Hi Pjethwani,
Thank you for the comment but that response was from one of our other community members who was kind enough to share his input here which I always appreciate and encourage.
So anyways with that being said, the point you have raised here has always gotten a lot of attention, and especially so with the recent slide in the dollar. To be honest with you, while I would like to learn more about debates such as this, I tend to from a trading standpoint focus on the what is, and not what I think should be. So with this in mind I know a fair amount about the federal reserve and how changes in monetary policy affect the markets as currently this is the monetary situation which controls the market. As we are not currently on a gold standard, I do not place too much focus on it so I would consider myself far from an expert in how a gold standard would affect the economy and markets.
What I do know is that there are two sides to the debate as to whether a fiat currency (one not backed by a commodity such as gold) is better for the economy, than one that is backed by something such as gold.
The first, which Airelon has touched on below, is that a fiat currency is better. People who feel this way normally believe that with a fiat currency the economy can grow at a faster rate than it otherwise would be able to. Secondly they feel that a fiat currency (which gives a central bank like the federal reserve the ability to increase and decrease the money supply) allows a central bank to manage the business cycle. For more on this please see module 8 of my
free basics of trading course where I talk about how the Federal Reserve works.
The other side of this debate is that a fiat currency is bad, because of the fact that it allows a central bank instead of market forces to control the value of a currency. They believe that because of this there is a tendency for the central bank to over inflate the money supply, which essentially makes the value of the currency worth less and less each year. They also tend to believe that governments will increase the money supply to pay for government programs, a sort of hidden "tax" on the population that allows them to increase government without having to go to the public and raise taxes.
As far as books on this topic most of my knowledge on the subject has been gained from reading the newspaper and watching youtube videos, so I have not read any. I would however appreciate any recommendations from any community members with knowledge on the subject as to what some good ones would be.
As far as a reading list, I am in the process of putting together a bookstore with reading recomendations from myself and the rest of the community which
you can find here.
Hope that helps. This is a very interesting topic so if anyone has any feelings one way or another on this please feel free to share them here.
Best Regards,
Dave