the Genoa resolutions called for negotiating a convention based on the gold-exchange standard
with a view to "preventing undue fluctuations in the purchasing power of gold"...
The United States has been formally on a fiat standard since August 15, 1971, when President Richard Nixon closed the gold window and effectively ended the Bretton Woods system of a gold-exchange standard
. Bretton Woods was nominally a gold standard, but the world was really on a dollar standard.
Keynes had argued in his book Indian Currency and Finance that whether a central bank holds its reserves in gold or in foreign exchange "is a matter of comparative indifference," and that "in her Gold-Exchange Standard
The gold-exchange standard
may be said to exist when gold does not circulate in a country to an appreciable extent, when the local currency is not necessarily redeemable in gold, but when the government or central bank makes arrangements for the provision of foreign remittances in gold at a fixed maximum rate in terms of the local currency, the reserves necessary to provide these remittances being kept to a considerable extent abroad.
Mundell noted the classic standard "operated smoothly to facilitate trade, payments, and capital movements." The "price level may have been subject to long-term trends but annual inflation or deflation rates were low, tended to cancel out, and preserve the value of money in the long run." Interwar, the United States was on a gold-exchange standard
until 1933, and a restricted pseudostandard until 1944.
The US ignored the limit set by the gold-exchange standard
on its deficits and flooded the world economy with dollars that eventually made it impossible to maintain gold convertibility.
Under the Bretton Woods agreement, the dollar would remain on an international gold-exchange standard
(meaning that dollars could be redeemed for gold, but only by international traders), and other currencies would be convertible into the dollar.
After four years I had written a series of articles on international aspects of the 1920s and 1930s: on the Bank of England's interest rate policy, on the Bank of France's sterilization of gold, on the collapse of the gold-exchange standard
, and on the effects of the devaluation of sterling.
The "gold-exchange standard
" under the Bretton Woods system was the expression of a strong political will to create a new and stable international order and to avoid the consequences of the monetary disorders of the 1930s.
Ahamed does to history is to fail to distinguish between the flaws of the classical gold standard, on the one hand, and the far deeper imperfections of the gold-exchange standard
(so similar to the evils of today's dollar standard), on the other." JAMES GRANT
Although the authors of these publications note differences between the classical pre-World War I gold standard and the post-World War I gold-exchange standard
, they nonetheless claim that the latter "gold standard" was operational during the 1920s and early 1930s.