Because each currency is pegged to a fixed quantity of gold, triangular arbitrage fixes all bilateral exchange rates between gold-standard currencies; maintaining that peg requires adjusting domestic monetary policy, so a country cannot run an independent monetary policy without violating the standard or triggering gold flows.
causalpending
Speaker
Douglas IrwinEvidence Quote
“by sort of triangular arbitrage it implies something about the the price of pounds in terms of the price of dollars”
Created: 6/15/2026, 9:36:56 AM
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