The Gold Standard
This is an idea that we should not have fiat money. Once upon a time all money issued had to be backed up by a gold reserve. If you had a $1 bill issued by the government there was $1 worth of gold in a big safe somewhere. This meant the money supply was usually pretty stable. It remained more or less the same regardless of what was going on in the economy at the moment.
Is this a problem?
Oh you bet it is. As the United States (and other nations) learned you sometimes need to restrict the money supply and sometimes you need to expand it. You'll restrict it to try and keep inflation in check and expand it when you need to create jobs. Without that ability the nation finds itself unable to respond to changing economic situations. Another problem is that the currency is tied to the current value of gold and that is something which can change quickly like if, say, a major gold deposit is located somewhere and mining commences. All of sudden your money isn't worth what it once was and there isn't anything you can do about it.
Also you never know when a super villain will decide to like...nuke your gold or something which would be very, very bad.
So why do people like this idea?
This is an idea that we should not have fiat money. Once upon a time all money issued had to be backed up by a gold reserve. If you had a $1 bill issued by the government there was $1 worth of gold in a big safe somewhere. This meant the money supply was usually pretty stable. It remained more or less the same regardless of what was going on in the economy at the moment.
Is this a problem?
Oh you bet it is. As the United States (and other nations) learned you sometimes need to restrict the money supply and sometimes you need to expand it. You'll restrict it to try and keep inflation in check and expand it when you need to create jobs. Without that ability the nation finds itself unable to respond to changing economic situations. Another problem is that the currency is tied to the current value of gold and that is something which can change quickly like if, say, a major gold deposit is located somewhere and mining commences. All of sudden your money isn't worth what it once was and there isn't anything you can do about it.
Also you never know when a super villain will decide to like...nuke your gold or something which would be very, very bad.
So why do people like this idea?
And what happened to the Turnip Standard?
