the so-called Fiat Money System. However, these facts simultaneously raise the question of what will happen if the people lose trust in their currency. In this case, a gold-backed currency, also termed commodity money, would be the alternative. Having used the gold-backed dollar from 1944 until 1971, point for the scenario in question. Moreover, talks about a new gold-backed US dollar, which have increased since the election of President Donald Trump, will be analysed as well.
Inhaltsverzeichnis (Table of Contents)
- Introduction.
- Problem
- Objective and methodology
- History
- The Bretton Woods System
- The End of the gold standard
- The Fiat Money System
- How does the Fiat Money System work?
- History after the Bretton Woods System collapsed
- Positive and negative effects of the Fiat Money System
- Return to a gold-backed US-Dollar?
- Policy options
- Consequences of a return to the gold standard
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This term paper aims to determine the feasibility of returning to a gold-backed currency in the United States. It investigates the historical context, focusing on the Bretton Woods system and the subsequent shift to a fiat money system, analyzing both their advantages and disadvantages. The paper explores the potential policy options for a return to the gold standard and considers the consequences of such a move.
- History of gold-backed currencies and the Bretton Woods system
- The evolution of the fiat money system
- Economic implications of a gold-backed currency
- Policy options for returning to a gold standard
- Potential consequences of a return to the gold standard
Zusammenfassung der Kapitel (Chapter Summaries)
The paper begins by introducing the problem of currency valuation and the potential risks associated with a fiat money system. Chapter 2 delves into the history of gold-backed currencies, focusing on the Bretton Woods system and its motivations. Chapter 3 examines the Fiat Money System, analyzing its mechanics, historical evolution, and economic effects.
Schlüsselwörter (Keywords)
Key terms and concepts discussed in this paper include gold-backed currency, fiat money system, Bretton Woods system, economic stability, monetary policy, inflation, exchange rates, and global trade.
Frequently Asked Questions
What is a gold-backed currency?
A gold-backed currency, also known as commodity money, is a monetary system where a country's currency has a value directly linked to gold, and can be exchanged for a specific amount of gold.
What was the Bretton Woods system?
Established in 1944, it was a global monetary system where the US dollar was backed by gold, and other currencies were pegged to the dollar. It ended in 1971 when the US stopped the direct convertibility.
How does a fiat money system differ from the gold standard?
Fiat money has no intrinsic value and is not backed by a physical commodity like gold; its value is derived from government decree and the trust of the people using it.
Is a return to the gold standard feasible for the USA today?
The research explores this as a complex policy option. While it could provide stability if trust in fiat money fails, it also presents significant challenges for modern economic flexibility and monetary policy.
What are the potential consequences of returning to gold-backed money?
Consequences could include changes in inflation rates, shifts in global trade dynamics, and a loss of the central bank's ability to adjust the money supply during economic crises.
Why has the discussion about gold-backed currency increased recently?
Interest has grown due to concerns about the long-term stability of the fiat system and political discussions regarding economic sovereignty and traditional monetary values.
- Arbeit zitieren
- Mario Müller (Autor:in), 2020, Gold backed currencies. History and current policy options, München, GRIN Verlag, https://www.grin.com/document/914066
