Week 4 Db Reply 1

Week 4 Discussion Board Reply 1

Lisa Medlock

Liberty University

Professor Knoche

13 Apr 2014

Patrick I enjoyed reading your discussion board post this week. It was very helpful in helping me to understand what the Gold Standard is. As I was doing some research for myself, I ran across articles that gave information on why the Gold Standard was used, what caused it demise, and what replaced the Gold Standard. This gave more knowledge of the gold standard that was very interesting. Basically the articles stated that the gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold. With the gold standard, the United States economy would print currency that equaled a specific value of gold. Meaning, you could cash in your money for a specified amount of gold because a unit of currency equals a specific amount of gold. The use of gold was due to its rarity, durability, and the general ease of identification through its unique color, weight, ductility and acoustic properties. As our studies explained the gold exchange standard, established at Bretton Woods after World War II, worked until the 1970’s when it collapsed due to inflation and the surplus of U.S. dollars held outside the United States. When Bretton-Woods was abandoned in the 1970's, market forces of supply and demand controlled exchange rates. During this time, there were periods of extreme precariousness, which led to market deregulation, open trade and a rise in speculators, leading to the Foreign Exchange Market. Pretty interesting stuff.

References

BBC News. (2008). Business. Retrieved February 28, 2008, from the BBC News web

site: http://news.bbc.co.uk.

FOREX Market (2008). FOREX Market. Retrieved February 28, 2008, from website: http://www.forex-market.net/

OANDA FX Trade (2008). The currency site, 2001 – 2008. Retrieved February 28, 2008 form website: http://fxtrade.oanda.com/currency_trading/fxmarket.shtml.