According to Wikipedia:
The gold standard is a monetary system in which a region’s common media of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold.
The gold standard is not currently used by any government, having been replaced completely by fiat currency, and private currencies backed by gold are rare.
Gold standards should not be confused with their historical predecessor, “gold-coin standards”, wherein taxes are payable in either gold coins or overvalued, government-minted, less expensive, coins.
The main purpose of either government money system has historically been to provide seigniorage, or money-creation profit, to governmental leaders in order to provide them with general purchasing power during emergencies, especially those leaders who are legislatively constrained and therefore unable to raise taxes in order to execute the defense commitments that are required for the survival of their states (Thompson, 1974.)
Gold standards replaced gold-coin standards in the 17th-19th centuries in the West as the extent of defensive warfare expanded to where the gold-coin standards were no longer sufficient to the task.
A similar history generated a gold standard in China from the 9th through the early 17th century. As gold standards have created deflationary periods they have been abandoned, as by FDR during the Great Depression.
- Yesterday, I had a debate with my colleague(s) about currencies that he claimed that is currently peg on GOLD…which I flatly corrected him…but he continue to be adamant about the pegging of gold on currencies as true.
From what I know from my research, there are no currencies in circulation at this moment is peg against gold standard however there had been some Government who wanted to restart this pegging on gold standard like the Malaysia.
In 2001 Malaysian Prime Minister Mahathir bin Mohamad proposed a new currency that would be used initially for international trade between Muslim nations. The currency he proposed was called the islamic gold dinar and it was defined as 4.25 grams of 24 carat (100%) gold.
Mahathir Mohamad promoted the concept on the basis of its economic merits as a stable unit of account and also as a political symbol to create greater unity between Islamic nations.
The purported purpose of this move would be to reduce dependence on the United States dollar as a reserve currency, and to establish a non-debt-backed currency in accord with Islamic law against the charging of interest.[17]
However, to date, Mahathir’s proposed gold-dinar currency has failed to become an accomplished fact.
This conclude the debate on whether if any currencies are peg against the gold standard…which there are NONE.
Current currencies of the world is all Fiat currency which can be easily printed by the Government via loans from the Central Banks.
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