Critics of the fiat money system say that when more dollars are put into circulation, our currency becomes diluted and the value of each dollar drops. In practice, the fiat system is designed to avoid price volatility. St. Louis Fed economist David Andolfatto explains the gold standard and discusses its pros and cons. Transcript follows video. the gold standard, many economists have argued that a fiat money regime based on credible rules for low inflation could do better than commodity money (see, for example, Friedman 1951, 1960). In 1980 that promise was in doubt. High and variable inflation was the number one economic problem facing the major market-type economies. In fact, the move spelled the end of the Bretton Woods system and the last vestiges of the gold standard. Within two years, most major currencies "floated," rising and falling in value against one another based on market demand. According to the quantity theory of inflation, excessive issuance of fiat money can lead to its depreciation in tionary fiat money regime, and they have encouraged examination of a monetary regime linked to gold, the vestiges of which the world The external value of a national currency under the gold standard was determined by comparing it with another widely used currency. For instance, the pound sterling was worth $4.8665 before World The FEDS have not printed new fiat $1, $5, $10, or $20 bills since 2009. This is why they have been pushing the "debit" card to use instead of cash. If everybody suddenly went back to only using CASH…the banks would freak out because they do not have that much fiat cash on hand. The new US Treasury bill will have for example, a TRUE value Gold Standard vs. Fiat Gold standard or money backed by physical commodities bases its value on real assets like precious metals. For instance, one unit could cost the same as 1g of gold or 10g of silver. Any government or entities that wants to use gold-backed currencies need to have a huge gold reserve to back all the currency units they have. .

fiat currency vs gold standard