It makes a great deal of sense, Bobert, because gold and silver are real and their amount (in government reserves) can therefore be estabished and confirmed...and if dollars are tied to specific amounts of gold and silver (example: gold was for a very long time worth $24 per ounce)...then you cannot artificially enlarge the money supply beyond all reason just by saying it's there (which it isn't).

To not tie dollars to something real and tangible is to turn the money supply into a giant pyramid scheme, and that's exactly what has been done.

Pyramid schemes always collapse at some point, because they are not based on reality.

Let me explain this another way: a piece of paper money is a receipt. It's worth nothing in itself, it's a receipt given on behalf of something that is worth something that backs it up. The way paper money began was that the goldsmith's were storing people's gold and silver coins in protected vaults with armed guards on duty. People would come to take out some of their coins when they needed to do some spending...but bags of coins are heavy and burdensome to carry around...so the goldsmiths starting offering pieces of paper as loans, certificates that supposedly symbolized some of the gold the person had on deposit in the vault, and you could use those certificates to purchase things in lieu of the real gold. The goldsmiths charged a fee storing your money and they charged interest when lending...so if they could lend out 10 times the money they really had on deposit, THINK of what that means in profits to the goldsmith! It exponentially increases the overall money supply and stimulates business and trade, and all the goldsmiths benefit as the many loans get deposited here and there to various goldsmiths.

They soon discovered that it was safe enough to lend out one hell of a lot more certificates than they really had gold to back them up with, because there was little danger of ALL the depositors arriving en masse one day and demanding their gold.

This made the goldsmiths very rich, and it was the beginning of phony paper money, created in vast amounts (through lending paper certificates) with only a fraction of the stated value in real money to back up the many loans.

On the rare occasions when the depositors did panic and descend on a particular goldsmith and demand all their gold and silver back...and discovered that most of it wasn't there (because most of it had been created out of thin air by lending), there was a riot, and the enraged people sometimes ended up hanging the goldsmith or burning him at the stake.

Ah...those were the times for direct social action, weren't they? ;-)