The Golden Age

I bet some of you have already known about the Golden Age. Don’t worry if you haven’t known about it, yet cause I will explain it to you. But, let’s play guessing game first. Start with the meaning of “Golden”. What do you think is the meaning of golden as it written on the title? Is it about the age when the people lived in prosperity? Or maybe it literally means golden? Actually, both are right.

This time, I am going to explain the second one only. The Golden Age lasted for 18 years before its collapse in 1920s. Gold was used for the transactions. Even it was not only gold which was used in the golden age (silver was also used in that time), gold is still the main idea of it.

There was a system called gold standard. According to http://www.investopedia.com/terms/g/goldstandard.asp, the gold standard is a regulation about the fixed gold amounts. With this regulation, the exchange rate between two currencies will have the same value. Fixed amount means the gold’s value has already been fixed and it has the same value in every country. For example, if you change a gold into a dollar, it will cost $20. It also valid for vice versa. The gold standard was used from 1875 to 1914, also during the interwar years (1919-1938).

We all know that we’re not using gold anymore for transaction. The gold is only used for jewelry and such of that. We are now using money, I mean banknote. How could it be collapsed? Despite its advantage on the inflation case, gold is very expensive for transaction. The value of goods and the gold is not the same anymore. The value of gold is increasing each day while the  goods’ is decreasing. Then, we have to find a material which is cheaper than gold. That’s why we use paper nowadays as our brand new basic material of money for our daily transactions.

The conclusion is we are now vulnerable to inflation. The exchange rate between currencies is not the same anymore. World economy is now held by US, that’s why every currencies have to compare their exchange rates to dollar. Even Europe, the old leader of world economy, has to accept the impact. World economy become unstable and unpredictable. 

This is the end of my explanation. I hope it could help you to understand more about the golden age. It’s nice to help people while I’m doing my assignment. JJJ

Athilla Meidictine Johanita

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