[RobertoG]

During the gold standard the government promised a fixed quantity of gold in exchange for the money that they created.

Money was a liability like now. It's just that the associated promise was different. Gold was not money then more than it is now.

[tomp]

> Money was a liability like now. It's just that the associated promise was different.

Is there any promise associated with money now (except "you don't go to jail if you pay enough taxes in government's money")? If not, then I can't see money as a liability, only as an investment (i.e. the government prints money, sells it for other assets (FX, bonds, stocks, etc.).

[RobertoG]

You can only pay yours debts with the government with money created by the government. And this is not something new.

Government money is, also, a liability in a very real accounting sense too.

When the government creates money (by crediting the accounts of their providers, for instance) it is also registered as a liability for itself.

This same money always will be accepted back as a payment. That's the promise.

[kaonashi]

The promise is to accept for settlement of tax obligations.

[Turing_Machine]

No, they actually issued gold and silver currency, which was called "money" and was used directly as a medium of exchange. Money wasn't just exchangeable for gold, it was gold (and silver).

The widespread use of paper money is actually quite a recent innovation, compared to the millennia of history for gold and silver coinage. People didn't trust paper for a long time (and still don't, when times get troubled).

The Constitution of the United States (quite a recent document, historically speaking) invariably refers to "coining" money, not printing it.

[RobertoG]

'issued gold and silver currency, which was called "money"'

If the value of the coin comes from the material, why issue coins in the first place?

[Turing_Machine]

Because it's harder to make a counterfeit coin than an counterfeit irregular lump of metal.

[bubuga]

> Gold was not money then more than it is now.

Actually, once the state stopped recognizing gold as the standard economic unit of account, it ceases to be money. It becomes just another commodity, like corn or platinum.

Another natural consequence of gold having become a commodity is that monetary policies cease to cover the value of gold, thus it fluctuates naturally in the market just like any product, and is also subjected to economic bubbles.

The price fluctuation alone makes gold unsuited to be used as money, as it is no longer suited to store value.