No. There isn’t. There are many bad rationales for metal-backed currencies, but as a practical matter given the relative sizes of modern economies and the sizes of precious metal reserves, any such setup would have to be absurdly leveraged
Meaning that there would be very little actual metal backing the theoretical convertibility, so it would be vulnerable as all hell to runs. The smallest twitch of panic in the markets would utterly exhaust the actual reserves, so the backing would be a lie.
Or alternatively the price on the precious metals would have to be so absurdly high that the distinction between a mine and a printing press would be utterly meaningless.
Very rough numbers pulled from wikipedia: in order for the value of silver reserves to equal gdp the price of silver would need to hit.. (90 trillion gross world product /540,000 tonnes of silver) .. about 5000 dollars/troy ounce at which point the currency can be debased by mining more silver because the price of doing so would be 2 orders of magnitude less than the value of the metal. And this would in fact instantly start happening unless you outlaw silver mining. Effectively that would be legal currency printing for anyone with a silver mine. Hello inflation.
No. There isn’t. There are many bad rationales for metal-backed currencies, but as a practical matter given the relative sizes of modern economies and the sizes of precious metal reserves, any such setup would have to be absurdly leveraged
Meaning that there would be very little actual metal backing the theoretical convertibility, so it would be vulnerable as all hell to runs. The smallest twitch of panic in the markets would utterly exhaust the actual reserves, so the backing would be a lie.
Or alternatively the price on the precious metals would have to be so absurdly high that the distinction between a mine and a printing press would be utterly meaningless.
Very rough numbers pulled from wikipedia: in order for the value of silver reserves to equal gdp the price of silver would need to hit.. (90 trillion gross world product /540,000 tonnes of silver) .. about 5000 dollars/troy ounce at which point the currency can be debased by mining more silver because the price of doing so would be 2 orders of magnitude less than the value of the metal. And this would in fact instantly start happening unless you outlaw silver mining. Effectively that would be legal currency printing for anyone with a silver mine. Hello inflation.