forked from fionnbharra/nimbupani.github.com
-
Notifications
You must be signed in to change notification settings - Fork 1
/
the-rise-and-fall-of-the-gold-standard.html
221 lines (125 loc) · 9.93 KB
/
the-rise-and-fall-of-the-gold-standard.html
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
<!doctype html>
<!--[if lt IE 7]> <html class="no-js lt-ie9 lt-ie8 lt-ie7" lang="en"> <![endif]-->
<!--[if IE 7]> <html class="no-js lt-ie9 lt-ie8" lang="en"> <![endif]-->
<!--[if IE 8]> <html class="no-js lt-ie9" lang="en"> <![endif]-->
<head>
<meta charset="utf-8">
<meta http-equiv="X-UA-Compatible" content="IE=edge,chrome=1">
<title> The Rise and Fall of the Gold Standard | Divya Manian</title>
<meta name="author" content="Divya Manian">
<meta name="description" content="This, of course, was a very haphazard arrangement. Different countries adopted different tactics to make their goods cheaper than the others and …">
<meta name="viewport" content="width=device-width, initial-scale=1">
<link rel="canonical" href="http://nimbupani.github.com/blog/the-rise-and-fall-of-the-gold-standard.html">
<link href="/blog/stylesheets/screen.css" rel="stylesheet">
<script src="/blog/javascripts/modernizr-2.0.js"></script>
<link href="http://feeds.feedburner.com/nimbupani" rel="alternate" title="Divya Manian" type="application/atom+xml">
</head>
<body >
<div class="container">
<div class="content">
<header role="banner"> <h1><a href="/blog/">Divya Manian</a></h1>
<h2><a class="twitter" href="https://twitter.com/divya">twitter</a> <a class="rss" href="http://feeds.feedburner.com/nimbupani">RSS Feed</a> <a class="youtube" href="http://youtube.com/nimbupani">Youtube Channel</a></h2>
</header>
<nav class="sitenav"><form action="http://google.com/search" method="get">
<fieldset role="search">
<input type="hidden" name="q" value="site:nimbupani.github.com/blog" />
<input class="search" type="text" name="q" results="0" placeholder="Search"/>
</fieldset>
</form>
<a href="/blog/">Home</a>
<a href="/blog/blog/archives">Archives</a>
<a href="/blog/about">About</a>
</nav>
<article>
<nav class="article">
<a class="previous" href="/blog/storm.html" title=" Storm">❬</a>
<a class="next" href="/blog/the-wall-0.html" title=" The Wall">❭</a>
</nav>
<header>
<time datetime="2004-05-01T00:00:00-07:00" pubdate><span class='month'>May</span> <span class='day'>01</span> <span class='year'>2004</span></time>
<h1 class="entry-title"><a href="/blog/the-rise-and-fall-of-the-gold-standard.html"> The Rise and Fall of the Gold Standard</a></h1>
</header>
<div class="entry-content"><p>This, of course, was a very haphazard arrangement. Different countries adopted different tactics to make their goods cheaper than the others and conserve the national gold reserves. During the First World War this system was abused by most nations, leading to its downfall.</p>
<p>After the war, as there was no viable alternative to the gold standard, the victors had no choice but to reinstate the Gold Standard. But now both pounds and dollars were used as international currency and U.S. and U.K. held gold reserves to ensure ready liquidity for other countries that wished to exchange their reserve of pounds or dollars for gold.</p>
<p>But anyway, the predictable happened. Britain could no longer sustain the constant outflow of gold from its reserves and it did not have enough reserves to carry on currency conversion (implying it issued more pounds than it had reserves for). U.S. was no less vulnerable, which was the reason for <a href="http://www.austincoins.com/confiscation.htm">confiscation</a> of all private gold collections and nationalization of such gold.</p>
<p>In the meanwhile, the Second World War occurred and war cries drowned the need for a uniform exchange rate system. And finally, realising the growing need for a standardized system to determine exchange rates, the world leaders came up with the Bretton Woods System.</p>
<p>Bretton Woods system was very similar to the previous standard, now, only U.S. promised to redeem the dollar reserves of all other nation by exchanging for gold at a fixed rate. But persistent balance of payments deficit by U.S. reduced its gold reserves and it again became unable to pay for the dollar reserves, abandoning the system altogether. Finally the world settled for an exchange rate system without the backing of any product (e.g. gold).</p>
<p>The history of exchange rates (as any other history) only shows the fondness of humans to repeat mistakes. Now, the ballooning American deficits and ever increasing investment of East Asian countries in American securities are two issues raising serious concern. The present situation is remniscent of the last few years of the era of the Gold Standard, with the U.S. dollar also exhibiting the short run volatility (Iraq war, 9/11) similar to gold. It is not impossible that countries might lose confidence in the U.S. dollar. My FMI tutor had been very worried about the lack of diversity (in terms of saving instruments) in the reserves of Asian Countries and has been an advocate of saving in gold, given its recent stability.</p>
<p>But then I do not think American feds will remain quiet while the world sits up and takes notice of the alarming deficit of U.S. Now that the countries now have an option of investing in the relatively more stable euros, U.S. Dollar now faces serious challenge and a repeat of a colossal failure.</p>
<p><b>References</b></p>
<ul><li><a href="http://www.econlib.org/library/Enc/GoldStandard.html">Gold Standard</a> by Michael D. Bordo. </li>
<li><a href="http://economist.com/displaystory.cfm?story_id=165701">A refresher on the 1930s, The Economist</a></li>
<li><a href="http://www.gold-eagle.com/gold_digest_03/blumen121203.html">Dollar Crisis and the American Empire</a> by Jeffery Sommers</li></ul>
</div>
<footer>
<p class="meta">This post was posted by
<a href="/blog/about.html">Divya Manian</a>
on
<time datetime="2004-05-01T00:00:00-07:00" pubdate><span class='month'>May</span> <span class='day'>01</span> <span class='year'>2004</span></time> in
.
