Actually, no. Your "can" is based on an incorrect assumption - that you could ever have a government that is not stupid and corrupt.
The technical term is "time inconsistent." And it can be mitigated through automaticity and commitment mechanisms--- which basically creates a "functional" or "de facto" gold standard (see "Euro Zone Crisis").
Going on a Standard (whatever we, pretty much no one cares at this point, heck do it on a Bubble Standard so long as it is on a standard!) just curtails those banking families from printing all this worthless money.
Unfounded and largely anti-Semitic paranoias aside, it is true that a fiduciary rather than a fiat system developed AS A RESTRICTION ON BANKS. We perceive it now as a restriction on government, but it began AS A PROJECTION of state power over "bank note" currency.
Sounds to me like the gold standard has inherent problems, while our current system can work better, but tempts governments to do stupid things with it that cause other problems (which may or may not be worse than the problems inherent in a precious-metal standard).
A fiat money system is largely not understood. The modern post-Bretton Woods system is the first even semi-long term attempt at global fiat money. Niall Ferguson has some interesting research on the matter (and some interesting and occasionally semi-offensive opinions). Thus, we seem to have enjoyed some benefits from a fiat system, and it seems to work, but we should remember that we have literally
thousands of years of market and institutional experience with fiduciary and commodity moneys, and
less than 100 years with fiat. Furthermore, to my knowledge, only one fiat money system has ever lasted more than 100 years, and that was in Song China, and it's longevity was based on other Song policies that served to mitigate the disastrously bad monetary policies they implemented. And, even then, it ended in hyperinflation. Furthermore, in the 400 years or so in which Western societies have had institutions capable of running fiat money systems, quite a few have had successful short-term experiences with them, but we have a handfull of disasters (Wiemar Germany FTW!).
That said, a fiduciary system is hardly as simple as people like to think. Fiduciary monetary systems were not "simpler" or more egalitarian than fiat ones (indeed, fiat systems more easily expand credit down the sociological strata, making them possibly more egalitarian). We just imagine them that way because they were in the "good old days."
You mentioned the denarius, that's an excellent example of how governments debase their own money so they can pay of outstanding debts. Or the post world war one Germany, which tried to print its way out of the reparations it had to pay.
Fiat money is like crack with it's short term high. But you keep on wanting more and more of it, and it compels you to have/make more. Ireland in January was making euros out of thin air, even now we are hearing the ECB may start printing money... Just digging themselves into a deeper holes.
You just contradicted yourself.
Fiat money creates the desire and need for "more and more".... but the denarius... wasn't fiat money? (though, in a sense, the seigniorage is a fiat-ish return for the government as it ultimately derives from legal factors).
That is true, of course, but the morale of the story is that you can never control anything that happens to your metals. Since the metal production, melting and coinage has nothing whatsoever to do with actual economic activity, you get two independent variables where you only really need one.
Also, the value of money is not imposed from above through some abstract calculations. There is an actual offer and demand going on; money is worth what you will give up for it. I give 41 hours a week for a certain of money, that's what it's worth to me, not grams of gold. Gold could be a means of exchange, or many other things, but it only counts as a means of exchange, not as gold.
The classical problem of Indian hoarding is worth considering here. The "stable" gold standard of 1870-1914 is largely a function of "irrational" (I put in quotes because I'm using it in a purely technical, not pejorative sense) hoarding of precious metals by private Indian consumers during that period. To this day, India has shockingly large gold hoardings (especially for a country of that income level), and gold is one of its largest imports. Shift the cultural norms about gold hoarding a bit, and the value of any fiduciary or commodity money based on gold... has uncontrollable results.
The curse/blessing of fiduciary or commodity monies is their internationalism. Everybody can hurt everyone, and everyone can pretty freely trade with everyone. 1870-1914 (the "classical gold standard" period) was a time of global trade, investment, communication, and immigration completely unmatched until our present day (which humorously/terrifyingly similar rhetoric on many things like technology and global peace issues).
Tom mentioned debasing, and some of the techniques taken to prevent it. I'm not so sure about the Byzantium story. Because of currency was based on precious metals part of the whole advantage was they could increase the circulation of currency, without devaluing the currency. The value of currency wasn't based on some abstract value of the economy that produced it, but based solely on the price of the precious gold. Conversely this meant that the ruling bodies often tightly controlled the mines and industry for the appropriate precious metal, in order to have some control over the supply and thus maintain the value. Obviously if the value of the metal dropped or rose, that affected the currency, but the amount of coins in circulation should not be as important as the relative scarcity of the metal itself.
I believe the gold standard you refer to, the modern gold standard was a Gold Exchange Standard or a Gold Bullion Standard, where the gold standard of medieval times was a gold specie standard.
The deficit of gold coins in Medieval Europe is a well-documented fact. Unsure if I'm agreeing or disagreeing with you here. But the markets at Constantinople and Antioch (and to a lesser extent in Spain, Provence, and Italy) where "points of trade" fueling Europe's major trade deficit. Europe was a net exporter of precious metals, and a net importer of goods and services until the major shifts of the 13th and 14th centuries; and then after 1492, everything changed even more radically. This deficit of precious metals led to inflation of their value in Europe, where good mines for silver and gold were also comparatively few (though Medieval mining technology continued to progress throughout the period).
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Thank you for reading an "applied summary" of my term paper.
