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
Both are somewhat correct. I believe it was 1934 when US citizens were no longer allowed to exchange US dollars for gold. However other countries were still allowed to do so (mainly European countries) where until 1971 Nixon abandoned the gold standard. Until then, European currencies were pegged (fixed) their currency to the USD and the USD was pegged to gold ($35/oz).
The gold standard is no way to run a global economy. The problem being that liquidity needs to be managed by Central Banks who could then adjust the money supply to local economic situations. This prevents or moderates periods of severe booms and busts (as was common in earlier periods).
Latest Answers