Editing Gold standard (section)

==Theory==
[[Commodity money]] is inconvenient to store and transport in large amounts. Furthermore, it does not allow a government to manipulate the flow of commerce with the same ease that a fiat currency does. As such, commodity money gave way to [[representative money]] and gold and other [[Coin|specie]] were retained as its backing.

Gold was a preferred form of money due to its rarity, durability, divisibility, [[fungibility]] and ease of identification,<ref name=autogenerated1>{{Cite book|first=Shepard |last=Krech III |author2-first=John Robert |author2-last=McNeill |author3-first=Carolyn |author3-last=Merchant |author3-link=Carolyn Merchant |title=Encyclopedia of World Environmental History |publisher=[[Routledge]] |location=[[New York City]] |year=2004 |volume=2 |isbn=978-0-415-93734-4 |oclc=174950341 |page=[https://books.google.com/books?id=8whW1e-jaHsC&q=9780415937344&pg=PA597 597]}}</ref> often in conjunction with silver. Silver was typically the main circulating medium, with gold as the monetary reserve. Commodity money was anonymous, as identifying marks can be removed. Commodity money retains its value despite what may happen to the monetary authority. After the fall of [[South Vietnam]], many refugees carried their wealth to the West in gold after the national currency became worthless.<ref>{{Cite web |date=2023-08-29 |title=How the End of the Vietnam War Led to a Refugee Crisis |url=https://www.history.com/news/vietnam-war-refugees |access-date=2023-10-06 |website=HISTORY |language=en}}</ref>

Under commodity standards currency itself has no intrinsic value but is accepted by traders because it can be redeemed any time for the equivalent specie. A U.S. [[Silver certificate (United States)|silver certificate]], for example, could be redeemed for an actual piece of silver.

Representative money and the gold standard protect citizens from [[hyperinflation]] and other abuses of monetary policy, as were seen in some countries during the Great Depression. Commodity money conversely led to deflation.<ref>{{cite book |first=Nick |last=Mayhew |url=https://brill.com/view/book/edcoll/9789004383098/BP000012.xml |title=Money and the Economy in: Money and Coinage in the Middle Ages |doi=10.1163/9789004383098_010 |publisher=Brill.com |date=2019-03-21 |isbn=9789004383098 |s2cid=159368019 |access-date=2022-03-03}}</ref>

Countries that left the gold standard earlier than other countries recovered from the Great Depression sooner. For example, Great Britain and the Scandinavian countries, which left the gold standard in 1931, recovered much earlier than France and Belgium, which remained on gold much longer. Countries such as China, which had a silver standard, almost entirely avoided the depression (due to the fact it was then barely integrated into the global economy). The connection between leaving the gold standard and the severity and duration of the depression was consistent for dozens of countries, including developing countries. This may explain why the experience and length of the depression differed between national economies.<ref>Bernanke, Ben (March 2, 2004), "Remarks by Governor Ben S. Bernanke: Money, Gold and the Great Depression", At the H. Parker Willis Lecture in Economic Policy, Washington and Lee University, Lexington, Virginia.</ref>

===Variations===
A ''full or 100%-reserve'' gold standard exists when the monetary authority holds sufficient gold to convert all the circulating representative money into gold at the promised exchange rate. It is sometimes referred to as the gold specie standard to more easily distinguish it. Opponents of a full standard consider it difficult to implement, saying that the quantity of gold in the world is too small to sustain worldwide economic activity at or near current gold prices; implementation would entail a many-fold increase in the price of gold.<ref>{{Cite web |title=International payment and exchange - Gold Standard, Currency Exchange, Global Economy {{!}} Britannica Money |url=https://www.britannica.com/money/topic/international-payment/Problems-with-the-gold-standard |access-date=2023-10-06 |website=www.britannica.com |language=en}}</ref> Gold standard proponents have said, "Once a money is established, any stock of money becomes compatible with any amount of employment and real income."<ref>{{cite book|last=Hoppe|first=Hans-Herman|editor=Mark Skousen|title=Dissent on Keynes, A Critical Appraisal of Economics|url=https://mises.org/daily/2492#i2|year=1992|pages=199–223|access-date=2014-09-15|archive-date=2014-09-15|archive-url=https://web.archive.org/web/20140915120724/https://mises.org/daily/2492#i2|url-status=dead}}</ref> While prices would necessarily adjust to the supply of gold, the process may involve considerable economic disruption, as was experienced during earlier attempts to maintain gold standards.<ref>{{cite web|url=https://mises.org/Community/wikis/economics/gold-as-money-faq.aspx |title=Gold as Money: FAQ |website=Mises.org |publisher=Ludwig von Mises Institute |access-date=12 August 2011 |url-status=dead |archive-url=https://web.archive.org/web/20110714174608/http://mises.org/Community/wikis/economics/gold-as-money-faq.aspx |archive-date=July 14, 2011 }}</ref>

In an ''international gold-standard system'' (which is necessarily based on an internal gold standard in the countries concerned),<ref>The New Palgrave Dictionary of Economics, 2nd edition (2008), Vol.3, S.695</ref> gold or a currency that is convertible into gold at a fixed price is used to make international payments. Under such a system, when exchange rates rise above or fall below the fixed mint rate by more than the cost of shipping gold, inflows or outflows occur until rates return to the official level. International gold standards often limit which entities have the right to redeem currency for gold.