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The Gold Standard

The Gold Standard

The gold standard is a monetary arrangement whereby the currency in circulation is equivalent to a fixed value of gold. The gold standard was replaced by fiat currency, whereby the government or central bank is ultimately responsible for the value of the money. Until 1971, the U.S. dollar was fixed to the price of gold. Many economists feel that reverting to the gold standard would  quell inflation because of the fixed value feature.

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