The gold standard is not a fixed exchange rate system because all nations on the gold standard use the same currency. Commodity is money paper currency. And and government-issued notes


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The gold standard is not a fixed exchange rate system because all nations on the gold standard use the same currency. Commodity is money paper currency. And and government-issued notes. Standard we're not money probably cuz they said they were money money substitute and they they substitute for gold on an exchange as Warehouse receipt so you're treating claims to go you didn't need to trade a physical goal that give you greater security it was more convenient to carry around a claim. Show me titles that Express the fact that you were the owner of the underlying asset or thing I was referred to deposit Sports Budweiser commercial Banks could also issue the wrong notes so let's take one from the former's and Merchants National Bank of Los Angeles knows what it says he will pay to the bearer? The man $20 with $20. Announce that will be paid to you if you bring in for Redemption that piece of. People recognized it as what it was and it was clear what it was but it was written on on on on on the face of the note that it was a claim to go so let's talk about the connection between the gold standard and money and prices the one in redeeming $20 for gold out they were not as a monitress claim selling gold and wants Ellen go to her just fulfilling their contractual obligation of redeeming that claim to go there was no sale involved. Sell a claim against what its claim it. That's just. Illegal interaction in the world. Standard the money supply is strictly limited by gold mine or it was received more strictly by the on balance of payments for countries that don't mind gold you can only increase fank no thank notes and Bank deposits to the extent that gold flows into the bank's there's some wiggle room there they can change the reserve Reserve ratio by for the most part the money supply increases and contracts with flows of gold and this is rationalism better than Inn in Morton. Is that drive the trade of goods and services so the result was that since we had a tremendous economic growth would say it in the US after the Civil War we went from basically an agrarian Nation before the Civil War to the mightiest Industrial? In the world by World War 1 is tremendous amount of technological Improvement of saving and investment and the accumulation of new capital and so on and that caused the supplies of goods and services to increase year after year. Standard increase extremely slowly much lower than was the increase in supply of goods and services still there for the natural effect was for prices to fall I like why I call this on both deflation deflation that results from from growth you know we were told back in the in the 1960s and 70s when changing economic to driving high that inflation was always always accompany growth growth was inflationary but that's ridiculous is always recognized that that's going to. All the things equal deflationary. Mainstreaming. Directed I got today and that that's not a boy. I want I want to point out is that there's a natural market mechanism to keep prices from falling too much and some sense even in the growth deflation you'll see it here but prices began to rise right around the late 1890s and they rolls all the way up until 1913 but doesn't natural phenomenon because it resulted from the gold new discoveries in in in sources of gold and also new discoveries in how to extract gold from ore so we had an increase in in in in Gold production from year to year over those years and that go prices up again but that was. An accident we are where we found a source of gold and someone when you have a full and prices all prices for all including the capital goods that are used in mining extracting and exploring for gold so go because we're valuable as as as Dill prices for the volume goes up obviously cuz it's the other side of the coin and as a result that's that that lowers the cost of producing gold exploring for gold increases the probability to go mining.



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