Richard Rowland wrote:
I have to admit, I have trouble getting my mind around the gold thing. Question, if the dollar is tied to gold, is the price of gold based on how many dollars are needed to run a society, or does a fixed amount of gold determine the value of a dollar?
Under Britton Wood (1944), the dollar was tied to gold and all other currencies were tied to the dollar. Gold was fixed at $35/ounce. So you were not "allowed" to print more currency than your country had gold in reserve. Course, all bets were off when Johnson came in and gave us the Great Society and the Vietnam War. Dollars were printed unabated (in other words our nation's debt began to balloon) and other countries became concerned about the value of the U.S. dollars they held in reserve.