But the relationship in the middle of gold and the dollar is not just a contrasting proportion.

Why is the stability in the middle of gold and the dollar valuable enough to affect the economy so degree? Let’s get the truth below.

Gold did not lose its price for centuries.

Centuries ago, gold, what he calls for humanity; Today he talks about one -on -one things. Since it is always paid and easy to process, gold has been the only thing that gives many civilizations and civilization status.

Especially rare adds value to its price. Moreover, not only a mine, it has become the source of money. As time goes by, gold has become a basis for money, and now it has a bond with the dollar.

The dollar idea, gold is rising.

In fact, what will tell us the proportion of gold and money will be the gold standard. This standard talks about a money system in which the paper money pressed by the Central Bank can be exchanged with a certain gold.

The system is considered a turning point in the evolution of monetary systems. In this system, the Central Bank of a Country would definitely commit to having gold reserves in exchange for the paper money it printed. In the theory, paper money could be changed with a dimension of gold that was always determined. This aimed to keep the money supply under control and prevent inflation.

The foundations of the gold standard are based on the first years of contemporary banking and money systems.

In the 18th century, in Europe, banks were bound to precious metals, at the cost of these money, at the time of these money, while the bank’s own money. In 1759, the Bank of England had paved the way for contemporary paper coins by pressing the first fixed paper coins. However, the paper money of that period was not today. Because the price was indexed to expensive metals of the institution directly pressing.

In 1717 Britain, the gold standard was officially accepted. It is different that Newton played a critical role in the implementation of the gold standard as the president of the Royal Mint. Newton noticed that the metals were stolen from the edges of the coins during the printing process of the money, and collecting coins in circulation and led to the production of new coins.

The gold standard revived trade by stabilizing the cost of money units.

Countries, money supply adhering to gold reserves, many money printing was prevented and inflation was inspected. The fixing of prices and exchange rates facilitated trade between countries and contributed to economic growth.

However, this standard also has valuable limitations. Since the obtaining gold was boundary and laborious, it was not always possible to increase the money supply to the needed level. During the economic crisis times, the flexibility of money policies decreased because it could not meet the demand for gold reserves.

With the beginning of World War I, many countries suspended the gold standard.

The cost of war made it difficult for the sustainability of the system. In the 1930s, the influences of the Great Depression show that the gold standard was inadequate against economic fluctuations. Economist Barry Eichengreen, in this period, the insistence on the defense of the gold standard, the central banks prevents harmony to the terrible economic conditions, he says.

II. After World War II, the financial system between the country was rebuilt. In 1944, at the Bretton Woods Conference, the dollar became a reserve money unit between the country. However, US President Richard Nixon, one of the economic, political and global pressures that increased with time, stopped the replacement of the dollar with gold in 1971.

The gold standard officially ended and the contemporary prestige monetary system was born.

Num is a form of money based on the economic guarantee of governments and central banks, which is no longer dependent on commodities, which are no longer worthy of gold or silver. In this system, exchange rates and money costs are determined by market forces, and countries can implement their own money policies more flexible.

Although the gold standard was developed for the purpose of controlling inflation and providing economic stability by limiting money supply, it had experienced flexibility problems due to the finite source of gold. The prestige monetary system, which was deemed more appropriate for economic conditions, was introduced. This is the connection in the middle of gold and the dollar.