[pedrocr]

Gold solves a coordination problem we no longer have.

Societies need some form of hard to falsify currency to enable indirect trade, so you don't have to lug around your corn to go buy chickens. Gold is mostly useless, doesn't spoil, and there isn't very much of it on earth. So you can use gold to make some nice looking coins and everyone can relatively easily check they're real and can't just make more of it. The crappy side effect is as you mention that it creates a large incentive to go mine for gold. For the purposes of currency it would be nicer if all the gold was already mined.

Today, with reputable central banks you don't need gold anymore. Gold's proponents usually mention that a gold standard would set a fixed money supply that can't be altered by a central banker. Yet if that's what you want you could just change the law to impose that rule on the central bank, just as you'd need to change the law to move to a gold standard. So the two approaches are really same, except the non-gold one doesn't create a bunch of digging jobs in a gold mine somewhere.

[jbarham]

> Today, with reputable central banks you don't need gold anymore.

Quantitative easing (aka printing money) isn't doing much for the reputation of central banks...

[pedrocr]

You're confounding "gold as a way to implement currency" with "gold as a way to lock monetary policy". And that's so common I address it in the original comment:

>Gold's proponents usually mention that a gold standard would set a fixed money supply that can't be altered by a central banker. Yet if that's what you want you could just change the law to impose that rule on the central bank, just as you'd need to change the law to move to a gold standard.

[alexmat]

Why bother changing the law when you can just change your medium of exchange. Much simpler to just trade in gold than to try to keep the Fed in check.

[pedrocr]

You need to change the law if you want the central bank to move to a gold standard or to have a fixed monetary policy so that your legal tender currency doesn't inflate.

Other than that if you just want to trade using a non-inflatable currency you can just go right ahead and trade with gold if your counterparty accepts it. But if you're willing to accept that restriction something like bitcoin is probably a better solution that doesn't involve carrying and securing large quantities of heavy blocks of metal.

[dgregd]

> Today, with reputable central banks you don't need gold anymore

Just look at the inflation charts of last 2 centuries...