Gold exchange standards reduce gold demand but deepen deflationary pressures.

Evidence

Hawtrey did not endorse a pure gold standard; rather, he proposed a gold exchange standard that would allow central banks to hold a limited amount of reserves in goldrelated currencies as fully equivalent to gold, thus economizing on the use of gold and reducing the excess demand for it, which would further increase the necessity of defl ation. — Clara E. Mattei, The Capital Order, 1689

Categorization

• XREF: connects to: Gold’s fixed supply gave the gold standard a built-in contractionary bias toward deflation — Mark Blyth, Austerity: The History of a Dangerous…, 493; Britain’s gold-standard return demanded prolonged deliberate deflation — Clara E. Mattei, The Capital Order: How Economists…, 995