Here is where it gets complicated. Societies that have used gold to measure wealth, went in conquest to destroy other nations in order to aquire the wealth.
One could argue that with gold, you would never be able to run deficits since your paper currency would be backed by equal gold.
The problem here is that when money is needed, it would be very difficult to get since you have to go and find ways to aquire more gold. If I was Microsoft and needed to grow to the next level but I didn't have 20 billion to fund a new project, then I would need to wage war, or spend an extraordinary amount of time to find investors.
This is where fiat shines.
When it comes to full scale governments, their abuse of fiat is what causes inflation.
It is possible that if bad actors did not exist, then fiat could expand the money supply as needed and reduced as needed to avoid inflation. But this is not the case because government spends more than they can generate. That's what throws the balance off.
While you are 100% correct that inflation makes the rich richer, it isn't any different with gold. The real difference is in who the actors are. Those who had gold alway acted to get more. And they will go to great lengths to source it, even if it means traveling across the ocean to destroy another civilization. Again not that fiat hasn't also caused this, it's just the actors taking advantage of the system.
You make a good point. I guess my counter-point is that fiat makes it easier for the bad actors to manipulate the system to their advantage. Also it enables inflation - which is (quite literally) a killer.
Microsoft could always take out a $20 billion loan of gold backed currency, and if they can't - well then maybe avoiding that sort of debt is a good thing. Current debt levels are going to sink our economies.
Sadly you have a good point about people fighting to grab what they need. We are still rather vicious and primitive beast by nature. This is partly why blockchains are so great - the transparency of transactions and the difficulty in generating endless funds ensures some sort of accountability - even for bad actors.
I think a lot about how a company could borrow in a gold backed economy.
The bank would have to have a large gold reserve in order to back the loan up. If the paper currency was backed 1:1 with gold (ignoring the $/oz or whatever it comes out to be), then the only way for the bank to issue the loan would be to practice fractional reserve banking.
If the bank litterally did not have enough gold, then Microsoft would need to go to multiple banks and receive multiple rates. It makes it difficult to do business in this manner, but you could then perform a swap with another firm to normalize your rate if you wished to.
At the end of the day, there is a time and place for fiat and I think fiat has allowed our economy to boom. By the same account, the abuse with fiat is absolutely real, and the downfall from too much debt is also extremely real.
I do not doubt that the next fall will be a result of debt, as it almost always has been.
One thing about todays society that I think we all discount is that every government runs on an inflationary fiat model and nearlly all governments have the same debt problem. In fact all debts are intertwined with each other to the point that if one fails, others will be equally damage or fail too. For that reason, there is robustness in the system since there is a common goal to not fail. Perhaps the only way out of this mess would be global debt forgiveness.
I say this because there is no way that we can continue to leverage future value for present gain without paying for it eventually.
I agree with much of what you say here. That part I would disagree on is that intertwined debt leads to robustness because there is a common goal not to fail. From an engineering point of view I point out there where there was one point of failure in a non-linked system, now there are many. The interest will indeed be in keeping the ship afloat, but the chance of disaster is greatly increased.
Your last sentence is one which I STRONGLY agree with!