The danger with fiat money is that it has no natural limit. Where gold is a product of the natural world and supply is limited, so that in order for a country to debase its currency it requires physical action on the coin, in the case of fiat money, it can be debased by simply printing more and more money.
Of course, the supply of money must have limits. But those limits should be measured by the amount of human inventiveness, NOT by the supply of ore for a semi-worthless metal like gold.
There are hundreds of GOOD reasons why humanity has (hopefully) left the gold standard in the dim past. Anyone who would suggest a return to the gold standard has to explain away a LOT of flaws inherent in such a system. I don't believe it is possible to paper over so many flaws.
As for whether money should be tied in value to oil, I would argue that that is exactly what is happening now. I would add that money should be valued in energy units such as watts. This would mean that wind turbines would exist on the same footing as all other forms of energy. "Remember the I35W bridge--who needs terrorists when there are Republicans"
Humans have been determining the value of the creations of nature for a very long time. The whole idea of the 'free market' was formed around this very problem. The creations of humans are quite another problem altogether. If a new product appears on the market, its value is determined by a formula which looks something like V=(HN)(CD)(T)(RI)(HE)(E). Where: V is the amount of money validated HN is an assessment of human need whether physical or psychological; CD is the creative design input which is a combination of learned information plus the intuitive flash; T is the existing technology; RI is the resource input from nature; HE is the physical effort or work supplied by humans; and E is the energy supplied from nature in the form of fuels. Because all six elements are critical, many forms of human endeavor do not add to value. For example, the value of the Russian Ruble is based almost completely on the value of their raw materials.
If a new product appears on the market, its value is determined by a formula which looks something like
V=(HN)(CD)(T)(RI)(HE)(E).
Where:
V is the amount of money validated
HN is an assessment of human need whether physical or psychological;
CD is the creative design input which is a combination of learned information plus the intuitive flash;
T is the existing technology;
RI is the resource input from nature;
HE is the physical effort or work supplied by humans; and
E is the energy supplied from nature in the form of fuels.
Because all six elements are critical, many forms of human endeavor do not add to value. For example, the value of the Russian Ruble is based almost completely on the value of their raw materials.
If this is the function by which the supply of money in a society is determined, then first and foremost as you note there is an assessment of human need. And that would seem to be the location at which we go astray.
If the economy is merely a means to an end, then HN is limited and exists embedded within a social and natural environment. However, the utilitarian bias present in most of modern society tells us that more is always better than less, and that the role of the good society is the unending creation of new wealth.
Disembedded from its social and natural context, the market logic undermines the social and natural endowments on which it depends. When confronted with social or environmental limitations, the presumption becomes that through our agency we hold within our power the ability to overcome the limitations placed upon us. Yet, upon closer examination how much of the progress we attribute to human ingenuity derives from the consumption of impounded power, of E in you formula, so that rather than being a testament to our triumph over the natural world, our progress is ultimately shown to be utterely dependent upon it.
And what comes when we have fully expended that impounded energy?
As much as I would love to believe that there exists within human nature an inventiveness necessary to release us from the bonds of nature, I simply can't.
Rather than being captains of our own destiny, we are all adrift on an ocean not of our own creation. For the liberal, this creates angst because it conflicts with the understanding that all have within them to power to change their fate. And the recognition that we are far less omnipotent and omniscient reduces us from masters of the universe to mere specks of dust.
Yet, if we cease to struggle and to profess belief that we have agency that exists outide of the structure created for us by nature and man. Then we might come to see that in the recongition that no man is an island, there is the wealth from knowing that we are all connected. When we pass from this world, all that is human does not pass with us. And it is in that continuity that out salvation lies. In abandoning the sense that we alone matter, and recognizing that we live on in that which we leave for future generations.
And if through we beleve that our ingenuity provides for us what we consume from the stocks of nature, we leave those who come after us a world less rich.
This is my point is saying that there has to be some natural limitation on the currency supply, because the belief that human ingenuity allows us to transcend natural limiation disembeds the operation of the market from the natural and social contexts in which it exists. We come to believe that when coal is exhausted we will fall upon petroleum, then natural gas, the nuclear, ad infnifitum. Until our asinine belief that we are gods is exposed for the foolishness it is.
The money supply is a means by which the disembedding of the market is facilitated, efforts to reembed the market, must thus place the money supply within the realm of what nature provides. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
