prajeshbhat wrote:The gold standard was abandoned by every country in the world except USA a long time ago. USA was the last one out when it became obvious that being the only country with the gold standard would be economic suicide. With such gigantic trade imbalances in the world, all the gold in the world will end up in china, Germany and OPEC nations anyway. What after that? These countries are already the largest creditors. So things turned out exactly as they would have under the gold standard. With the current fiat system, at least no real gold was lost. It is still in fort knox. In the worst case scenario, a new currency can be started with a gold backing.
prajeshbhat, your goal in life must be to spread economic fallacy. Under the international gold standard, trade is balanced. If one country imports more than it exports, it loses gold. As the local gold supply drops, prices fall. Lower prices attract foreign buyers. Exports rise until trade becomes balanced. If one country exports more than it imports, it gains gold. As the supply of local gold increases, prices rise. Higher prices repel foreign purchasers of exports. Exports fall and trade becomes balanced. Do as all a favor and stop speaking of which you know nothing.