HISTORY AND ABANDONMENT OF THE GOLD STANDARD (IS THERE A WAY BACK?)

Abstract

The gold standard is a type of monetary system that works by setting the value of the nation's currency linked to gold. According to some, the reason why the gold standard is preferable is because it assures long-term price stability. Furthermore, in the case that governments and banks would have it hard to manipulate money supply, it would as well prevent inflation. In this paper, we want to look into just that and find out the answer to certain questions concerning the gold standard and its possible role in today¿s economic environment: is it really that stable? Is it preferable? If the gold standard worked and was stable, then, why is it not in use today? This also raises the question of whether it would be even possible to use the gold standard or a bimetallic standard today. Would it be better than the fiat system if it was possible to implement? And ultimately, should we go back if we could?