Foreign Exchange Markets?

Question

Consider the following: You have been asked by a local college to write a lecture that explains the gold standard and addresses the functions of the world's major foreign exchange markets. I am to write a 1050-1400 word summary detailing the functions of the world's major foreign currency exchange markets. I am to be sure to discuss t he positive and negative aspects of using a gold standard.

Can anyone help with the start or where to go with this???

Answer 1

Dude, do your own research and write your own freak'in paper!

Answer 2

The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold.

Under the gold standard, currency issuers guarantee to redeem notes, upon demand, in that amount of gold. Governments that employ such a fixed unit of account, and which will redeem their notes to other governments in gold, share a fixed-currency relationship.

Supporters of the gold standard claim it is more resistant to credit and debt expansion. Unlike a fiat currency, the money backed by gold cannot be created arbitrarily by government action just by printing banknotes. This restraint prevents artificial inflation by the devaluation of currency. This is supposed to remove "currency uncertainty," keep the credit of the issuing monetary authority sound, and encourage lending. Nevertheless, countries under a not truly 100% gold standard, like countries simultaneously using manipulated paper currencies, underwent debt crises and depressions throughout the history of its use with the Central Bank manipulation and inflation of the currency as the U.S. experienced in its Panic of 1819 after its Second National Bank was chartered in 1816.

The gold standard is no longer used in any nation, having been replaced completely by fiat currency. However, it is still in use by some private institutions.

Answer 3

Once the subject of heated national debate over 100 years ago, the gold standard today has nearly disappeared as a political issue. The world has abandoned the gold standard in favor of so-called "paper money," and only a diminishing group on the far right continues to call for its return. However, if mainstream economists (on both the left and the right) have anything to say about it, there will never be a return to "that barbarous relic," as John Maynard Keynes called gold over 60 years ago.

Even so, defenders of the gold standard include such former presidential candidates as Jack Kemp and Stephen Forbes. Furthermore, the rise of well-funded, right-wing think tanks in the last few decades has managed to resurrect the issue. Therefore, reviewing the arguments of the "gold bugs" -- as they are irreverently known in academia -- is well worthwhile, if only to screen our presidential candidates for obsolete economic ideas.

The reason why the far right opposes the current money system is because it allows the government to control the size of the money supply. They argue that an unscrupulous government might pay its bills by printing more money, which would cause inflation. They also argue that shrinking the money supply allows the government to create recessions. Under a gold standard, the total value of money would be fixed (or nearly so), and the market would adjust itself efficiently around it. In his book, The Theory of Money and Credit, Ludwig von Mises wrote: "The excellence of the gold standard is to be seen in the fact that it renders the determination of the monetary unit's purchasing power independent of the policies of governments and political parties."

Mainstream economists, however, have a powerful counter-argument. The current system might, in theory, allow an unscrupulous government to create inflation or unemployment, but it also allows the government to fight inflation and unemployment. And that is a tremendous achievement, because not one nation around the world using Keynesian monetary policy has experienced a depression in the last six decades. It appears that we eliminated depressions when we eliminated the gold standard.

It hasn't been for lack of opportunities. In 1987, the U.S. stock market crashed, in a "meltdown" that was even worse than the Crash of 1929. But the Federal Reserve had learned its lessons from the Great Depression, and this time it responded correctly: with a sharp expansion of the money supply. And not only was there no depression, but there was no recession either -- in fact, the remarkable economic boom of the 80s continued without even a bump. Under a gold standard, the Fed would have been robbed of this anti-recessionary weapon.

Of course, the gold bugs have developed a set of apologetics for arguments like these. To put everything in perspective, it is helpful to trace the evolution of the monetary system, from its very beginnings to the rise and fall of the gold standard. The reason for starting at the beginning is twofold: even the basics are disputed by people who believe themselves informed on the issue, and many lay persons might not know them anyway. So, with apologies, let's start with the invention of money.

Answer 4

Colleges are a waste of time.... Get free education!

Answer 5

hey didn't you take econ in high school. either as a freshman or a senior. i still have my work book which just summarize the book. unless you want a 15 yr old to help you on your paper and how old are you?

am nice i might help you but what is in it for me?