How did the Gold Standard limit gov’t spending?


A look at an advantage of the Gold Standard system. We examine how a commitment to the Gold Standard meant that governments could not print/spend money indiscriminately. Because people holding a currency could redeem gold for their currency at any time, any loss in confidence in a currency would cause gold reserves held by a central bank to become quickly depleted and undermine the currency they were attempting to print/spend.

Videos to watch before

  1. What can cause the banking system to break down?
  2. What restrictions did the Gold Standard impose on member countries?