What Is the Gold Standard?

We usually think of banks as looking at their deposits, or how much money they have in the reserve account at the central bank. If i'm a banker, that is not the way it works. When a moneyor when a bank actually makes a loan, that creates a deposit. And that is when money is created. Now think back what it meant for money to be, to be under the gold standard. That means for every dollar, there was so much gold held in a vault in fort knox,. wherever other central banks held their gold. The reason why they did that was because then you would limit the amount of money going through the economy.