The gold standard: A pillar of economic stability

SOURCE

After my previous post, where I talked briefly on the benefits, but more so on the potential pitfalls of s fiat monetary system, I'm going to cover briefly, I say briefly because it would take a lifetime to cover all possibilities on the benefits and historical significance of backing a countries monetary supply with a physical, tangible asset - let me introduce you to the GOLD STANDARD.

In the annals, yes annals..... there's an extra N, of monetary history, the gold standard stands as a defining chapter, where the value of a country's currency was inextricably tied to the allure and intrinsic value of gold. Come with me on a journey into the world of the fabulous "gold standard", as I unravel its intricacies, and understand why it no longer holds sway in today's modern economic landscape.

SOURCE

The fundamental premise of the gold standard was simple yet profound. Countries under this system agreed to maintain a fixed exchange rate between their paper money and a specific quantity of gold. The price of gold was set in stone, and the government committed to converting paper money into that fixed amount of gold upon demand. So the little "I promise to pay the barer the sum on damand" part of UK circulating bank notes, was the promise to exchange that note for an equivalent weight of gold. This steadfast relationship between currency and gold gave birth to a tangible measure of wealth, you held paper knowing it could be exchanged for gold( at anytime), and so did the person accepting it as a medium of exchange). The system worked because everyone knew that their labour or goods and services could be directly exchangeable for precious metals.

Imagine, if you would, a scenario where the United States, for instance, pegged the price of gold at $1000 an ounce. In such a scenario, the value of a U.S. dollar would be ascribed to 1/1000th of an ounce of gold. The gold standard provided a clear, gold-backed measurement for assessing the worth of a nation's currency and the work required to generate it.

SOURCE

However, it's crucial to remember that the gold standard has now receded into the annals of history amd only remembered as a shiningbecon of what once was. The United Kingdom abandoned it in 1931, and the United States followed suit in 1933, culminating in the complete dismantling of the system in 1973 under Present Nixon, when he "temporary" removed the US from it.. In its place emerged the era of fiat money, a term denoting currency that is mandated as a legitimate medium of exchange by government fiat or decree. In the U.S., the dollar became fiat money, and in the UK, it was the Pound sterling.

The allure of the gold standard lay in its ability to wrest control of money issuance from the hands of imperfect and greedy human judgment. With a finite supply of gold serving as a natural cap on the currency expansion, a society could adhere to a simple rule to avert the perils of dreaded inflation. Monetary policy, in this context, was not just about curbing inflation but also preventing deflation while fostering a stable monetary climate conducive to full employment. You add more gold reserves, you add more circulating currency.... The solution was not only.simple.but brilliant.

Yet, history provides a more cautionary tale. A brief glance at the U.S. gold standard's trajectory underscores that while adhering strictly to this rule could stave off inflation, it also had the potential to sow economic instability and, at times, even spark political turmoil. The gold standard, with its golden link, remains an intriguing chapter in the evolution of money. It offers timeless lessons about the delicate balance between monetary control, economic stability, and societal harmony. While the gold standard may have faded into the past, its legacy continues to inform our modern financial world.

Will we ever see a time when circulating money is once again backed by a tangible asset?? Your guess is as good as mine!! All I know is, and you fiat lovers can quote me on this- "As a precious metals stacker, I can be wrong about the future of money 1000 time and it not effect me. My savings are safe in gold and silver. But as an investor in fiat, you've only got to be wrong once and its game over for you"

If you dont own any precious metals, then why not tell us? As a community we encourage ALL engagements and encourage everyone to take the plunge and own at lease a sinlge ounce of silver or a fraction of gold. If your struggleing to find a safe and secure place to buy, reach out to the community as there is always someone willing to offer their time and advice to help you out.

40+yr old, trying to shift a few pounds and sharing his efforsts on the blockchain. Come find me on STRAVA or actifit, and we can keep each other motivated .

Proud member of #teamuk. Teamuk is a tag for all UK residents, ex-pats or anyone currently staying here to use and get a daily upvote from the community. While the community actively encourages users of the platform to post and use the tag, remember that it is for UK members only.

Come join the community over on the discord channel- HERE

Want to find out more about gold and silver? Get the latest news, guides and information by following the best community on the blockchain - #silvergoldstackers. We're a group of like minded precious metal stackers that love to chat, share ideas and spread the word about the benefits of "stacking". Please feel free to leave a comment below or join us in the community page, or on discord.