The monetary systems of world nations are based on paper currencies backed by legislative fiat rather than the value of any commodity. In a gold standard, the monetary unit is defined by a certain amount of gold. For example, in the period from 1834 to 1933, the U.S. dollar was defined as .048 troy ounce of gold. This made the redemption ratio of gold $20.67 per ounce. A common misconception is to think of this as the fixed price of gold. But in a gold standard, gold is money. When a bank ATM gives you $50 in cash for $50 in your deposit account, it is at best misleading to think of this as an exchange at a fixed price. Similarly, it is misleading to ...

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