The Price-specie-Flow Mechanism (1) The theory was recognized by the david Hume, the Scottish philosopher, in 1752 e Suppose that Britain's current account surplus is greater than its non-reserve capital account deficit. The balance must be matched by flows of gold into Britain These gold flows automatically reduce foreign money supplies and swell Britains money supply, pushing foreign prices downward and British price upward.The Price-Specie-Flow Mechanism (1) The theory was recognized by the David Hume, the Scottish philosopher, in 1752. Suppose that Britain’s current account surplus is greater than its non-reserve capital account deficit. The balance must be matched by flows of gold into Britain. These gold flows automatically reduce foreign money supplies and swell Britain’s money supply, pushing foreign prices downward and British price upward