What Was The Gold Standard?
[Q:] I saw the term “Gold Standard” mentioned in one of my textbooks. What was the gold standard and how does it differ from today’s system of money. [A:] Excellent question! First we’ll have a quick history lesson, then we’ll see how it works and how it differs from fiat money. Definition of the Gold Standard My normally extensive Economics Glossary does not have an entry on the gold standard, so we’ll have to look elsewhere for a definition. An extensive essay on the gold standard on The Encyclopedia of Economics and Liberty defines the gold standard as “a commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold. National money and other forms of money (bank deposits and notes) were freely converted into gold at the fixed price.” A county under the gold
