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Why don’t we use gold as money any longer?

Gold has always been used as money but it fell out of common use as currency when it became easier and much cheaper for governments, through their central banks and treasuries, to print notes as register of debt. These were essentially ‘I owe you’s which could then be exchanged on the open market. You might receive £5 for providing a delivery of corn but technically you would have to then go to the Bank of England to redeem your five pounds of gold.

You can now no longer do this and the paper money system is taken as currency, even though it is still based on debt.

In 1971 the dollar, the world’s largest reserve currency, came off the gold standard. So arguably, as there were no mainstream currencies attached to the gold value, gold was no longer money. However, central banks still continue to hold, buy and exchange gold.

Today you can once again use gold as money anywhere in the world.