Quote:
Originally Posted by two drink minimum
Ah, so those who want to use gold to buy low-priced items will have to mold tiny coins, which then every seller will have to analyze to ensure the coin's authenticity.
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Pennies are made out of copper. Nickels out of nickel-copper alloys. We had silver dollars for a long time. This wasn't a problem. We even had mixed monies for quite a while. Even now we use different currencies between countries. We used to have gold clauses in contracts for big "dollar" stuff. We've had private minting at various times, and places. Why did it end? Because of fraud? No, because governments stomped them out of existence by law because to control money itself via the state is to control
everything. Period. I'm also not saying you would have to use the commodity itself, but, as it was originally, the paper could be effectively a redeemable wherehouse receipt. See silver certificate vs. reserve note. Simply there is no reason that a single paper fiat currency must be the medium of exchange. Well, not in a free country anyway. In a place where the state seeks control over individual life, then absolutely it's a requirement.
Just like anything, products, in this case money itself, gains credibility over time. Certainly the government could be involved in minting, as it was and is. Maybe it'll win out as the preferred medium of exchange. Maybe everyone will generally agree to make transactions in X. Our Dollar comes from the Bohemian Thaler. It was basically a private money that was prized for its quality and consistency and was used throughout Europe.
The reason the government controls and demands the use of only its money within a geographic area isn't some well intentioned plan to reduce "confusion and chaos", but simply that it makes it much easier for them to control all other aspects of economic life. High on that list is the link to a central bank and the ability to inflate money supplies to do neat things like build-up war machines. Damn hard when the government doesn't control money.