“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.
“I can’t decipher what you mean by that.”
I mean the real “currency” now is not the dollar, to wit paper presidential portrait, it is the credit card. The idea of “plastic money”, indulging an instant loan for a trivial amount, is quite new. (Not to be confused with classic loans, for which one would apply and put up collateral for. I remember the advent of the Visa as some kind of breakthrough, and the shock of paying for fries at McDonalds with one. It’s new.) I mean the paper hard-currency dollar _is_ the backing for our new plastic/virtual currency, and there are a limited quantity of real dollars backing it.
The 2008 financial crisis, for which some very high powered bank executives were basically told “come here, shut up, and do what you’re told” resulting in $1-2T in instant loans (under Bush to boot), staved off a run on real currency which would have hit a financial stalemate and caused financial meltdown once all the M1 money was exhausted - which it would have within days.
Point? The dollar is, in fact, the backing standard value-holder for a new currency - and that arrangement very nearly collapsed this country. Putting the dollar itself on a gold standard (which, BTW, I advocate save only for not seeing where we’ll get enough of the stuff) will face the same problems.
“The amount of gold backing the American dollar in 1970 when Bretton Woods was still in effect was half of one percent.”
Yup. Our current insanity of plastic/virtual debt-based money has the same problem - and darned near had a catastrophic Chernobyl-level meltdown just 2.5 years ago. An argument may be made that Nixon pulling us off the gold standard was done for the same reason as the trillion-plus-dollar “bailout”: there just wasn’t enough in that equation to balance things, so when it went out of whack something had to give.
“The Fed adjusts the level of the monetary base by buying and selling Treasuries but that doesn’t make the currency we use “debt”.”
Baloney. The Fed takes a $0 balance sheet, and pulls a stunt modeled after particle physics: $0 = $1T cash + -$1T debt, issues $1T in bonds for which $1T is borrowed, voila the feds have another trillion to spend. After a time, the two are put back together, and the money & debt vanish. Meanwhile, the Mint pounds out a paltry fraction of that (which is still an impressive amount) in raw fiat money to facilitate the transfers of that debt currency.
I realize there will be an imbalance between the backing value and the certificates representing it (though there shouldn’t be). I also realize that we’ve layered a new currency upon the “dollar” as backing. I also realize that unless these are fair 1:1 ratios, or near enough as to make no practical difference, we risk a “run” on the backing value, which is why we had the ‘08 national financial crisis, and why Nixon took us off the gold standard.
Enough of us (say, around 150,000) know this problem well enough that to return to a gold standard would compel us to exchange a moderate amount (say, averaging $10,000 each) of our existing dollars for the new exchangeable gold - pulling what is now $1,500,000,000 of shiny yellow stuff out of Fort Knox, leaving none left. Well, assuming there is any there (ya know, wouldn’t be surprised if exactly that “run on gold” happened just before, when was it, 1973? someone knew what was about to happen, and you think they didn’t compel a very large withdraw?).