Gold reserved economic system?
Is it true that every country has deposited a particular amount of Gold with bank of England? Against which it gets foreign currency or privilege to print new currency notes?
If not, then how to determine the worth of any country and its ability to pay off its debts?
Comments
Wow, no, it is not even remotely true about countries depositing gold at the bank of England. (Does that make any sense to you? Why on earth would all the countries of the world submit to that?)
First, no country on earth backs their currency with gold or anything else. That was an old-fashioned way of managing a money system that went out of style decades ago. All currencies today are unbacked "fiat" currencies.... no exceptions.
Second, no country needs "permission" from any one to print its own currency.
Third ... where this is remotely related to reality is that many countries do maintain a stock of gold bullion ... NOT to back their currencies, but just as a way of keeping some assets to buy and sell (mostly sell) and as a vestige of the old money systems of the past. When all nations abandoned the gold standard, they did not necessarily just sell off all the gold they had stockpiled. Interestingly, such gold bullion is not kept bank of England, but much of it for many countries is kept in the vaults of the Federal Reserve Bank of New York in Manhatten, for the sake of security and convenience.
Unless a currency is formally backed by something of value (e.g., historically gold or silver) then there are no real limits on how much currency a country can print. At present, no country is limited by any deposit of gold with the Bank of England, not even Great Britain.
Some people believe that a moderate rate of currency printing can sustain the good faith acceptance of a currency by the general population, but there is no guarantee of that. Other people believe that it's only a matter of time before people realize that a currency is truly worthless if it has no backing by something of value. History has many cases where countries have printed currencies without backing them with value (e.g., Germany right after the First World War), and resulting in economic catastrophe for the country's citizens.
At the present time, neither the euro nor the American dollar is based on gold, silver or anything of real value - other than the goodwill of the citizenry. The value of each currency is simply based on the guesswork of traders in the international financial markets.
this is known as the "gold standard". there is also certain amount of gold in banks in USA were countries like Germany deposit certain amount of gold to print their new currency. so it's true but not today.
its ability to pay off its debts?: sadly, this system was removed 1971 by president Nixon which it permits central banks to created unlimited amount of currencies. now, all currencies around the world became "fiat currency" which are created by debt and the problem is that there is interest with it. what's the problem? example: i'm a central bank and there are 2 person asking me for 100$ each of them because there is no dollar in circulation. i'm now creating 200$ out of debt plus charging 10% in interest of that which means the 2 of them as to pay back 20$. the 2 of them are buying stuff and then they return the 200$. now they have to pay back the 20$ but the problem is that there is no more dollars in circulation so they have to keep borrowing and borrowing to pay off the previous interest which it creates more interest and that's how all the national debt around the world are getting bigger and bigger. it is MATHEMATICALLY IMPOSSIBLE to pay back the national debt because currencies aren't based anymore on certain amount of gold and there are interest like i explained before and because we arent in a gold standard, we cant pay our debt and interest in gold.
how to determine the worth of any country: by that, you meant the value of a country's currency? if so then each currency as their own cash supply. there two things that make a currency more or less valuable than the others.
1) the more cash a currency has in circulation, the less value it is compare to others which it makes prices of goods and services higher in this currency (inflation). the less cash a currency has in circulation, the more value it is compare to others which it makes prices of goods and services lower in this currency (deflation).
2) the demand and the offer also play a role. the more demand a currency is having, the higher it's value and the more offer a currency is having, the lower it's value.
sure! examine a e book titled, The Creature from Jeckyll Island. it incredibly is a e book approximately how the business and finacial czars of the early 20 century in reality conspired to manage the money furnish in our united states.