Under the gold standard, the balance of price, interest rate, credit, finance and trade can basically be self-regulated. In that case, why abandon the gold standard?

1, the fundamental reason is the contradiction between the rapid growth of a large amount of money demand and the slow growth of gold mining and supply. The gold standard system is indeed an ideal exchange rate system, but the stock of gold is limited, and the annual supply increment is also limited. However, the rapid development of economy needs a large amount of money increase. Too little gold means insufficient money supply, which is easy to lead to deflation and is not conducive to economic development. So countries began to issue bank notes with less and less gold content, and the exchange rate system gradually became the gold exchange standard or the gold bar standard, so that paper money was directly selected later, and the gold standard system existed in name only.

2. Historical reasons: During World War I and World War II, the United States made a lot of war money, and the traditional European powers became American debtors. All the gold in their hands went to America. At that time, 70% of the gold in the world was in the treasury of the United States, which was the most powerful country in the economy at that time. If we continue to implement the gold standard, it is impossible to trade, because trade needs real gold. European countries have no gold and no currency at all, so they can't conduct world trade. In this case, we can only change the exchange rate system and decouple the currency from gold. The United States was the most powerful country at that time, and it established the Bretton Woods exchange rate system with the US dollar as the core.

3. The exchange rate mechanism of the gold standard makes it impossible for China to implement an independent monetary policy, which is incompatible with the idea that countries generally adopt Keynesianism and use monetary and fiscal policies to improve the domestic economy after the war, so the gold standard is naturally abandoned by governments all over the world.