[This excerpt from an anonymous internet source makes some interesting points about fiat currency and value. It has been lightly edited by myself.]
So, should we return to the gold standard?
My reply is "no."
To be useful as money, the medium for exchange must be something that is universally agreed upon to have value while at the same time existing in enough supply to prevent manipulation... In arguing about a new value standard for money one detractor argued that gold was the only possible basis for a new monetary system because only gold was universally valued. Obviously, that is not true. One could walk into any nation carrying a gallon of gasoline and find someone willing to trade for it. So clearly, other mediums of exchange are possible, even if we did not have prior history to assure us of their validity and success.
The problem with gold and silver as mediums of exchange is they exist in too small a quantity relative to the growing population. Gold and silver can be manipulated, hoarded, and shorted, to make the speculators rich at the expense of everyone else. Most of the existing gold and silver are already in the hands of the very same bankers who wrecked our present system, so moving to a gold standard merely trades one form of banker-slavery for another.
What is needed is a medium for exchange that increases in supply right alongside the population itself, in order to maintain stability and constant value.
So, my suggestion is to use electricity as the universal basis for a new value-based money system. For the purposes of discussion I call the new US monetary unit the "Lectro." It is redeemable for one kilowatt hour of electricity. The reason I think this is an idea worth pursuing are as follows.
1. While the US Government will have a motive to create electrical power in order to redeem the tokens (coins) and claim checks (Lectro certificates) issued for commerce, creation of electricity and hence money cannot be monopolized. There is no central issuing authority. Every home can have solar panels generating power to the grid, which is redeemable in Lectro notes. In a way we already do this when we pay for power for paper notes and for those able to sell power back to the utility, trade generated power for notes back. This is simply taking the idea to a national scale and making it the de-fact monetary system. and because everyone can generate electricity, artificial scarcity of supply cannot be created.
2. Because power is now the actual monetary system, this approach encourages efficient (and with the proper tax penalties for pollution) clean power generation as well as conservation at the consumer and factory levels.
3. Nobody can short the money supply because everyone can create their own power and monetize it through the treasury. Runaway inflation is impossible because all the coins and certificates in circulation are tied to the available power grid. As power is created, coins and certificates flow into circulation. As power is used, the coins and certificates are taken out of circulation.
4. In the long term, creation of an energy-based money system will smooth the transition from a human-labor to machine-labor society. At present, human labor precedes all capital, payable in a monetary system that pays primarily for human labor. In switching to a monetary system that pays for machine based power production, we evolve towards a society where machines become the primary creators of capital, and all humans shift towards the demand side of the economy. Instead of creating poverty, the push towards automation creates more wealth.