Monetary Standards Reviewed: From Gold Standard to Gold Exchange Standard to Exchange Standard Definitely

In the long run we are all wrong. An old mineral, surfacing definitely during the 19th century, always considered as a most valuable metal, since ever known over the planet Earth as gold, has become according to Keynes a barbarous relic, as supported in its value by recurring monetary functions, presently fixed, in a worldwide specific payment system, to the paper dollar, since the Bretton Woods final text. As long as a gold standard, so known in the literature since the first monetary history. According to the most relevant Hume’s model, a deficit country must pay for the excess import of goods using the simple payment model flux as currency of the surplus country, or if any, according to the monetary arrangements of the gold standard system specifically adopted. In this case finally, gold should be transferred via issuing paper certificates called bills (paper money) by central banks, from the deficit entity to the surplus holders, thus reducing the money supply and the general price level in the debtor country. So adjusting its surplus balances and adding its exports and reducing imports. So automatic adjustments will rebalance the payments of the deficit country versus the surplus countries, according to the Hume’s PSFM (Price specie flow mechanism). This means that according to the monetary arrangements in the gold standard system, imbalances must be either compensated on a periodical time basis, or balanced via their central banks, from the deficit country to the surplus country, thus reducing the money supply and the general price level in the former, improving its relative competitiveness, and increasing its exports as opposed to imports. This procedure will, finally, rebalance the payments of the deficit country versus the surplus country. David Hume was linked to the intrinsic metal value, the monetary function was performed fluently without strict conflict between the metal value and the transactions price by the link to the monetary metal and transaction agreed price.

Mario Pines. Monetary Standards Reviewed: From Gold Standard to Gold Exchange Standard to Exchange Standard Definitely. Economics World, Apr.-June 2026, Vol. 13, No. 2, 71-80, doi: 10.17265/2328-7144/2026.02.001

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