What is the Gold Standard, as in reference to economics?

redwaldo

The USA 'went' on to the gold standard in 1972 as a result of increasing deficits ,largely from funding the Vietnam war.It was used to maintain confidence in the U. S. dollar. Mar 04 10, 4:57 PM

george48

Yes,but what, precisely is the gold standard? Mar 04 10, 5:03 PM

sarahcateh

The gold standard says that the standard 'unit of account' is a fixed weight of gold. Unit of account is a standard unit of measurement of the market value of goods and assets. Basically, under a gold standard, goods derive value in comparison to a fixed weight of gold. http://en.wikipedia.org/wiki/Unit_of_account http://en.wikipedia.org/wiki/Gold_standard Mar 04 10, 5:13 PM

queproblema

"...The Encyclopedia of Economics and Liberty defines the gold standard as "a commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold.... "The Bretton Woods System, enacted in 1946 created a system of fixed exchange rates that allowed governments to sell their gold to the United States treasury at the price of $35/ounce. 'The Bretton Woods system ended on August 15, 1971, when President Richard Nixon ended trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed'. The gold standard has not been used in any major economy since that time." http://economics.about.com/cs/money/a/gold_standard.htm Mar 04 10, 5:28 PM