Because the nominal price of gold is fixed under the standard, an abundance of gold cannot lower gold's price directly; instead the relative price of gold falls by raising the prices of all other goods (inflation), as the excess gold flows into central bank reserves when people exchange it for transaction-usable paper currency.

causalpending

Speaker

Douglas Irwin

Evidence Quote

the way that you get a fall in the relative price of gold is the price of other goods has to go up, and that's inflation

Source

Douglas Irwin on the Great Depression and the Gold Standard 10/11/2010EconTalk
Created: 6/15/2026, 9:36:56 AM

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