Gold standard

The gold standard is a monetary system in which a country's currency is backed by the value of gold. Cash issued under this system is redeemable by a certain amount of gold. However, this system and its variation under the Bretton woods agreement was totally abandoned in 1971 because of redundancy. An expanding economy naturally will create more cash or currency to compensate for the growing demand for goods, the mining of gold would not be able to keep up with this expansion just to satisfy the needed amount to back newly printed currency. This will ultimately lead to a shortage that causes deflation.

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