[peisistratos]

> Fiat currencies (that is, currency that has no intrinsic value) has existed for at least 1300 years, if not longer. They are not based on air

If paper currency got bootstrapping 1300 years ago, then why were American and European currencies gold backed half a century ago? Apparently the bootstrapped currency needed to be bootstraped again.

Gold is an ordinary commodity with practical uses (electronics, tooth fillings etc.) Its special qualities that make it a good currency candidate are its durability, portability, uniformity and divisibility. Gold is valuable due to its practical value, but is often exchanged due to its commodity qualities.

> an institution and its ability to maintain its value through whatever means it has available

The means a half century ago was to trade the paper for gold. Now that is implicit. The US stores tons of gold in Fort Knox and elsewhere - why? Obviously it implicitly backs the currency, even if the M1 supply is very large.

[IggleSniggle]

It got bootstrapped again because the government backing the currency fell, or the trustworthiness of the government fell.

Gold has a different "durability index" than "government coercion," but it's also not constant, and its rarity can be manipulated by anyone, whereas the rarity of a government backed currency can only be manipulated by the institution that backs its value in the first place.

I'm not making an argument that government backed currency is strictly "better" in all scenarios, only that it is not substantially "different" for most intents and purposes; ie it is not based on air, but a real-world quality: the coercive ability of an institution to maintain the value of the currency.