Floating currency rates were Milton Freidman's brainchild. They were the makeshift result of an emergency system put into place after years of printing money by the US until the world was awash in US Dollars. The US under Bretton Woods had agreed to be the world reserve currency so other countries could use the USD for exchange and the dollar they held was "as good as gold" because each dollar was backed at a fixed rate and was exchangeable into gold. Well we created a lot more dollars to pay for wars and social programs than we had gold to back it (huge deficit spending, and printed the money to pay for it - sound familiar?)

We defaulted and told the rest of the world to screw themselves. France and a few smaller countries got their gold before Nixion slammed the door shut as a full blown bank run started on the US gold reserves.

When someone tries to tell you gold is a "barbarous relic" it may be, but central bankers sure do not want to give up what they have. It works for cash when nothing else does. Witness Iran. We cut them off from the banking system, yet they could still use gold to transact business. That is going to turn into another government fubar (forcing countries to not trust the interbank system so they start their own) but that is for another discussion.

John