The final paper and presentation for which this abstract is being written will discuss the differences between the USD, or “Federal Reserve note”, as money, and the gold standard which was once a critical part of this. It will show the history of gold as money. The next part will be the reasons why the gold standard was abandoned, the steps which the USA took to get off the gold standard, and why this may not be the best long term move.
The paper will also have information concerning the convertibility of the USD to gold before Richard Nixon closed the “gold window” in 1974. The information will show the position of the USD as reserve currency, and reasons why moving the USD from being gold backed to being “full faith and credit” of the USA has different short run and long run implications for the US public and the USA as a whole.
The quote “gold is money, nothing else” was said by one the founder of one of the largest banks in the world. It was said by J.P. Morgan on testimony to Congress in 1912 (J.P. Morgan's Testimony, 2006). This statement from J.P. Morgan seems to indicate that people ought to know that true money should make an unmistakable sound.
The history of gold as currency is well documented. The below timeline comes from Reuters India (TIMELINE - Gold's history as a currency standard, 2010). As we can see, the first records of gold as currency started more than 3,000 years ago. The timeline starts in the time known as BCE or Before Christian Era.
a. 1500: Gold became recognized as a standard medium of exchange for international trade as the immense gold-bearing regions of Nubia made Egypt a wealthy nation. Ancient Egypt left behind a rich legacy of gold.
b. 1091: Little squares of gold are legalized in China as a form of money.
c. 560: The first coins made purely from gold are minted in Lydia, a kingdom of Asia Minor.
d. 50: Romans began issuing a gold coin called the Aureus.
The “gold standard” used in the...