Under the gold standard, gold flows reduce the money supply in one nation when another nation experiences a trade surplus.
The nation with a trade surplus has a swell in the money supply, which leads to price increases. At the same time, the nation
with a reduction in the money supply will cause prices to fall. The lower prices create more demand for product from the nation
with a reduction in the money supply, which leads to a
Ofloating exchange rate.
Otragedy of the commons.
Obalance-of-trade.
Ofacilitating payment.
O planned economy.