The Foreign Exchange Market and the Gold Standard

The Foreign commuting Market and the Gold Standard Skylin Brezina July 3, 2010 INB 205 Sonja Norris The Foreign Exchange Market and the Gold Standard The foreign exchange market is a wild and crazy international market. Billions of dollars pass through turn over like water at all times. Todays technology has made that happen at a speedy speed. But it was not always like that. There was at one time a pecuniary system called the gold monetary standard that has a very interesting history. The gold standard is a monetary system where the standard economic unit of account is a fixed weight of gold. Here is how it works: currency issuers control to redeem notes in that amount of gold. Countries that employ this fixed unit of account and redeem notes with other countries in gold function a fixed-currency rate. That is where the foreign exchange market comes into play. The gold standard has been quite the controversy throughout the years. There argon many another(prenominal) arguments over the advantages and disadvantages of the gold standard. There are many disadvantages to the gold standard. It is not hard to imagine that transporting and storing gold is not an late task. Preventing the debasement of gold is also another widely used argument against the gold standard.

But the main concern lies in the fact that it can slip fanfare and debt. In a way, the gold standard is artificially inflating golds essential value, which in turn increases the cost of items and industrial processes in which it is used. As the gold standard stands, gold that is mined at a rate other than the economy grows can cause inflation because when deposits are discovered and extracted. It can also cause deflation when the mines are empty. The gold standard has also been blamed as the cause of the Great Depression. Some say that because the production of gold normally trails economic growth, it can result in times of deflationary pressure. Another aspect that needs to be taken into thoughtfulness is the... If you want to get a full essay, order it on our website: Orderessay

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