The Gold Standard: How Does it Work? Do We Need It?
The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold. There are distinct kinds of gold standard. First, the gold specie standard is a system in which the monetary unit is associated with circulating gold coins, or with the unit of value defined in terms of one particular circulating gold coin in conjunction with subsidiary coinage made from a less valuable metal.
Similarly, the gold exchange standard typically does not involve the circulation of gold coins, instead using notes or coins made of silver or other metals, but where the authorities guarantee a fixed exchange rate with another country that is on the gold standard. This creates a de facto gold standard, in that the value of the silver coins has a fixed external value in terms of gold that is independent of the inherent silver value. Finally, the gold bullion standard is a system in which gold coins do not circulate, but in which the authorities have agreed to sell gold bullion on demand at a fixed price in exchange for the circulating currency.
No country currently uses the gold standard as the basis of its monetary system, although several hold substantial gold reserves. (from Wikipedia)
There are strong arguments for and against the gold standard. Others say that neither the Federal Reserve OR the gold standard should exist, and that instead, the U.S. Treasury itself should control the currency supply by issuing a Greenback currency (rather than the PRIVATE Federal Reserve Bank). This position's case has been well made in the documentary film "The Secret of Oz" by Bill Still.