The Gold Standard in the United States Analytical Essay by Nicky
The Gold Standard in the United States
An analysis of the failure of the gold standard exchange system in the United States.
# 148395 | 1,267 words | 5 sources | MLA | 2011 |
Published on Oct 17, 2011 in Business (Finance, Investment and Banking) , Political Science (Fiscal Policy (economy)) , Economics (General)
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The paper explains that the gold standard was a medium of exchange that used paper currency that could be converted into pre-determined, set amounts of gold. The paper discusses how the gold standard has several advantages but it failed in the United States and around the world because it was such an inflexible system when it came to economic downturns, and, it was tied to gold mining and gold reserves. The paper looks at the views of economists who believe that holding on to the gold standard until 1933 helped lengthen the Great Depression.
From the Paper:"The gold standard has several advantages. One of the biggest advantages of the standard is its straightforwardness. People easily understand it, and the worth is fixed, making it a constantly known value. The people also understand the value of gold, and it is a tangible asset. In addition, the gold standard assures a relatively low inflation rate, because the supply of gold remains relatively stable, and the currency remains relatively stable. It also assures the country will not print too much money, because if they print too much money, people will exchange it for gold, and then the treasury will eventually run out of the commodity. It also requires a fixed set of exchange rates around the world, so it created a very stable foreign exchange market. However, that stable exchange rate is also one of the biggest drawbacks to the gold standard, because it does not allow countries to quickly respond to changing fiscal circumstances in their countries."
Sample of Sources Used:
- Author not Available. Policing the Frontiers of Finance. The Economist. 2008.
- DeLong, Brad. "Why Not the Gold Standard?" University of California at Berkeley. 1996. 4 May 2009.<http://econ161.berkeley.edu/Politics/whynotthegoldstandard.html>.
- Hallwood, Paul, Ronald Macdonald, and Ian W. Marsh. "An Assessment of the Causes of the Abandonment of the Gold Standard by the U.S. in 1933." Southern Economic Journal 67.2 (2000): 448.
- Simmons, Beth A. Rulers of the Game: Central Bank Independence During the Interwar Years. International Organization, 5, 3, Summer 1996, 403-437.
- Velde, Francois R. "Following the Yellow Brick Road: How the United States Adopted the Gold Standard." Economic Perspectives 26.2 (2002): 42+.
Cite this Analytical Essay:
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