PDSnet Glossary

Term

Categories

Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

Versions

Name	synonyms = 1, variations = 2, abbreviations = 3

Publish: (0 = no, 1 = yes)

Definition

A past financial discipline whereby a country's currency was directly linked to that country's gold reserves. Form 1989 until 1933 America was on the gold standard which acted as a limitation on government spending and prevented the government from expanding the money supply. It meant that $20.67 bought one ounce of gold - guaranteed by the government. Between 1933 and 1971 America abandonned the gold standard and moved towards a fiat currency. The Great Depression required the government to be able to create more money in their economy to get it moving again. One of the effects of this has been the steady rise in the size of US government's balance sheet. Today it has total debt of over $23 trillion and rising rapidly. Recessions are avoided or minimised by the stimulation of the economy by the creation of new money - known as quantitative easing (Q/E). There is no country in the world today on the gold standard.

Edit Glossary Term