So say we go back to a precious metal standard...

[Pianist4Freedom]

And say our productivity outstrips the mining of that precious metal. Eventually, smaller and smaller denominations of specie will have to be used as currency, in order for more people to have access to it, right?

Like say there was 1 massive silver coin in the world. If there are 2 people in the world, and they want to trade, they'd have to denominate their currency as half of that 1 massive silver coin. Multiply this by the millions, and eventually you will have individuals holding currency notes that are backed by a speck of dust of precious metal. At what point does that tiny speck of precious metal feel "less real" and solid to the owner?

See what I'm getting at?

Also, what if absolutely everyone in the country right now tried to buy silver or gold. What would happen? The price would become astronomically high very quickly wouldn't it? A lot of people wouldn't be able to obtain silver or gold. Unless a private currency company came in and denominated pieces of gold or silver in tiny affordable chunks. Speck of dust again. Speck of very expensive dust. Come to think of it...diamonds are still expensive even when tiny. Maybe that isn't an issue. ...

 

[Dark Aerow]

This is why you use gold, silver and if neccesary other precious metals in the distant future. You aren't restricted to only gold.

 

[WilliamC]

Gold, silver, copper, nickel, iron.

We aren't at risk of running out of metals if that's what were used to back the value of money.

And besides, there's plenty more to be mined both on Earth....and off.

 

[Pianist4Freedom]

Excellent point. I guess the bottom line is: government can't control how much metal is in the ground, thus having a precious metal monetary standard will restrain their ability to finance wasteful programs/wars, etc.

 

[Dark Aerow]

I'd just like to add that we could easily use only gold and silver with our current economy.

 

[Pianist4Freedom]

We'd have to re-denominate our currency though wouldn't we? I mean, from what I hear the amount of gold out there right now is far below the amount of dollars. So we'd have to define a new currency based on gold for that to work I would think.

 

[Acala]

Change the currency

I think optimally, you abandon "denominated" currencies, since they lead to debasement, and stick to actual amounts of metals so the currency becomes a gram of gold or an ounce of silver or an ounce of copper - whatever the market chooses.

 

[Pianist4Freedom]

That's an interesting idea. I wonder how easy it would be for people to detect if their coins were pure silver/gold etc.?

 

[Dr.3D]

That's an interesting idea. I wonder how easy it would be for people to detect if their coins were pure silver/gold etc.?

That is why the Constitution gave authority to Congress to coin money.
The coined money would be specific in what is was worth.
Anybody who coined money looking like what Congress had authorized would be breaking the law.

 

[Acala]

It depends

Gold is difficult to counterfeit because it is so dense there is nothing that can be substituted that can pass a simple specific gravity test. Silver I think is easier to counterfeit.

The major protection against counterfeiting is the reputation of the minter and the complexity of the art on the coin that makes it difficult to duplicate.

Additionally, it is likely that warehouse receipts - like those issued by the Liberty Dollar people - will be used as well. And they can be made counterfeit-resistant.

 

[fx57]

Gold is mined at about the same rate as the population grows. I don't know if that is a coincidence or an effect of supply and demand, but it keeps gold value pretty consistent over time.

Total existing gold averages out to about 3/4 ounce per person worldwide. So when fiat money is gone if you have more than 3/4 ounce of gold you'll have more money than the average person does. Makes gold seem pretty cheap right now, doesn't it?

 

[roguepatriot]

Gold, Silver, Platinum, Palladium

Having an ounce of gold buy so much because we have so much prosperity, is a problem we would be lucky to have.

 

[AceNZ]

And say our productivity outstrips the mining of that precious metal.

On a gold standard, how much new metal is mined has no relation to productivity or economic growth. New money is not required to grow the economy.

Eventually, smaller and smaller denominations of specie will have to be used as currency, in order for more people to have access to it, right?

Yes. As time goes on, the natural progression in a healthy economy on a gold standard is that prices would decline.

Multiply this by the millions, and eventually you will have individuals holding currency notes that are backed by a speck of dust of precious metal. At what point does that tiny speck of precious metal feel "less real" and solid to the owner?

See what I'm getting at?

But the "speck" could be alloyed with a less expensive metal, like copper. There's no need for all currency to be 100% gold on a gold standard. Or maybe paper would be used for small denominations, and gold for larger ones -- the inverse of the way it is today.

Speck of very expensive dust. Come to think of it...diamonds are still expensive even when tiny. Maybe that isn't an issue. ...

Exactly. It's not an issue.