Monetization of Gold and the de facto Standard of Price: Extimating the Depreciation Rate of the Dollar

Monetization of Gold and the de facto Standard of Price: Extimating the Depreciation Rate of the Dollar

Most of economists and even Marxists have great doubts about the monetization of gold But since money as a measure of value and as a means of payment ultimately needs to be tied to a product which has real values, it follows that the currency should still remain a representation of a gold volumes In other words, the value of a currency should be regulated by gold volumes, which the currency has behind itself In this paper we stress that gold is the proper measure of value. In our modern credit money system there is no gold convertibility and hence there is no direct, visible link between currency and gold Therefore, the objective of this paper is to demonstrate the link between currency and gold through indirect means To accomplish this, we compute the de facto standard of price in Dollars, keeping in mind the logical relations between the market price of gold, the production cost of gold and gold as the standard of price Then we compare the consequence of this computation to the price index and the market price of gold. Finally I argue that gold underlies the currency even today At the same time I am going to estimate how much the dollar have depreciated during the post Word War Ⅱ