Why do we no longer use gold coins as common tender?
The unfortunate thing about gold is that it is a limited resource. The number of gold coins we produce is limited by the amount of gold we actually possess. Before Theodore Roosevelt banned the ownership of gold in 1933 the United States could only produce cash in accordance to the amount of gold in the Federal Reserve. When he prohibited gold he changed the way America used currency forever. We could produce money in anticipation of how much we would be worth. Meaning the US produced money in a way very similar to how we use credit today. Now we can buy gold coins to remember a time when the economy worked in a very different way. Our primary form of currency is the US dollar and then we have change which breaks down the smallest denomination even further. We also now use electronic forms of cash which represent paper money in much the same way cash used to represent gold. The main reason we use cash is theoretically it maximizes our capital. Now of course there is a benefit, we can now buy and sell gold coins as a investment opportunity. Producing gold coins to use as currency limited the amount of money the US could produce by how much gold we could acquire. It was more beneficial in the long run to switch our financial system, but an unfortunate side-affect is it allowed the US to spend money it didn’t actually have. By spending money the US didn’t have cause the country to go into billions of dollar in debt. The US spends money we don’t have to create different programs. If we still used gold as the common form of currency then of course we wouldn’t be able to afford all the different things we have bought. Now there are billions if not trillions of dollars in gold, but not all of this belongs to the US. Now, the gold coins are still legal tender in the US, because the US never actually changed their policy after the gold recall. Those coins are worth significantly more then their face value.
