Was Dropping The Gold Standard A Mistake? | Economics Explained

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Is returning to the gold standard something that could fix the economic issues we are facing today?

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I have heard a fractional reserve Gold standard as 'being able to exchange your money for gold, as long as you never actually try to do so'.

MWhaleK
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“Fungible” - a word almost no one would have understood 18 months ago and now everyone watching this nodded at that moment and thought “Yes, I know what that means”

ellieban
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The issue people have with FIAT currency is not that they don’t have faith in the FIAT system. It’s that they look at their leaders and have no faith in them due to their utter incompetence and corruption. That’s why people want to go back to a gold standard.

rosspimentel
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I wish you had mentioned the much longer history of the gold standard in America instead of just starting with the Bretton-Woods system in 1944. It seemed like there was a lot of oppertunity for some good history there that might have informed some of the decisions that were made. It would have also been interesting to examine some of the options like fractional gold/silver systems, as we literally used to mint our coins in 90% silver up until 1964 anyway.

sqeeye
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Abandoning the gold standard was the beginning of the stagnation for lower and middle class citizens and the beginning of massive riches for the already wealthy.

DynamicUnreal
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7:47 This point is a staple in Argentina. Many of us decide to buy things like cellphones through a one or two year payment plan because, even if there is a price mark up compared to paying the full price, inflation will eventually make the monthly fees cheaper over time.

cristobalcosta
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I think the most frustrating part for me when discussing finances and the current trends is that I am not smart enough to come up with a solution but smart enough to see that the current way of doing things is absolutely broken. Any solution outside the fantastical would require those that benefit the most from the current system to suddenly become altruistic and that is not something I see happening

steven
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I always thought leaving the gold standard was a big mistake. No one had really explained to me the imperfections of the gold standard and why it was REALLY ditched. You have explained that very well.

Don_elCHARTO
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Really, GDP growth graphs should be in inflation adjusted real terms to compare post and pre leaving gold standard

marwanshamsia
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You cannot argue that money supply needs to grow at the same rate as GDP when your GDP isn't even inflation adjusted. And by inflation, I'm not talking about CPI. Add rent and home prices to that too.

franco
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16:10 gold also has a rarity factor that contributes to people thinking it valuable. One of the reasons a gold standard works is because there is a limited supply of gold so it's a lot harder to print money at unsustainable rates

spikeshartell
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One huge point you missed is that with the current system we have just kicked the can down the road by creating a huge debt burden 30+ trillion which we cannot get out of. Gold backed currency forces government discipline to avoid these huge debt traps.

eljangoolak
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In many ways, people believe their currency has the value it has because they have no other choice. Even in a hyperinflation situation people have to go on using their hyper inflating currency because they probably have very little access to foreign currencies or gold/silver coinage.

davidplowman
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"...Gold is just shiny, soft dense metal..." but it can't be printed, needs effort to mine and it's not infinite, that's why it's valuable.

kameliastoyanova
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The federal reserve was the first mistake and the biggest mistake.

LegacyAftermath
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As a coin collector, I can tell you it was a friggin' disaster.

cosmicharlie
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Are you going to address the fact the CPI formula changed in 1981? And if measured just like the 70’s, that second chart would look quite volatile?

gersonadr
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Mate, your gold price chart is wrong in the y axis, gold was convertible at 35$/oz. It went more than 20x that price.
The initial peg was at 20$/oz from 1834 to 1933 when the US govt seized it's citizens gold and devalued the peg to 35$/oz until 1971, then the free market took it to 800$/oz in january '80

lepkr
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An economy can grow regardless of being pegged to gold in that the gold standard’s restriction on quantity of dollars will in this case act as a deflationary force, increasing currency value versus requiring an increased production of that currency. The only disadvantage of a gold standard is that it restricts the ability of a government to borrow and spend recklessly.

teucer
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Abandoning the gold standard encourages unlimited spending.

James-mchc