John Mangun Returns To Theme Of Gold As Money

His explanation of why gold makes for a good monetary unit is fairly common-sensical: there's been widespread demand for gold for thousands of years, and that underlying demand (when combined with those five attributes oft-mentioend in hard-money circles) makes gold a good choice for a monetary unit.

Also common-sensical is his explanation of why fiat currency has a lesser life:

[Assume] my business is washing cars. You sell chickens. I print my own “money.” Each one “Mangun money” is worth one car wash. I give you my money in return for two chickens. I redeem the money the following week by washing your car. But then I print thousands of “Mangun money” and buy goods all over town. Eventually, there is no way that I can wash all those cars and redeem all my money in a reasonable amount of time.

The next time I come to “buy” your chickens, you charge me two “Mangun money” because you know it will take me several months to get around to washing your car. My money is now devalued and the “price” of your chickens has gone up.

I have devalued the value of my money by printing too much of it.

Those who believe currency does not need to be asset backed would say, “So what?” It really does not matter if the chickens cost one or two “Mangun money” as long as we keep doing business with each other.

But if I keep printing more money, at some point, it will be very hard to
determine the “true value” of my currency. The people that I do business with will not be sure if they should charge me two, three or how many “Mangun money” for the goods they sell me. If the trend of my printing unlimited amounts of currency continues, you will lose confidence and eventually stop accepting my currency.

The entire piece makes for a good read.