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Why did the United States leave the gold standard? Basically, because the gold standard constrained the federal government. I get a lot of questions from students about the gold standard. For example, what is it? And why dont we have one anymore? I will start by explaining what it is. Under a gold standard, the monetary unit is defined as a certain amount of gold, like 1/20 of an ounce, or 10 grams. In the era of the international gold standard, before World War I, the U.S. dollar was defined as a little less than 1/20 of an ounce of gold. To be precise, one ounce of gold equaled $20.67. A silver standard follows the same idea. The British monetary unit, the pound sterling, originally meant exactly that: one pound of sterling silver. A gold standard can operate with or without government involvement in the minting of gold coins, the issuing of gold-backed paper currency, and the provision of gold-backed checking accounts. Historically, private mints and commercial banks were reliable
