If the gold standard was in use today, would it hinder economic growth Essay

The atomic number 79 standard refers to a monetary dodging in which the unit of account of money will be icy with the weight of specie. There atomic number 18 many people who make do that the lucky standard should be implemented to bring down the inflation. By furbish up the provision of money with aureate, the government will not be adequate to issue money without having property in reserve. However, on the other hand, there are experts who argue that by fixing the supply of money with metallic, stinting festering will be hindered as the amount of gold useable on Earth is hold in (Mises, 2009).This paper will show that the gold standard will hinder stinting growth. Ill firstly argue that there is a limited amount of gold in this world. Secondly, economic growth is seen as limited. Lastly, the amount of commerce will eventually pretend a level match to the gold holdings by the central pious platitude of the country. Economic growth will be hindered if the gold stand ard is use as there is a finite amount of gold in the world. Economic growth requires that there should be sufficient liquidity in the system.By adhering to the gold standard, economic growth will be hindered as to supply more money, the government will first need to defile gold. (Skousen, 1997) Secondly, economic growth is seen to be unlimited. This doesnt complement with the gold standard, as the amount of gold is limited in the world. If economic growth is to be unlimited, and so there must be enough money supply to finance it. The gold standard makes to difficult for governments to issue money, which in circumstance limits economic growth. (Cagan, 1982)Lastly, if the value of the dollar is limited by the amount of gold, thusly amount of commerce would reach a level equal to the gold holdings. In order for more money to be issued, the government would shed to purchase more gold to back the increase in dollars issued. only the three points written above are influenced by the single constituent that the supply is limited, while the demand for gold seems to be unlimited. (Cagan, 1982) Another puzzle with the gold standard is how to determine what weight of gold will equal to one unit of account.Furthermore, the gold standard can be self-destructive for developing economies. Developing economies will need to buy gold to finance their economic growth, which might already be to expensive to buy for them. Currently, these economies are able to finance it through a budget deficit. Moreover, how will the gold standard be able to handle the speed and complexity of at presents financial transactions? Lastly, if the world shifts to a gold standard, then all the governments will need to burn huge amount of edict money to make received that the money supply equals to the amount of gold in the economy. Eichengreen & Marc, 1997) In conclusion, I believe that although by adhering to the gold standard the level of inflation will come down. However, the economic growth of a country will be hinder. The major reason for this is the limited supply of gold. Furthermore, if the gold standard is implemented the prices of gold will level up, making it more difficult for developing economies to grow up. Lastly, the government will need to burn huge amounts of fiat money to make sure that the there is no extra money in the economy.