Money is an idea supported by confidence. The reason gold, at one time, was the ultimate repository of confidence is that it was hard to adulterate and you couldn't mess with it.

Money is still an idea backed by confidence, now that the gold window has long since closed.

Humans will work for money to the degree they have confidence that it will pay for other work and things.

Gold-basing the economy would certainly stabilize confidence, but it would be illiquid and hard to dampen up and down. It would make the flows of credit now so popular between banks and government very tricky to manage. Not that that would be bad in some respects but it would undermine the broad middle class growth of the last fifty years.


A