In 1929, the global financial system was based on the gold standard and was extremely vulnerable to any financial downturn escalating quickly to catastrophic economic meltdown. As the financial markets collapsed, thousands of banks collapsed as people withdrew their savings in the fear that paper money would no longer be backed or redeemed for gold. True / False.

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Business

Kaliyah Hoffman

26 February, 16:00

In 1929, the global financial system was based on the gold standard and was extremely vulnerable to any financial downturn escalating quickly to catastrophic economic meltdown. As the financial markets collapsed, thousands of banks collapsed as people withdrew their savings in the fear that paper money would no longer be backed or redeemed for gold. True / False.

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Aedan Mendoza · Answer 1

true

Explanation:

The gold standard continued with the Bretton Woods agreement in 1944 and lasted until 1971 when president Nixon unilaterally decided to exist the Bretton Woods system.

The story behind the Great Depression was much more complicated than the gold standard, since if continued for many years. The roots of the great Depression are several but the most important one was speculation and trading on the margin. The stock markets created a gigantic bubble that was continuously fed with money coming from new investors, but when there where no new investors around, it burst and it was terrible.

And once people start to panic, things can get worse.