Why does the UK not use the gold standard

Kingdragon

I am just curious, why does the UK not base the pound of a gold standard instead of a fiat currency?

(edited 2 months ago)

Reply 1

Gazpacho.

It really limits the flexibility of central banks.

Reply 2

TheStupidMoon

To devalue the commoners savings.

Reply 3

Napp

Its economically disadvantageous in the modern world. Also, we have no gold worth a damn.

Reply 4

username6802768

With fiat currency, your money is not backed by anything so has no intrinsic value.
With a gold standard your money is backed by gold so has some value.
Proponents of the gold standard would claim its better as currencies would lose value at a much slower rate.

However with a gold backed currency you can't print new money, in the US 60% of dollar bills were made during Covid which means it can stiffle economic growth. One of the main arguments for fiat currencies is that the inflation is a feature not a bug, inflation forces consumers to spend rather then save which helps the economy, as this creates more demand for goods/services which creates more jobs which creates more demand for goods/services from more jobs.