Gold and Economic Freedom Summary and Analysis

This chapter, written by Alan Greenspan, considers the role of gold and looks at the gold standard. The gold standard was the mechanism by which the international monetary system functioned until the end of World War II. Money functions as the common denominator in all transactions and it is a means of savings. The existence of money allows people to avoid the problems of barter and this promotes the division of labor. To function as a medium of exchange, the item must be durable and study which is what a metal is. The metal is homogenous and divisible. A single commodity used as a medium of exchange is very beneficial for a society.

Two metals widely accepted as a medium of exchange are gold and silver. Currency and deposits can take place in a bank...