All tagged Gold Standard

Printing Over Problems

In the United States, central banks and governments play a key role in the health of the nation. These institutions have been working in conjunction for many years to determine monetary and fiscal policy in an attempt to grow economies and mitigate inflation and unemployment. However, after the gold standard was abandoned in 1933, and the US moved to a floating currency, everything changed. Under the gold standard, the currency had to be tied to physical gold where it could be exchanged but now, countries like the US have a floating currency where the value of the dollar “floats” with its demand in the global currency markets. This has given banks and governments a lot more freedom with interest rates and policy and has made way for the longest-running bull market in history. However, this has allowed those entities to manipulate markets and push large underlying problems further down the road by embracing new macroeconomic theories, such as modern monetary theory. Unfortunately, since these new theories have never been battle-tested over a long period of time, the economic condition of countries that have embraced these new theories has yet to be fully seen.