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When the dollar was backed by gold, it was possible to go to the central bank and redeem a fixed number of dollars for a certain amount of gold. While central b
by soVeryTired 9y ago
When the dollar was backed by gold, it was possible to go to the central bank and redeem a fixed number of dollars for a certain amount of gold. While central banks do hold bonds on their balance sheets, it is not true that an investor can convert a predetermined dollar amount into a bond at the central bank: bond prices are determined by the market.