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I posted in other threads, but this is a dedicated thread. After World War 2, at the Bretton Woods Conference, the US dollar was chosen as the currency for international money exchange specifically because the it was on the gold standard. On August 15, 1971, President Richard Nixon took the US dollar off the gold standard. The US dollar became a fiat currency, meaning it has value because the government says it does. This is fundamentally unstable. At that time (August 14) $35 in US dollars could be exchanged for 1 troy ounce of gold. Today one troy ounce of gold is worth $4,219.23. Inflation based on the Consumer Price Index would make $35 from 1971 worth $280.69 today. That's 702.0% inflation. Inflation does not mean the price of goods increases, although most people think it does. It really means the value of a dollar has fallen.
Under a fixed commodity standard, such as the gold standard, the Treasury must have enough gold for all the money in circulation. If thieves break into a storage vault and steal gold, then the Treasury must destroy money of equal value. For example, if thieves steal $100 million worth of gold bullion, then the Treasury must destroy $100 million of paper money. Or the same value in bank accounts. This could hinder bank operations. One reason the US was taken off the gold standard in 1971 was the total quantity of gold in the world was not growing as fast as the population. All the easy to mine gold was gone (mined), remaining gold mines today require several tons of dirt to make one troy ounce of gold. Diminishing returns. Acquiring gold fast enough to keep the economy growing is an issue.
However, a fiat currency has even greater problems. Government has the temptation to spend beyond its means, run a deficit. When the debt gets too large, just print money to pay bills. But when they do that, value of currency falls. If the US prints enough new money to increase the total amount of money in circulation by 10%, then the value of a dollar will drop by 10%. After inflation, total amount of currency in circulation will equal what it was before printing that money. But this also mean any savings you have in a bank account will not increase. If you had $1,000 in savings before the government printed money, you will still have $1,000 after. But the value of a dollar dropped 10%, so after inflation your savings are now worth $900.
Government is doing this. A lot. That's why there has been 702% inflation since 1971.
Debasing currency was a problem in ancient Rome. The primary coin of the Roman empire was a denarius. It was roughly the size of a dime, just slightly larger, exact size depends which year. Denarius was 95-98% silver. Pure silver is not a good idea, because it's so soft it can be bent with fingers. Sterling silver is 92.5% silver, remainder usually copper. Sterling silver is used for jewellery because it's strong. When a US dime was introduced in 1792 (spelled Disme) it was 89.24% silver. It stayed that concentration until 1916. From 1916-1945 a US dime was 90% silver. Starting 64 AD ancient Rome started to "debase" their currency, meaning silver content fell. From 14 AD through 37 AD, a Roman denarius was 97.5% to 98% silver. In 64 AD it fell to 93.5%. It continued to fall though 274 AD when it was only 5% silver. This contributed to the fall of Rome. In the US, since 1945 a dime is a "sandwich" of pure copper core clad in two layers of 75% copper, 25% nickel alloy. There is no silver in a modern US dime.
The US abandoning the gold standard in 1971 is equivalent to debasing coins. It's no longer based on precious metal. We need to avoid this.
I propose Mars use coins of precious metal. We don't need paper money. Mars will have debit cards, credit cards, bank accounts, and utility bill payments through an online transaction with your bank. I never go to a utility office to pay a bill, I don't even go to a bank branch, I just long onto my bank account, make a payment online. When I purchase groceries, I use a debit/credit card machine at the till to pay. I normally don't carry cash. Mars will have modern banking, with online debit card machines. When purchasing from Amazon, you order online, pay with a credit card. Mars will have all that. The difference is a gold standard. And coins will be made of sterling precious metal. No need to exchange paper money for slips of gold at a bank, because the coins will be precious metal.
As for source: Mars hasn't been mined yet, so will have lots of everything. Metal asteroids contain precious metals, so will supplement what is mined on Mars. Gold was originally used because it was the first metal humans knew how to make, and it never corroded. Gold nuggets were found on the surface of the ground, shining in the sun. When gold had to be mined, they didn't mine very deep. Copper was discovered when mining for gold. Today precious metals have value, but are also used for industrial purposes. Electrical contacts for electronics are electro-plated in gold because it does not corrode. Solder used to connect electrical components was originally 60% tin / 40% lead. But old or broken electronics thrown in a landfill caused problems: the lead leached into ground water. So in Europe, lead solder was outlawed. Solder is now still 60% tin, but the rest is a combination of silver and copper. Platinum is a relatively recent precious metal. It's used in oil refineries to crack heavy oil such as crude oil to become something lighter, such as gasoline. Platinum is also used in catalytic converters in cars. The only alternatives to platinum are other platinum-group metals: palladium or rhodium. There are 3 more platinum group metals, but they don't work as catalysts. One is iridium, which is the points of spark plugs. In the cylinder of a car engine, iridium doesn't corrode, and doesn't melt. If the world changes to hydrogen fuel cells, we still can't get away from precious metals. A hydrogen fuel cell uses a thin plastic membrane coated in a very thin coating of one of those same metals: platinum, palladium, or rhodium.
A Canadian penny was 98% copper, the rest tin & zinc, 1942-1996. Balance of tin vs zinc varied over the years. From 1858-1859 it was 95% copper. From 1876-1942 it was 95.5% copper. US penny was 100% copper 1793-1857, 88% 1856–1864, 95% 1864–1942.
Coins I proposed for Mars:
penny - made of 98% copper, the rest tin & zinc (Canadian penny 1942-1996)
nickel - made of pure nickel
dime - sterling silver (92.5% silver)
quarter - sterling silver (2.5 times the mass of a dime)
silver dollar - sterling silver (4 times mass of a quarter)
$20 coin - 22 karat gold (91.66% gold)
$100 coin - 95% platinum, 5% ruthenium (another platinum group metal)
Last edited by RobertDyck (2025-11-30 23:30:35)
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One story from YouTube, a real story, is quite interesting. A couple guys in Australia found a lump of gold in the ground. They dug it out, the largest single lump of gold ever found in recorded history. But they were afraid it would be stolen, so promptly put it back in the hole and buried it. They waited until Monday morning when banks would be open. Carefully sleeping beside their lump of gold all weekend to guard it. Monday morning they took their lump to a bank in a city. The bank didn't have a scale large enough to weigh it, so broke it up into 5 pieces, and weighed the pieces. Total weight 2,520 troy ounces! The bank melted it down into bars. Sent the bars to the bank of England in the UK. The Bank of England then printed new money with a value equal to the gold, and sent the paper money back to Australia. The two individuals who found the lump got the money.
Notice what happened: the Bank of England did not pay in tax money. Since the British pound was based on the gold standard in 1869, the bank did not have to "buy" it. The Bank printed new paper money and shipped that. This is how a gold standard works. Yes, the gold bars were added to the British equivalent to Fort Knox.
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