Summary: This article analyses the working of the gold standard, pointing out the inconsistencies of the traditional view, based on Hume’s specie flow-price mechanism, which ignores Adam Smith’s “law of reflux”, and the properties of a commodity-money regime. Avoiding the aprioristic and excessively stylized character of the majority of analyses, it discusses the adjustment mechanisms based on real economic history, which makes the issue more understandable as well as more concrete and less disconnected from reality, which is difficult to explain from an orthodox perspective, as recognized by many authors.
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