If one country prints more money than gold rules permit, inflation prices out its exports and cheapens imports, creating a trade deficit that (absent capital flows) must be financed by gold outflows, which then forces the central bank to slow money growth and raise rates—David Hume's price-specie-flow mechanism returning the system to equilibrium.

causalpending

Speaker

Douglas Irwin

Evidence Quote

the only way the country can finance that in the absence of capital flows is by gold flows. So... the gold will begin to leave that country

Source

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

My Notes

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