In the late twentieth century, however, fiat currency regimes have replaced the rigid automaticity of the gold standard in its heyday. More elastic currencies and markets, arguably, are now less sensitive to and, hence, slower to contain the misallocation of capital.
So we have to recognize the links and interactions between the two, which may at times be reinforcing and at times be conflicting. In this balance, “time-dimension” is important. We know whether the balance is right or wrong only ex-post.