1. Return to the Gold Standard? Ursula Bettendorf Shannon Bowen Kristina Appel Pepe Montoya Midori Maxwell Eva Jimenez

2. Gold Standard: Introduction to pros • The Gold Standard Promotes Better Consumer Confidence • Gold is a commodity. It will Always have Value. • Gold has a Higher Purchasing Power • Gold as a Single World Currency • Can be Used to Further Facilitate International Trade • Contains a Self Regulating Mechanism • Fiat Money is Government Control • Government has Unlimited Control Over Monetary Policy • Redistributes Wealth Through Creation of Additional Currencies and Credit

3. Gold Standard: Introduction to cons • Too many problems • Too costly • Limited supply • Liquidity trap • Deflationary bias • Positive benefits of fiat currency • Simplicity • Government control to facilitate economic growth and stability

4. Gold Standard: Introduction to cons • Historical precedent of failure • Caused recessions that deepened into Great Depression • Countries which abandoned gold standard earlier than the U.S. largely escaped the Great Depression • Constricted economic growth • Bank runs

5. Gold Standard: Debate • Less complications with the Gold Standard • More Benefits with Fiat Money • Gold is the customarily accepted medium of exchange • Fiat Money is a More Appropriate Medium of Exchange, and More Customarily Accepted

6. Gold Standard: Debate • Negative Side of the Fiat Currency • The costs imposed on society • The costs imposed by special interest groups • The costs in the form on inflation –induced misallocations of resources • The costs incurred by businessmen

7. Gold Standard: Debate • Fiat Standard can Expand Money Supply to Counter Unemployment • Credit Expansion, Foreign Aid, Trade, and Government Aid Programs Are also Encouraged • The Standard can Manipulate the Currency to Avoid Recessions and Depressions • Under the Gold Standard, the Automatic Adjustment Mechanism Causes Outflows which Hurt the Economy

8. Gold Standard: Debate • Misconceptions linked with the Gold Standard and the Great Depression • The idea that the Pancea for debt is credit • Prosperity is a product of credit rather than the increase and exchange in wealth

9. Gold Standard: Debate • The U.S. Suffered 8 Depressions while on Commodity Money • Gold Standard was the Root of the Problem in the Great Depression • In the 1920’s there was Nothing to Force Surplus Countries into Higher Prices to Manage the Balance of Payments • President Roosevelt Cured the Great Depression by Changing the Fixed Price of Gold • Countries that weren’t on the Gold Standard in 1929 or that abandoned it, escaped the Great Depression. Those that didn’t, suffered the most.

10. Conclusion to the Pros • The Great Depression caused by other factors besides gold standard • Less government interference • Lack of historical information on the fiat system

11. Conclusion to the Cons • Depression Caused by the Gold Standard • Experienced Recessions Under the Gold Standard • No Government Control • Can’t Expand Money to Finance the Country • No Welfare or Public Benefits • In Reality, No One can Control the Supply of Gold • Costs of Gold • Mining • Limited Supply • Governments are Unlikely to Return to the Gold Standard, because it would Mean Turning Monetary Policy Over to Uncontrollable Swings in the Stock of Gold.

12. Conclusion to the Cons • Using Gold as a Commodity to Barter or to Directly Support the Value of Paper Currency is Unrealistic and Impractical to Effectively Stabilize an Economy of Change. Nor does such a Standard Encourage Economic Development. Also it is both Irrational and quite Impossible for a Floating Economic System to Successfully and Fairly become a Fixed System, like that of the Gold Standard.