I don’t think a metallic currency is a very good idea – you can read some reasons why not here – but if we are to have one, why gold? A dime-sized coin made of pure gold would be worth about $91; a gold dollar coin would have to be something you would have to handle with tweezers. But a silver dime-sized coin would be worth about $1.40 – that’s more manageable. Alloy it a bit to reduce the silver content/value, and we could have quarters and dimes just large enough to handle with fingers.
Isn’t the idea that the currency is backed by gold? Not that the currency actually is gold.
Historically gold advocates were more established/conservative and silver advocates more progressive. Thus the debate over bimetallism in the William Jennings Bryan days.
In the modern era silver has had some pretty major price collapses all in recent memory and gold had been going up for years before the gold bug stuff reached a pop culture critical mass (and actually silver prices have lost like 50% since their peaking in 2011.) That’s mostly why I doubt silver gets as much attention.
That’s the version held by those whose chief concern is to prevent inflation, I imagine. But, some libertarians seem to hold to a more extreme version that would have no currency but gold coins, and possibly notes, but issued by private banks, not government. Getting government out of the currency business is the main point; libertarians do not trust government with the power to manipulate the value of currency, they want a currency with an independent, “natural” value, the market-value of the metal the coin contains.
Well, that was a different matter, inflation was the whole point of the Free Silver movement – they wanted unlimited silver coinage, leading to inflation – bad for creditors (bankers), good for debtors (farmers) – a class-based agenda, it was. (Also, of course, very good for the owners of silver mines, which is why the movement was so popular out West.)
Of course, “natural” does not necessarily mean “stable.” A bimetallic standard is unstable because the relative prices of gold and silver are always fluctuating. You’d have to check the prices before deciding whether to spend your gold-dollars or your silver-dollars today. But even in a monometallic standard, the price of the metal used will always be fluctuating, causing inflation/deflation even if the supply of coins in circulation remains stable.
For the purposes of backing a currency, we wouldn’t have to limit the field to precious metals, would we? Just one that’s of value but not enough that we’re actively using it all up.
A related thread: Gold standard driving out silver standard
If Britain and the United States had had a silver-only standard, I believe the Great Depression might not have happened, or at least been much less severe.
That’s why I invested all of my money in tulip bulbs last Fall. In a few weeks they’ll point their pretty heads to the sky AND start creating new tulip bulbs. By October I will be in Fat City!
Right up until the point where the deer start treating your bulbs like a bitcoin depository with a leaky firewall.
Hm. The market value of a coin or anything else is subjective. There is no “natural” value. Libertarians like gold for money for two main reasons. 1) it was the chosen money on the market before governments monopolized the creation of money. For this reason, they believe it would be the chosen money on the market after government is restrained or eliminated 2) it prevents the government from actively manipulating the money supply, and shifting resources to its mischievous endeavors. In order to do so they would need to call in coins to be clipped and redistributed.
OK, but how does any of that not apply to silver?
And, how is government “shifting resources to it mischievous endeavors” by manipulating the money supply? And why would it? If government wants to shift resources, it raises taxes.
In the U.S., $1 gold pieces were minted from 1849 (following the Gold Rush) to 1889. Their diameters were 13-15 mm. I have a few, and yes, they’re tiny. But a “dollar” in 1849 terms is quite different than a 2014 dollar.
It might be as simple as the fact that silver tarnishes (corrodes) and gold doesn’t. Not only SHINEY! But it also makes it easier to crudely verify the material. Also you are constantly losing a little silver to the tarnish-polish cycle.
Good idea. I put all mine in ZWDs and now my fortune is Gono. I hate these fiat currencies.
I think you are making a dual proposal here:
- Return to a representative currency
- Choose silver as the metal
A return to a representative currency is not feasible–at least for the US–rendering your second question moot.
I’ve staked my fortune on a Spoo Ranch.
Hey goldcrustaceans! Need a new currency? Why not Zoidberg?
While you could accept any old piece of gold or silver in barter, you were likely to be cheated because it was fairly easy to put a thin veneer of pure metal over a core of dross. Coinage was originally intended to be a government-certified stamp of weight and purity- at least until the government turned to debasing it’s coins in times of financial stress. It was fairly easy to mint debased coins that at least initially wouldn’t be detected, so coinage is hardly immune to government manipulation, especially if you have a bimetallic system where the government can hoard or dump one or other metal.
The only solutions would be either a quick easy way for anyone to verify the specie content of coins; an information system rapid and reliable enough to quickly discredit fraudsters; or an issuer free of conflicts of interest, that had an institutional interest in maintaining a flawless reputation*
*which oddly enough was the rationale for the established of the oft-reviled Federal Reserve.