</p>
</footer>
</article>
<section>
<h1>Comments</h1>
<div id="disqus_thread" aria-live="polite"><noscript>Please enable JavaScript to view the <a href="http://disqus.com/?ref_noscript">comments powered by Disqus.</a></noscript>
</div>
</section>
</div>
</div>
<aside id="articles">
<h2>Posts on Web Development</h2>
<ul>
<li><a href="/blog/this-revolution-needs-new-revolutionaries.html">This revolution needs new revolutionaries</a></li>
<li><a href="/blog/some-css-transition-hacks.html">Some CSS Transition hacks</a></li>
<li><a href="/blog/safe-css-defaults.html">Safe CSS Defaults</a></li>
<li><a href="/blog/unplugged-2011.html">Unplugged 2011</a></li>
<li><a href="/blog/bokeh-with-css3-gradients.html">Bokeh with CSS3 Gradients</a></li>
<li><a href="/blog/making-pure-css3-demos-better.html">Making "Pure CSS3" demos better</a></li>
<li><a href="/blog/web-opener-at-opera.html">Web Opener at Opera</a></li>
<li><a href="/blog/current-color-in-css.html">Current Color in CSS</a></li>
<li><a href="/blog/css-vocabulary.html">CSS Vocabulary</a></li>
<li><a href="/blog/active-web-development.html">Active Web Development</a></li>
<li><a href="/blog/sexy-css3-buttons.html">Sexy CSS3 Buttons</a></li>
<li><a href="/blog/accessible-css-barcharts.html">Accessible CSS Barcharts</a></li>
<li><a href="/blog/svg-is-coming.html">SVG is coming!</a></li>
<li><a href="/blog/wee-marquee.html">Wee! Marquee</a></li>
<li><a href="/blog/vignettes-with-css3-box-shadows.html">Vignettes with CSS3 Box Shadows</a></li>
<li><a href="/blog/drop-shadows-with-css3.html">Drop Shadows with CSS3</a></li>
<li><a href="/blog/diversity.html">Diversity</a></li>
<li><a href="/blog/notes-from-javascript-n00b.html">Notes from a JavaScript n00b</a></li>
<li><a href="/blog/spacing-out-on-css-namespaces.html">Spacing Out on CSS Namespaces</a></li>
<li><a href="/blog/notes-from-html5-readiness-hacking.html">Notes from HTML5 Readiness Hacking</a></li>
<li><a class="btn" href="/blog/categories/web-development/">More</a></li>
</ul>
</aside>
<footer role="contentinfo"><p>
Copy to your heart’s content 2011 - Divya Manian -
<span class="credit">Powered by <a href="http://octopress.org">Octopress</a></span>
</p>
</footer>
<script type="text/javascript">
var disqus_shortname = 'nimbublog';
var disqus_developer = 1;
var disqus_url = 'http://nimbupani.com/the-rise-and-fall-of-the-gold-standard.html';
var disqus_identifier = 'http://nimbupani.com/the-rise-and-fall-of-the-gold-standard.html';
(function () {
var dsq = document.createElement('script'); dsq.type = 'text/javascript'; dsq.async = true;
dsq.src = 'http://' + disqus_shortname + '.disqus.com/embed.js';
(document.getElementsByTagName('head')[0] || document.getElementsByTagName('body')[0]).appendChild(dsq);
}());
</script>
<script type="text/javascript">
(function(){
var twitterWidgets = document.createElement('script');
twitterWidgets.type = 'text/javascript';
twitterWidgets.async = true;
twitterWidgets.src = 'http://platform.twitter.com/widgets.js';
document.getElementsByTagName('head')[0].appendChild(twitterWidgets);
})();
</script>
<script src="//ajax.googleapis.com/ajax/libs/jquery/1.7.0/jquery.min.js"></script>
<script>window.jQuery || document.write('<script src="js/libs/jquery-1.7.0.min.js"><\/script>')</script>
<script src="/blog/javascripts/octopress.js" type="text/javascript"></script>
</body>
</html>