The gold standard is currently viewed with disdain by most economists and financial officials in today’s monetary system. However, the U.S. was on the gold standard for 180 years until the early 1970s, during which time it proved to be effective. Inflation was kept in check while the dollar was anchored to gold, and the U.S. experienced significant long-term economic growth.
After the link between the greenback and gold was broken, the average historic growth rates in the U.S. declined by approximately one-third. Despite this, the general disdain for the gold standard remains widespread. However, recent events have begun to shift this perspective, as central banks around the world have been purchasing gold at a record pace.
Events often have a way of pushing formerly unpopular ideas to the forefront and turning them into reality. This segment of What’s Ahead highlights the clear indicators of change, with the purchasing of gold by central banks being a key development to watch. It raises the question of whether the gold standard may see a resurgence in the future, challenging the current mainstream of economic thought and policy.
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