Currently, the gold standard is viewed with disdain by most economists and financial officials in today’s monetary system. However, the United States was on the gold standard for 180 years until the early 1970s, during which time it proved to be effective. Inflation was kept in check while the dollar was anchored to gold, and the United States experienced significant long-term economic growth.
After the link between the greenback and gold was broken, the average historic growth rates in the United States declined by approximately one-third. Despite this, the general disdain for the gold standard remains widespread. However, recent events have begun to shift this perspective as central banks around the world have been purchasing gold at a record pace.
Central banks purchasing gold at a record pace is a clear indicator of change that raises questions about whether the gold standard may see a resurgence in the future. It challenges current mainstream economic thought and policy. Events often have a way of pushing formerly unpopular ideas to the forefront and turning them into reality. This segment of What’s Ahead highlights this key development that should be watched closely as it could signal a shift towards more traditional economic systems in countries worldwide.
