Gold backed currencies. History and current policy options

Seminar paper from the year 2020 in the subject Economics - Finance, grade: 2,0, University of Applied Sciences Essen, language: English, abstract: The research objective of this term paper is to answer the question in how far a return to a gold-backed currency is possible in the USA. In order to answer this question, this paper starts with the history of gold-backed currencies. The main emphasis of this chapter is put on the Bretton Woods system and its arguments for and against this system. In chapter 3, the Fiat Money System, which was the aftermath of the Bretton Woods system and is still the common money system of the USA and the world, is explained more precisely while stating the positive and negative effects it had on the economy. In the following chapter, the question of a return to a gold-backed currency will be answered based on the results previously elaborated. Completing this research, a final conclusion will briefly summarise the conflicting arguments. Nowadays the worth of currencies is to be perceived as a result driven by the state and trust of the people. Therefore, currencies do not have an intrinsic value. This money system is the so-called Fiat Money System. However, these facts simultaneously raise the question of what will happen if the people lose trust in their currency. In this case, a gold-backed currency, also termed commodity money, would be the alternative. Having used the gold-backed dollar from 1944 until 1971, point for the scenario in question. Moreover, talks about a new gold-backed US dollar, which have increased since the election of President Donald Trump, will be analysed as well.