This is precisely what Britain did, as it led the way, at the Genoa Conference of 1922, in creating a new international monetary order, the gold-exchange standard
. Mises had explained this need for policy coordination in a similar way:
But if we see that the gold-exchange standard
is not, in the currency world of to-day, anomalous, and that it is the main stream of currency evolution, we shall have a wider experience on which to draw in criticizing it, and may be in a better position to judge of its details wisely [...].
Opponents like O'Brien in The Atlantic compare CPI during the interwar gold-exchange standard
(1919-33) with monetary easing under Bernanke (2008-12), concluding there has been more price stability in the latter period.
Here the question was whether the problem was a global gold shortage as suggested by Robert Mundell or the intrinsic fragility of a gold-exchange standard
as Robert Triffin had argued.
Also, in their historical analyses they not only point out the generally recognized shortcomings of the both versions of the gold-exchange standard
(the 1930s and the Bretton Woods version), but they also tend to argue that countries were better off without an international monetary standard.
Even though Temin notes that "the gold standard" he discusses was a modified "gold-exchange standard
," his principles for a genuine gold standard are grossly incomplete.
Indian Currency and Finance [Keynes, 1913] explored the working of the gold-exchange standard
and the need for a reserve bank to manage India's participation in it; The Economic Consequences of the Peace [Keynes, 1919] argued that the transfer problem made the reparations clauses of the Versailles Peace Treaty unworkable; A Tract on Monetary Reform [Keynes, 1923] exposed the social costs of hyperinflation, discussed inflation as a tax on holding money and government bonds, and analyzed covered interest arbitrage in the forward market for foreign exchange in the resulting world of floating exchange rates [Dimand, 1988]; and The Economic Consequences of Mr.
Under the gold-exchange standard
that governed international finance prior to August 1971, a shift out of dollars would have led to a transfer of U.S.
Unless fixed exchange rates have solid backing (such as gold under the late gold-exchange standard
, US dollar reserves for the Hong Kong dollar, or the French treasury in the case of the CFA franc), they won't bring any comfort to foreign investors -- on the contrary.
In this introduction, Harold James traces the banking crises to the deflationary policies necessitated by the gold-exchange standard
through their effects on the profitability of client firms.
Even a return to the Bretton Woods gold-exchange standard
doesn't look feasible at this point, partly because of its historic failure to instill discipline.