When and why was the gold standard abolished in the US?

Question

I had read it was abolished in 1971, but I also read it was in 1933. Which one is it? Also, why was it abolished in the first place?

In: 306

Answer 1

I like to think of the money supply for an economy as being like clothing for a person. You need slightly bigger clothes as a person grows and as an economy grows the money supply should adjust accordingly. The gold standard couldn’t expand as the economy grew. Also too big of an increase too quickly can be a problem as well – for example the Spanish empire when they found silver in South America.