There is some rationale for currency backed by hard commodities. Most people nowadays consider that the drawbacks outweigh the advantages, but valid arguments pro exist.
Was there a rationale historically?
Yes. The governments have a habit of printing money and it’s an addictive thing. You need ways to stop the governments from going on a binge and printing lots and lots of money (historically, that happened on a pretty regular basis). Nowadays in the West the problem is considered fixed because technically governments don’t print money any more, it’s done by a theoretically independent central bank which does not have to listen to what the government tells it. In practice it’s… slightly different :-/
There is some rationale for currency backed by hard commodities. Most people nowadays consider that the drawbacks outweigh the advantages, but valid arguments pro exist.
Yes. The governments have a habit of printing money and it’s an addictive thing. You need ways to stop the governments from going on a binge and printing lots and lots of money (historically, that happened on a pretty regular basis). Nowadays in the West the problem is considered fixed because technically governments don’t print money any more, it’s done by a theoretically independent central bank which does not have to listen to what the government tells it. In practice it’s… slightly different :-/
I think limiting the printing of money may have been useful before central banking, so I think that’s a good point.