You cannot have a modern economy subject to the supply and demand of one or two commodities, gold and silver. New mining strikes and runs on the treasury created many many extreme booms and panics irrespective of anything else going on in the economy at a time when accounting methods, regulation and communication required a hard asset as a medium of exchange. And over time such things are inevitably dissipated. Modern banking, accounting and communication have made the need for keeping accounts in hard assets unnecessary and cumbersome by comparison.
Why should a country's people's fortunes be entirely dependent on how much of two essentially useless metals (in pre-modern days) were in the ground? Today, those metals find industrial applications that further dissipate them and make them more valuable to hi-tech uses than as something to wear smooth jangling in your pocket and being passed hand to hand to hand! Fiat paper and computer transactions are much more suitable to such use and abuse.
The value of fiat money is based on the authority and management of the issuer weighed against ALL THE ASSETS in the economy. Its weakness is in the potential mismanagement of its value. But the weakness of gold and silver is that it bears no relation over time to the productive capacity of the rest of the economy whose liquidity it holds hostage to the vagueries of mining, dispersion and hoarding. It worked well only during intervals when mining was steady and the supply of it happened by accident to match the economy's liquidity needs. Fiat money on the other hand does not depend on mines, is replaceable and which hoarding can be counteracted by additional liquidity from the central bank.
Gold and silver remains useful as a currency only of last resort. If the central bank gets it wrong, by deliberate policy or error, gold and silver can be useful until democratic and economic action forces a return to sound policy.
American fiat currency and, indirectly, that of Europe are in fact backed by two metals. No longer useful gold and silver have been replaced by uranium and plutonium. These two metals (as well as a few pounds of tritium) guarantee the stability of the institutions which issue fiat currency so that they will be around and respected in their management of these media of exchange.
But I'll comment. The thing about the modern economy, perhaps I concede there should be sophisticated mechanisms of credit between private entities that allow the flexability ours allows.
But why must the currency itself be debt based? A debt based currency is forced on us by our government. The islands of Gurnsey and Jersey ran a debt free system of money that was very successful. The government would print money, use it to pay for a legitimate public work project (not a damn bridge that goes nowhere) and that money would circulate debt free in the islands, and was receivable for taxes. It worked. I'm not against something like that. Further, to be only for gold and silver coins is a mercantile mentality that I don't necessarily endorse. I just want equity, and a preservation of this Republic.
We labor under a deficit, a national debt, the IRS, none of which the people like very much, why?
Visit Bermuda sometime, it is beautiful, and there is no IRS, no income tax, little if any debt.
Finally, "Gold and silver remains useful as a currency only of last resort," yes. Thank you for saying that. Gold and silver is where everyone runs when the inherent flaws of our modern money system show themselves and people are afraid where they are invested is not safe as when they bought in. What we might be able to agree on is that fiduciary monies allow beneficial modern economic phenomenon to occur which wouldn't occur with gold and silver, but also contain risks that gold and silver don't have. People will, just like a child testing the world, building confidence as he grows, take ever greater risks with debt and explore more exotic types of doing business, i.e., credit derivatives, and still, like a child, who gets to far from mom and dad, gets scared when a crisis develops, and goes running back to silver and gold. It is a cycle.