If prices rise, the government must increase taxes to take money out of circulation. If prices fall, the government must spend more to put the money back into circulation. To be successful, the government must always have spare gold in its coffers. If gold flows out of the country, the government may run out of gold to mint during a downturn in the economy. With the introduction of financial instruments, the government is no longer dependent on a real asset for the money supply.
Monetary policy is divorced from fiscal policy.
The monetary authority can now use monetary policy to control money supply and interest rates and the fiscal authority can use fiscal policies to control velocity. The government may also use debt management policies and oversight regulations. The value of money is its purchasing power. If prices rise, the value of money falls. Extreme price increases reduce the utility of accepting and holding money balances and initially increase velocity.