When Hamilton made the dollar exchangeable for gold there was not another currency for which even dollars were a limited exchangeable backing.
Today, most “money” is in fact outright debt. Remember M3? abandoned because it gave the scary truth of how over-leveraged our money supply is? For every paper dollar, there are 15-20 claims on that dollar. The cash in your bank account isn’t currency, it’s debt; the money you pay your taxes with isn’t currency (save for a few people, I stopped paying taxes in cash ~10 years ago), it’s debt; that $75 tank of gas you filled up this morning wasn’t paid with currency (safe bet on my part), it’s debt; etc.
Our debt-driven virtual-currency society uses cash - physical cash - as the “reserve”, for which the popular “currency” can be exchanged for. Assuming a generous 10-to-1 ratio for byte-bucks to greenbacks, and assuming a return to the gold-backed dollar at a similar 10-to-1 greenback to gold ratio, you’re looking at a hundred-to-one ratio of practical plastic dollars to real gold exchange. Should a mere 1% of our financial society decide to exchange the ethereal numbers in their bank account webpage for real money - and I think you can see the preference of saving real currency-backing gold over a couple bytes on a cloud computer - ALL that gold in Fort Knox disappears.
Good money: durable, verifiable, physical gold.
Bad money: a promise by a machine, displayed on a glowing screen.
“it does require the ability to exchange dollars for gold at a fixed price upon demand.” Bingo. 150,000 people - that’s 0.05% of the population - demand $10,000 in gold, and it’s all gone before the dollar is “quickly bid up to par with gold”.
“When Hamilton made the dollar exchangeable for gold there was not another currency for which even dollars were a limited exchangeable backing.”
I can’t decipher what you mean by that. The money then circulating in America consisted of Spanish pieces of eight, British pounds, shillings and pence, and paper issues of each of the 13 colonies plus the Continental dollar.
“Today, most “money” is in fact outright debt.”
That’s hardly new. Welcome to the world of banking. The majority of the money supply except for the monetary base has always been based on debt. Prior to 1913 American banks issued their own private currency which circulated alongside Treasury issues. During the National Bank era that ran from 1863 to 1913 banks were required to back up their currency issue with Treasury debt.
“The cash in your bank account isn’t currency, it’s debt; the money you pay your taxes with isn’t currency (save for a few people, I stopped paying taxes in cash ~10 years ago), it’s debt; that $75 tank of gas you filled up this morning wasn’t paid with currency (safe bet on my part), it’s debt; etc.”
Whoever told you that is confused. We have been using a fiat currency since the days of LBJ and Nixon, when the last links to silver and gold were removed. The Fed adjusts the level of the monetary base by buying and selling Treasuries but that doesn’t make the currency we use “debt”.
“Should a mere 1% of our financial society decide to exchange the ethereal numbers in their bank account webpage for real money - and I think you can see the preference of saving real currency-backing gold over a couple bytes on a cloud computer - ALL that gold in Fort Knox disappears.”
The amount of gold backing the American dollar in 1970 when Bretton Woods was still in effect was half of one percent.