The Gold Standard

The Gold Standard is a monetary system where a country's currency is directly tied to a fixed amount of gold. This means that people can exchange paper money for a specific quantity of gold, ensuring currency stability and trust. The system encourages financial discipline, as governments must hold enough gold reserves to back their money. Historically, the gold standard limited inflation and helped stabilize economies, but it also restricted government flexibility to adjust monetary policy. It was widely used in the 19th and early 20th centuries but has largely been replaced by fiat money systems today.