The gold standard: break the loop

Classical period, 1871–1914 · an interactive corrective to the textbook

The textbook draws the classical gold standard as a machine that corrects itself: a deficit drains gold, money contracts, prices fall, trade rebalances. Below is that loop. But the central banks that ran it had a toolkit for defeating each step. Switch on a device and watch the assumption it broke.

Click each card. Every one severs a specific link in David Hume's price–specie-flow mechanism.

BoP deficit Gold outflow Money supply contracts Prices fall Trade rebalances self-correcting: the loop closes on its own
The tidy story. With every device off, the loop runs as Hume described — an automatic, self-correcting mechanism. Now start switching them on.
0 of 4 assumptions broken

Built for classroom use. Sources: Bloomfield (1959); Bordo & MacDonald (1997); Bazot, Bordo & Monnet (2016); Eichengreen, Golden Fetters (1992).