On September 19, 1931, the UK left the gold exchange standard. There is a wonderful little video below of Keynes taking about that event.
Ludwig von Mises, one of the leading Austrian economists of that era, made a prediction about what would happen, and this story is told by Mark Skousen:
“In September 1931, Ursula Hicks (wife of John Hicks) was attending Mises’ seminar in Vienna when England suddenly announced it was going off the gold exchange standard. Mises predicted the British pound would be worthless within a week, which never happened. Thereafter, Mises always expressed deep skepticism about the ability of economists to forecast.” (Skousen 2009: 286, n. 2).I am not surprised that Skousen relegates this embarrassing story to a footnote. So much for Mises’s great predictive powers.
Keynes, by contrast, was correct in predicting that British trade would benefit from abandoning the gold exchange standard and from the currency depreciation that resulted. He was also correct in opposing the gold standard fanatics like Mises who predicted the collapse of the value of the pound. In our era, the Austrians have been predicting hyperinflation, but they are as contemptibly and stupidly wrong as Mises was in 1931.
Skousen, M. 2009. The Making of Modern Economics: The Lives and Ideas of the Great Thinkers (2nd edn.), M.E. Sharpe, Armonk, N.Y.