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Comment by vezzy-fnord | Hacker News Reader

Fiduciary media is money. Money need not have inherent value for value is subjective and thus cannot be inherent beyond people's achievement of various ends.

The gold standard was turned off far earlier than 1971. In fact, all commodity money standards have suffered subversion or suspension by financial institutions (suspending convertibility of notes) and governments at various times. Nor was gold arrived at by the will of market forces. It was imposed through bank charter, displacing the then-dominant silver in the process. Nor was the international gold standard well designed, for R.G. Hawtrey and Gustav Cassel presciently anticipated its collapse and resulting great depression thereof.

Monetary reform is definitely in order, but commodity money has nothing to do with it. Convertibility requirements can be satisfied with interbank clearinghouses and other means.

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> Nor was gold arrived at by the will of market forces. It was imposed through bank charter

Haven't gold and silver been used as money for thousands of years?

Carl Menger's Origins of Money makes the argument that gold/silver naturally emerge as money through the barter system.

Precious metals best satisfy the characteristics of money:

- Durability - Portability - Divisibility - Uniformity - Limited supply - Acceptability

https://www.stlouisfed.org/education/economic-lowdown-podcas...

Menger provides an evolutionary theory of money's emergence and does devote a chapter to the precious metals, but historically all sorts of commodities have served as media of exchange in various circumstances.

The primary standards of international trade during the mercantilist and merchant capitalist eras were silver bullion coins like the Spanish dollar.

Formal gold specie standards arose during the 19th century by royal fiat and soon displaced other currencies.

It is likely that free currencies would settle on precious metal convertibility because of prior art, but there's no reason to presume it has to be gold in particular, or to single out gold as being "special".

It doesn't have to be gold of course, but in absence of "royal fiat" as you put it... gold has uniquely superior natural properties to most other candidates (rare, fungible, can be divided into extremely small quantities without destroying it, does not tarnish, limited industrial use).

Silver has most of these qualities however it is second only to crude oil in its industrial usefulness (best conductor of heat, best conductor of electricity, shiniest metal when polished, antimicrobial/antibacterial, whatever you call its property that makes it suitable for photography, etc).

Of course you are correct about the use of spanish dollars... this was the origin of the US dollar, which was originally specified as certain quantity of silver in the Coinage Act of 1792. In colonial times it was not uncommon to cut a Spanish dollar into eighths (like a pizza pie) to make change... this is why even today we call $.25 "two bits" and why until a few years ago stock prices were quoted to 1/8 precision. Ironically most markets are electronic now and there are (coincidentally?) 8 "bits" to a byte to so maybe we never should have changed that at all ;)

> The primary standards of international trade during the mercantilist and merchant capitalist eras were silver bullion coins like the Spanish dollar.

Fine, but that doesn't answer jwallaceparker's point, which was that gold and silver had been used for money for thousands of years. And weren't ancient Greek coins electrum (gold/silver)?

> Formal gold specie standards arose during the 19th century by royal fiat and soon displaced other currencies.

Fine, but weren't gold and silver used as coin long before that (even if not by formal royal fiat)?

I don't deny any of that. My objection was to the GP's initial singling out of gold. I'm also skeptical of how constraining a commodity requirement is in light of modern financial institutions and public finance.

> I'm also skeptical of how constraining a commodity requirement is in light of modern financial institutions and public finance.

I also am skeptical of that. I think that, since 1975 or so when the value of gold was allowed to float, the Fed has kept the value of the dollar more stable than the value of gold (or silver). And "in light of modern financial institutions and public finance", it's pretty important to hold the value of the unit of account more or less constant...

I would add that currency needs to be convenient, as well.

There's no way that I'm going to lug around a block of gold, a scale, and snips when I have a credit card.

Currencies can be redeemable. Until 1968 if you held US dollars you could take them to the treasury and trade them for silver coins (or bullion, post 1934). That gives you the benefits of precious metals without the hassle.

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