[drags]

On the GP's point, isn't a gold certificate a debt instrument? If you use a gold certificate for convenience, then you are introducing counterparty risk.

Most people are willing to pay a few cents on the dollar (whether that rears its head as actual risk of theft, risk of default or risk of inflation, or as insurance against those possibilities) in order to be able to trade things with other people.

The modern economy is very good about keeping its costs stable and low, while steadily increasing the speed and ease with which we complete transactions. I'd say that's a pretty good thing.