Losing gold under the gold standard could cause a serious financial shock without exhausting a country's remaining reserves. That distinction underpins the rejection of the claim that the 1857 crisis destroyed the American economy. The same reasoning is applied to claims that Britain declared bankruptcy during the Great Depression. The argument distinguishes financial distress from a declaration of bankruptcy, while allowing that successive shocks can progressively weaken an economy.
Notable Point · 2:21:55-2:23:45
Financial panic, gold reserves, and economic destruction
A follow-up distinguishes the effects of a gold loss or financial panic from national bankruptcy and lasting economic destruction.