Why did we abandon the gold standard?
In: Economics
The gold standard was abandoned in large part because of the restrictions it places on an economy and (perhaps more relevantly) Government to borrow and spend money. Under the gold standard, you can only have as much money as you have gold. You can adjust the ratio, ie your unit of currency is now worth less gold per unit, but you are still very much limited. During the World Wars countries found themselves needing to spend A LOT of money in a hurry and the need to have gold for that money was too limiting. Countries simply couldn’t bring enough gold to hand to back the amount of debt and currency they needed to move… so they stopped.
Post wars there was an effort to get back onto the gold standard but the benefits of a fully fiat (ie not back by anything but faith / credit) currency were being felt. Countries could manage their currency and economy regardless of the amount of gold or silver they possessed and the world was just… carrying on. At this point there is little incentive to go back that doesn’t come with it’s own downsides.
Estimates suggest that the *total amount of all gold mined by humans ever* is worth around $13.7 Trillion in today’s money or about 2/3rds the size of the US Economy *on it’s own*. So either gold needs to have a massively increased value, or we need to somehow shrink the size of the global economy by an order of magnitude.
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