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The "Gold Exchange Standard"- what does it mean?

I am reading Rothbard's book on "What has Government done to our Money" and I have a question regarding section IV on The Monetary Breakdown of the West. In phase III of this section Rothbard talks about the Gold Exchange Standard in Britain and the US. Can someone help me understand why Britain had to deflate their money supple to get back to a gold standard after world war I? I'm not sure I understand this section. Thanks.

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Glad to help

You asked why Great Britain HAD to deflate their money supply to get back to the gold standard. They didn’t HAVE TOO, but WANTED TOO. They wanted to return to exporting their inflation. What they were trying to do was bring back a gold parity with the dollar. I believe it was somewhere 4.65 pounds per dollar, I do not know where the market price of the pound per dollar was at the time. That’s what Rothbard is talking about. There were too many pounds per dollar in the market place. What he is explaining is a Gold Exchange Standard. This is where the central banks exchange gold at a set rate between counties. When a country runs a trade surplus they drain gold from the country they are running that surplus with…….and when a country run a trade deficit they are losing gold to the country that they are running that deficit with. It should be a zero sum game, between just those two countries in this example.

It like a cash flow statement for a company

Cash beginning of the quarter
Change in Debit/ Credit
Cash end of quarter

It looks like this.

Current account deficit/ surplus
Capital Account surplus/ deficit
Zero out a change in the gold reserve or now Special Drawing Rights (issued by IMF)

On the local level, I think what you want to know more about is a Gold Standard in the banking system. This is where we must end the cartel of the Federal Reserve and return what Rothbard calls the “FREE BANKING SYSTEM”. This is where a bank is run like any other corporation, without public backing. An example would be where a bank has their capital and based on that capital they determine what amount of loans should be made on that capital. This bank would issue money (we will call them dollars). If they issue too many dollars based their capital, the market place would depreciate their currency or dollars until they brought it back in to a balance. You risk more bank runs, but with the internet it would be easy to keep an eye on your own money.

Look if I have confused you further, get a copy of Murray Rothbard’s “The History of Banking and Money” From the Colonial Times to World War Two.

You will be amazed at the trip you are about to take……it will change the way you look at EVERYTHING. Read it at you own demise……it’s a RED PILL kind of moment!

Also, how does the gold

Also, how does the gold exchange standard work?