Macro Musings with David Beckworth Kris Mitchener on What Actually Anchors the Price Level
Apr 13, 2026
Kris Mitchener, a Santa Clara University economist and monetary historian who studies bimetallism, the gold standard, and central bank balance sheets. He recounts digging through archives and explains how bimetallism worked and why gold prevailed. He explores what anchors the price level, the politics behind monetary rules, and how central bank losses and credibility shape policy.
AI Snips
Chapters
Transcript
Episode notes
How Gold Won Through Accidents And Network Effects
- The 19th century shift to the gold standard happened partly by accident (e.g., Newton's mint ratio) and then by network effects as Britain pulled trade partners onto gold.
- Gold's simplicity (one anchor) better supported expanding global trade and finance than dual-metal systems.
Gold Membership Was A Credibility Signal For Borrowing
- Joining gold also signaled fiscal and monetary probity: core countries earned a 'good housekeeping' seal and lower borrowing costs.
- That credibility depended on political capacity to undertake painful macro adjustments to maintain gold parity.
Gold Worked Only With The Right Political Weights
- The gold standard's stability depended on a trade-off in the trilemma: pegged rates plus capital mobility meant sacrificing independent monetary policy.
- With limited political franchise, policymakers could prioritize external balance and price stability; wider democracies changed that weight.