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Finance: What is the Gold Standard? 4 Views


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Description:

What is the gold standard, besides the standard at which this video is judged? Hit play to find out.

Language:
English Language

Transcript

00:00

What is the gold standard? Alright people well it's a kind

00:08

of value number line that everyone trusts gold gold gold gold yeah like [hand draws line against ruler, fills with gold]

00:13

that an ounce of gold in India is generally worth the same as an ounce of [map of world]

00:17

gold in China the US Argentina even Somalia assuming it's an actually real

00:22

gold and not fake gold or pyrite yeah yeah we know what you did [Somalian with gun in village]

00:26

alright well because gold is so universally or planet airily trusted it [gold ingot floating in space]

00:31

kind of comprises a monetary system unto itself [gold ingot orbiting earth]

00:35

its economic unit is the heart of most modern economies or at least their [skeleton with golden heart]

00:39

history and like a tub of Neapolitan ice cream it comes in three flavors species [tub of ice cream]

00:45

bullion and exchange alright so let's start with gold species with Vichy but

00:51

it's way better it is the standard monetary unit associated with gold coins

00:56

well obviously in a world where gold is being exchanged for things of value like [crate of good and bag of gold ]

01:00

mining picks Levi's jeans and food gold itself or the store of value has to be

01:08

modularized in the standardized units and that's what gold species is all

01:12

about alright next up the gold bullion standard alright well that's a system

01:16

where gold coins are stored in the coffers of governments as a kind of

01:20

collateral or guarantee against a usually paper circulating currency like

01:25

the US government has a whole bunch of gold in Fort Knox in Kentucky there yeah [US government building]

01:30

and they guarantee the paper value of a dollar in theory based on that gold

01:35

reserve in Kentucky even though today it's a small tiny rounding error of all

01:39

the paper that's out there alright well finally we have the Gold Exchange

01:42

standard which is usually simply a government backing or guarantee of a

01:46

fixed exchange rate for what the government will do in return for them [Uncle Sam holding cardboard sign]

01:51

being given an ounce of gold well the real gold standard however kind

01:55

of faded away through the 20th century as so many countries drew irresponsible [highway sign saying "now leaving Gold Standard]

02:00

financial practices as the norm norm the quote honesty unquote of a fixed rate

02:06

gold exchange simply put too much pressure on the desire for countries to

02:10

have internationally weak currencies hoping to stimulate

02:14

exports from their own hard-working citizens the big advantage here well in [Fidget Spinner boat in Atlantic ocean]

02:18

essence the gold standard limits the power of government to make too many [Uncle Sam holding knife]

02:22

stupid moves and the foundation of that control is that if a government's

02:26

currency or ability to buy stuff is limited by the amount of gold they have

02:31

in their coffers well then they have to live within their set budget and I like

02:36

the rest of us right unlike a paper backed currency like what we have in the

02:40

US governments then can't just run a printing press anytime they want [dollars getting printed]

02:45

printing money out of thin air making more gold to pay for I don't know

02:49

congressman pickpockets private shuttle from Virginia to DC or a new five [congressman getting out of taxi]

02:54

hundred thousand dollar after-school program for kids who are addicted to [kid biting pencil in class]

02:57

biting pencils anyway the biggest disadvantage here is that governments

03:01

are actually then culpable for the money they spend ie their budgets that's the

03:05

problem with a real full gold standard it forces people to act financially

03:11

responsible yeah that would be terrible well when you look around that would not [wheel of fortune landing on Greece/Somalia]

03:15

be such a terrible thing at all

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