Glossary



T E R M S

 

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Bimetallic System

Bretton Woods System

Bullion



TERM
DEFINITION

Bimetallic System

 A system of currency that uses two commodities, generally gold and silver.
                                                                            


Bretton Woods System A set of international economic institutions, rules, and standards established in July 1944 at the Mount Washington Hotel in Bretton Woods, New Hampshire. The system created the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD). The Bretton Woods system obliged each country to maintain an exchange rate by tying the country’s currency to the US dollar. In 1971, the United States ended the gold standard, which ended to Bretton Woods system.
                                                                 
Bullion Gold bars, silver bars, or other precious metal bars.
                                                                    
Coinage Act of 1792 An Act passed by the US Congress on Apr. 2, 1792 that established the Mint and regulated US coins, declaring the dollar the "money of account.” The Act authorized production of eagle (gold), half eagle (gold), quarter eagle (gold), dollar (silver), half dollar (silver), quarter dollar (silver), dime (silver), half dime (silver), cent (copper), and half cent (copper) coins. Additionally, each coin was to have an image representing "Liberty” with the year on one side, gold and silver coins were to have the eagle and "United States of America” on the reverse, and copper coins were to have the denomination on the reverse. The Act also established the death penalty as punishment for debasing the coins or embezzlement of metals for the coins by employees of the Mint.
                                                                        

Coinage Act of 1834 An Act passed by the US Congress on June 27, 1834 that raised the silver-to-gold weight ration from the 1792 level (15:1) to 16:1, setting the Mint price for silver below international market price.
                                                                        

Coinage Act of 1873 Also called the "Fourth Coinage Act.” An Act signed into law by President Ulysses S. Grant on Feb. 12, 1873 that demonetized silver. Gold became the only metallic standard in the United States, thus creating a de facto gold standard. The Act also ended production of the half dime, silver three-cent piece, and the two-cent piece.
               


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Cyanide Leach Mining Also called "gold cyanidation” or "the cyanide process.” A process in which cyanide is sprayed on ore to extract gold or in which ore is combined with cyanide in vats to extract gold. The cyanide solution bonds with gold, making it easy to separate from the ore.
                                                                    
Deflation A fall in the general prices of goods and services over time that is generally attributed to a decrease in the amount of money in circulation relative to available goods and services. This occurs when the inflation rate falls below 0%.
                

Domestic Gold Standard When the domestic paper money supply is directly linked to gold.
                                                                    
Emergency Banking Act of 1933 An Act passed by Congress on Mar. 9, 1933 that allowed only Federal Reserve-approved banks to operate in the United States. The Act was passed to help quickly liquidate banks that could not be saved and reorganize banks that could be saved. It also gave the President power to declare a national banking emergency. The Glass-Steagal Act of 1933 largely replaced the Emergency Banking Act.
                                                                    
Federal Reserve Act An Act enacted on Dec. 23, 1913 that created and constructed the Federal Reserve System, the central banking system of the United States, and granted the Reserve legal authority to print Federal Reserve Notes (the US dollar) and Federal Reserve Bank Notes as legal tender.
                 
 
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Federal Reserve Bank Note A type of Federal Reserve Note issued until 1971 that was backed by one of twelve Federal Reserve Banks rather than all twelve collectively.
                                                                        

Federal Reserve Note Commonly called "US dollars.” The only type of paper currency currently circulated in the United States that is backed by all twelve Federal Reserve Banks collectively.
                                                                    
Fiat Currency/Money Paper money that is not convertible to gold, silver, or any other substance and is not backed by the value of gold, silver, or any other substance. It is declared legal tender and the value is determined by the government. Fiat money lacks intrinsic value.
                                              
Financial Crisis Any of a variety of situations in which financial institutions or assets suddenly lose a large part of their value.
                                                                    
Free Silver Movement A late nineteenth century advocacy of unlimited silver coinage prompted by the Coinage Act of 1873 that demonetized silver. The movement was mainly composed of Western silver mine owners, famers who believed an expanded currency would increase the price of crops, and debtors who believed silver would allow easier payment of debts.
                                                                    
"Full Faith and Credit" of the Government An unconditional guarantee by the government that something, fiat money in this case, is of value. "Full faith and credit" is the common name for Article IV, Section 1 of the US Constitution, which means that each state will respect the laws, records, etc. of the other states.
                 


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Full Gold Standard When the government holds enough gold to convert all paper money in circulation into gold at the promised exchange rate.
                                                                    
Gold Bug A person who opposes and criticizes fiat currency and supports a return to a gold standard or another standard based on the intrinsic value of an asset, or someone who considers gold the appropriate measure of wealth. In the 1896 US Presidential election, supporters of William McKinley were called gold bugs and wore gold pins, necklackes, headbands in support of gold against the "silver menace."
                                                                    
Gold Bullion Coin Act of 1985 An Act signed by Congress on Dec. 17, 1985 that allowed for the minting of fifty dollar, twenty-five dollar, ten dollar, and five dollar gold bullion coins.
                                                                    
Gold Reserves The gold held by a central bank or nation.     
                

Gold Reserve Act of 1934 An Act that outlawed the private possession of gold and forced individuals to sell gold and gold certificates to the Treasury.
                   


