Question

what exchange rate regime existed in the US durubg the gold standard era?

Answer 1

The gold standard can apply to a number of things, including a fixed monetary system under which the currency of the state is set and can be exchanged into gold freely. It can also apply to a freely open monetary system in which gold or bank gold receipts serve as the main exchange medium; or to a norm of international trade in which some or all countries set their exchange rates based on the relative parity prices of gold between individual currencies.

Over time, the gold standard has established a nebulous meaning, but is commonly used to describe any commodity-based monetary system that does not depend on unbacked fiat money, or money that is valuable only because the government forces citizens to use it. But there are major differences beyond that. Most gold standards depend only on the actual production of physical gold coins and bars, or bullion, but others require certain currencies of goods or paper. Recent historical structures offered only the ability to convert the national currency into gold, thereby restricting banks or governments ' inflationary and deflationary capacity.

After the Second World War, the Bretton Woods agreement required Allied countries to accept the U.S. dollar as a currency rather than silver, and the U.S. government promised to keep enough gold to sustain the dollars. In 1971, the Nixon administration ended U.S. dollar-to-gold convertibility, creating a fiat currency regime.