What is the Gold Standard? Video Lecture | Business Economics for CA Foundation

almost 2600 years ago the first gold
coins were minted and used for trade
later on people started storing their
gold in well-guarded vaults and bought
goods and services using the receipts
given to them by those running the
vaults pieces of paper they could always
exchange for real gold
that's how paper money first appeared
and things of all from there
initially most currencies were pegged to
gold directly as the name gold standard
suggests people could walk into a bank
and exchange a piece of paper money to
gold after 1945 however this changed
currencies were pegged to the dollar
which was pegged to gold at a rate of
$35 per ounce individuals were no longer
allowed to exchange paper money to gold
but central banks were however countries
such as France ended up no longer
trusting the US dollar and started
converting their dollars to physical
gold the gold reserves of the US were
getting depleted quickly so President
Nixon stopped allowing that he took the
United States and thereby the world off
anything even resembling a gold standard
in 1971 at this point the money we used
isn't backed by anything tangible fiat
currencies as they're called are
basically backed by confidence the
dollar is backed by the confidence
people have in the US the British Pound
by people's confidence in the UK and so
on the value of one currency compared to
another
therefore fluctuates continuously
confidence driven supply and demand if
you will