The use of a medium of exchange is required to expand the size and scope of the market.  Many different commodities have been used as a medium of exchange over the years.  One has out performed all others, gold.  Gold has been chosen by the market due to its unique qualities.  Silver and copper have been used too, but primarily gold.  It’s important to note that the people chose gold, it wasn’t forced onto them by the state.

The most common criticism is that gold is a barbarous relic.  This isn’t even a criticism or a valid argument against it.  Calling it that has somehow ended arguments.  Gold stands in the way of the state so that’ll be thrown around.  Many will think: we’re not barbarians.  However, gold is critical to freedom.  Gold prevents deliberate interference by the state.  They can’t print gold.  This prevents credit expansion.

Silver and copper have been used, and it’s said that bad money drives out the good, Gresham’s law.  Taken at face value, this contradicts the market.  The phrasing is incorrect to justify a state monopoly in money.  Gresham’s law is actually “Money overvalued by the State will drive money undervalued by the State out of circulation.”  When the state fixes the ratio of gold and silver, the one that is undervalued won’t be used.

The gold standard doesn’t mean you carry around gold.  It’ll be inconvenient and the gold coins wear down.  Money substitutes are used.  These substitutes are exchangeable for gold.  The paper tickets we use now aren’t.  A paper ticket is debt to the central bank.  There is more debt than paper tickets.  The debt can never be paid off under current conditions.  They must keep printing paper tickets to keep the house of cards standing.

A critical feature of gold that paper can never do, serve as an obstacle to various state goals.  Under gold, the state can only spend what it takes.  Under paper, they just print the difference.  Credit can’t be expanded.  There can’t be a boom and bust, given 100% of gold reserves are maintained.  The state and pressure groups will push paper so manipulation is easy. Fanatical attacks will be pursued.  It’s all propaganda.

References

Ludwig von Mises; Human Action

Murray Rothbard; Man, Economy, and State