What would be an alternative to use as a standard? If gold is too volatile and our current “magic wand”standard is a sham, what vehicle could we use to place value on our money? It’s an interesting subject, I am not trying to be a smart ass.
I believe Fiat money backed by a large government such as the US, is the best there is.
You could use literally any commodity from sea shells to shiny metal or dull metal, but the underlying value is subject to inflation or deflation according to the laws and supply and demand. And supply can vary from over production to shortages if you can’t produce enough.
The official value is still the government’s word and the people’s faith in that.
Bottom line fiat currency is more manageable by a central bank and a government and provides for less economic disruption than does any commodity backed currency.
And the truth is, the moment you allow debt or loans of any type, then Congress can borrow way beyond it’s means and promise your children will pay it back in gold or platinum or oil or sea shells or whatever commodity you chose. So fiat money is actually far less dangerous.
With fiat currency, you can literally unprint money the same way you created it in the first place. It’s just that deflation tends to cause depressions as people start hoarding money, thinking it will go up in buying power. Mild inflation is actually good for the economy, because it’s a disincentive to hoarding cash and an incentive to invest to get a return greater than the inflation rate.