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Gold Standard Act of 1900 An Act passed by Congress on Mar. 14, 1900 that established gold as the only standard, stopping bimetallism. The Act assigned a specific dollar value to gold, $20.67 per Troy ounce.
                                                                    
Great Depression A financial crisis prompted by the 1929 Wall Street crash that lead to a decade of high unemployment, steep declines in industrial production, and severe drops in consumer spending and investment. In 1939, World War II increased industrial production and raised the economy.
                                                                    
Great Recession Also called the "Lesser Depression,” the "Long Recession” or the "global recession of 2009.” A global economic decline that started in Dec. 2007 and experienced a sharp downturn in Sep. 2008. The recession was started partially by the financial crisis of 2007-2008, US public monetary policy, practices of private financial institutions, and decentralized mortgage funding. It is considered the worst financial crisis since the Great Depression.
                                                                    
Greenbacks Also called "Demand Notes." The first fiat money printed by the US government to help finance the Civil War. The bills were printed on one side with green ink. The Union issued almost $450 million in greenbacks during the Civil War.
                                                                    
Greenback Party Also known as the "Independent Party,” the "National Independent Party,” and the "Greenback Labor Party.” An American political party with anti-monopoly ideology that was active between 1874 and 1889.
                                                                    
Inflation A rise in the general prices of goods and services over time that is generally attributed to an increase in the amount of money in circulation relative to available goods and services.
                 


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Inflation-Adjusted Value Calculating values using the average consumer price index to account for the change in the general prices of goods and services over time.
                                                                    
Interest Rates The rate at which interest (a fee paid by a borrower of assets as a form of compensation for the use of the assets) is paid by borrowers for the use of money.
                                                                    
International Gold Exchange Standard Using gold, or a currency fully backed by gold, to make international payments.
                
                                                   
Intrinsic Value An economic theory that holds the value of the object is contained within itself.
                 


Knox v. Lee The 1871 US Supreme Court 5-4 decision that found that making paper money through the Legal Tender Act did not conflict with Article One of the US Constitution.
                 


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Legal Tender Act An Act passed by Congress on Feb. 25, 1862 that authorized the printing of $150 million paper notes (called "greenbacks”) not backed by gold or silver for the government to pay bills, financing the Civil War after the US government’s gold and silver reserves were depleted.
                                                                    
M1 Currency All physical money in circulation, including cash and assets that are easily converted into cash.
                                                                    
M2 Currency M1 currency and all time-related deposits, savings deposits, and non-institutional money market funds.
                                                                    
M3 Currency M2 and all large time deposits, institutional money-market funds, short-term repurchase agreements, and other large liquid assets.
                                                                    
Numismatic The study or collection of currency.
                   


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Open Pit Scar The large hole left in the earth where ore and gold were extracted for mining.
                                                                    
Panic of 1873 Also called the "Long Depression.” A financial crisis caused partially by Germany’s decision to abandon the silver standard, which lead to the fall in demand for silver internationally and helped cause an economic depression in the United States and Europe and lasted until 1879.
                                                                    
Price Stability When prices do not change much over time. This would mean the economy experiences no inflation or deflation.
                                                                    
Purchasing Power The amount of goods or services that can be purchased with a unit of currency.
                                                                    
Real Cost The cost of producing a good or service including the costs of all resources and the costs of not using those resources elsewhere.
                   


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Real Median Income The middle value of incomes adjusted for inflation.
                                                                    
Real Value Value corrected for inflation.
                                                                    
Recession A general slowing of economic activity during which GDP, employment, investment spending, income, business profits, and inflation fall while bankruptcies and unemployment rate rise.
                                                                                    
Specie Payment A payment made in coin or bullion as opposed to fiat money.
                                                                    
Specie Payment Resumption Act An Act passed by Congress on Jan. 14, 1875 that restored the gold standard through the redemption of United States Notes, which were not previously backed.
                                                                    
Treasury Bonds An "IOU” issued by the US Treasury stating that the US Treasury will pay principal and interest according to the terms and conditions of the bond. Treasury bonds are issued in face values of $1,000 and have maturities of 30 years.
                 

Troy Ounce (ozt) A unit of measurement retained from the Roman system to measure gold, silver, platinum, and gunpowder. 1 troy ounce is equal to 1.09714286 ounces.
                

US Gold Commission President Ronald Reagan established the US Gold Commission in 1981 in accordance with an Act of Congress of Oct. 7, 1980 to investigate the possibility of a return to a gold standard and to enlarge the quota assigned to the United States in the International Monetary Fund.

The Commission was chaired by the Secretary of the Treasury, Donald T. Regan, and consisted of J. Charles Partee, Henry Wallich, and Emmett Rice of the Federal Reserve System; Senators Christopher Dodd (D-CT), Roger Jepsen (R-IA), and Harrison Schmitt (R-NM); Congressmen Stephen Neal (D-NC), Ron Paul (R-TX), Henry Reuss (D-WI), and Chalmers Wylie (R-OH); and four private citizens with finance-related backgrounds.

The Commission reported and disbanded on Mar. 31, 1982. Their report recommended the issuance of gold bullion coins minted by the US Treasury but rejected a gold standard.
                                                                                                    


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